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

To: Paul Senior who wrote (51196)	3/28/2013 5:01:28 PM
From: E_K_S	1 Recommendation Read Replies (1) \| Respond to of 78659

Re: MLP paper work vs building a portfolio that generates predictable income streams at a value. After completing my taxes using Turbo Tax, I have to agree that the accounting for the MLPs generates a lot of paper. I E-File the Federal return, but send the paper file for CA State. Each MLP form creates three pages (printed on both sides) for the State return. I think my paper CA State return is currently 88 pages long! The MLP K1's are not that bad as many allow direct import into Turbo Tax. Some still require manual entry but now that one can get email alerts when the forms are available for download, it is much easier w/ the Internet to do the special K1 MLP accounting. Rethinking the investment, for me, I think as long as I build a 5% portfolio position it is probably worth owning the individual MLP stocks. Otherwise, one of the CEF Funds might be easier as long as expense ratios are low and the distribution meets your 6% yield mark. I still like some of the individual names I have researched, but many are just way too expensive w/ their recent run up. The key attribute to MLP's are predictable revenue streams that should grow significantly over the next 36-48 months. My goal was to generate income but buying only at a value level where the distribution met my specific income goals. The income streams will grow over time (several years) so I am not inclined to sell any of my MLP's unless their debt profile has changes and/or their future distribution growth estimates have changed. I am still thinking about how to manage these types of investments for a long term "value" portfolio. So for now, I will build my current MLP positions rather than entering new ones unless significant value opportunities present themselves. --------------------------------------------------------------------------------------------------------------------------------------------------------- FWIW, I added a few more of the CDRpB for $25.10/share yielding 7.02%. Added these to my last batch bought 9/2012 for $23.93/share. These were Grommits's pick and for me should generate good portfolio income until they are called in 2017. My concern longer term are increasing interest rates and/or inflation. A stiff market correction will occur when PE's normalize once higher interest rates are factored into the market w/o the Fed's continued QE. So, does one move capital to short term fixed income products but stay clear of long duration bonds or bond like investments. I presently have 7.5% cash generating 0.25% in my brokerage account and do not want to expose this capital to overvalued stocks or high yielding bonds that would be impacted by a sustained market corrections. I have come to the conclusion to accept the opportunity cost (perhaps 5% potential income) of holding the cash. Noticed how much these CEF Preferred Income Funds (using leverage) fell in the 2008 "Crash". Therefore, using one of these funds to park cash could be impacted by a large loss (much more than the opportunity cost of lost income by just holding cash in the brokerage account and/or credit union). Therefore, my "Value" premises is to keep the cash liquid and available for new "Buys" that get me preferred stocks and/or equities at a 15% - 45% discount from current levels. As the market moves higher (it always over shoots), I will build my cash reserve (it could be 12 months or more) but keep my core stock & preferred holdings that generate the portfolio income I need to live on. Like you, I may peel off shares of one or more of my income producing stocks as yields falls and/or their debt profiles change significantly. EKS