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

To: Spekulatius who wrote (50960)	2/23/2013 11:04:36 AM
From: E_K_S	Read Replies (1) \| Respond to of 78744

Re: ETP I see that you bought your first shares 9/2012. That's the same day I bought my position (my only buy). Since then ETP has been expanding their NG gathering and distribution business acquiring SXL and Southern Union. For me, this is part of a long term consolidation in the industry that once completed (perhaps w/ other mergers/purchasers) will bring economy of scale to their operation. Up front one time consolidation expenses will take more than 12 months and as much as 36 months before significant cost savings can be achieved. Therefore, I am not surprised that their distribution coverage is still unusually high. As this is the Sector where I am allocating as much as 20% of my portfolio to in the next 24 months, ETP has one of the best expanding "foot print" coverage in the sector. I continue to hold my shares and reinvest my dividends (w/ the company 5% discount). I also will add new shares as secondaries are offered. My position in ETP is small w/ EPD (4x larger) and EPB (2x larger) my two other largest MLP's held in the taxable account. The IRA holds some shares in DPM, EEQ & KMI. I also started a larger position in the taxable account in KMP by buying CPNO that was acquired last month and will exchange .45 shares KMP for each CPNO. There is as much as a 2% discount offered by buying CPNO and waiting for the shares to convert to KMP shares. I plan to double up the position buying more CPNO shares in the next 20 days if/when it sells below $38.00/share. I also own a few shares of EEQ that I want to increase as of the group (ETP, EPD, EPB) is one that is undervalued at this time. The equities I own that also fit into this sector theme include: GAS, MDU, CNP,WMB, TCP, ATO, APL, TRP & SRE. Many of these stocks are selling at a fair value price (or a bit higher). I peeled off a few shares of GAS and MDU to re-buy at lower prices but still hold an over weight position in each ( 2x that of ETP). I am trying to build a basket of these equities. D is one I do not own now but want to add if it sells off. Also, when MHR spins off their gathering MLP, I plan to start a position in that. After reviewing my holdings, ETP is one of my smallest positions and I probably should add more shares on any sell off too. I think you pointed out in an earlier post that you liked that a substantial (if not all) of the revenues are "fee" based and not subject to huge commodity price swings. From the link you provided, I thought this statement from the CEO provided a good description of the "fee based" growth potential in the Eagle Ford & Woodford projects looking forward a few years. With higher Eagle Ford growth it will continue to lean heavily towards fee based. The proportion of fee-based business will increase significantly throughout this year and throughout the next couple of years. All of the business on [inaudible] which at one point will have about 1.3 BCF of new production signed up, both gathering and processing and of course downstream liquids, those are all fee-based business. So our growth both in the Eagle Ford and then also up in Woodford to [inaudible] with our new volumes there, those are all fee-based and as I mentioned, new contracts that we’re negotiating at West Texas are also fee-based. So you’ll see a significant shift in the percentage of fee-based versus BOP as a consolidated partnership. Therefore, I will continue to hold my ETP shares and up my position on any sell off simply because they are growing their operations in the heart of the Eagle Ford shale region and will benefit from the increased volumes of gas & oil moved. They have a significant advantage over rail cars (about $8.00/barrel) and I believe ETP will eventually be rewarded for their current investments. EKS