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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (49307)	9/5/2012 9:53:19 PM
From: Spekulatius	Respond to of 78632

NSH still is the better bet, even at current prices. NS will issue more units and NSH will get a free ride on the incentive distribution on those units as well. The big problem for NS and NSH is that the asphalt business has gone to hell and I am also somewhat leary of their big storage business that could be dependent on the forward price curves for crude futures and crude products. Storage will always be needed but I have been hearing that cushing storage may be overbuild, with all these new sources (Bakken, Eagle Ford) coming online. NUstar may have too much storage in the wrong places in the long run. Afor now, i am staying out of NS and NSH but NSH is clearly the better of the two, imo.

To: Paul Senior who wrote (49307)	10/26/2012 11:04:20 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78632

I bought some NSH units today at 29.3$. The low distribution coverage for NS is scary and can end badly for the General Partner NSH but I think the management (which owns way more NSH than NS units) is pretty much stating that they want to grow out of the whole by expanding, and that means issuing more NS units, which benefits NSH (since NSH get's a share of NS cash flow). While NS cost of capital is high, I think the lower GP cut of 25% of incremental cash flow (compared to 50% for many other MLP's) makes the plan more manageable. Based on recent experience, I think NS will increase unit count by 10% annually, which will create a nice windfall for NSH. Somewhat risky, but there is a 7.3% yield, with a good chance of 10%distribution growth, due to NS unit # increases from secondaries.