Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: E_K_S who wrote (51726)	6/14/2013 7:43:54 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78774

Re NSH - you need to look at the EV if you look at EBITDA, because EBITDA does not subtract interest expense, so instead of that, the debt itself is accounted for by taking EV rather than market cap. If you take a metric like earnings/share ( not useful for MLP's) or discounted cash flow, where the interest expense is subtracted, it is better to look at market cap. I also don't think you can look at NSH in isolation, since NS directly owns the assets and NSH just the Incentive distribution rights, which is a slice of the cash flow (up to 25% if certain threshold values are met). This makes NSH a levered play on NS and specifically that NS can keep their distribution and the entire enterprise can grow again (otherwise things could go ugly for NSH! ). I am not claiming that NSH is without risk, if NS cannot cover their distribution it will be cut and NSH will be feeling the cut too, as it is levered about 1.6x to NS distribution (according to my estimates, better double check). I do think that their Eagle Ford play is a good one, the Texstar acquisition was done from funds received from their divestures and hopefully will accelerate the transformation into a pure storage and pipeline MLP. With the current yield, one gets rewarded for the risk. As far Insider purchases are concerned, while I think they are a positive, their predictive power is weak, since the CEO always has been buyer in the past, so I would not read to much into that.