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

To: E_K_S who wrote (52345)	9/11/2013 1:39:35 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78748

Re NS/NSH - might be a bit early to buy. This is what I wrote on IV MLPs board: NS/NSH posted their latest presentation on the SEC website.The outlook looks ugly: 1) throughput estimates from Eagle Ford have been revised down from the plan presented in July 2013 2) Storage under pressure due to backwardation. Many leases coming up for renewal and will roll over at lower rates 3) A lot of talk about debt covenants and saving reducing working capital 4) The language about not cutting the distribution has disappeared entirely I owned NSH at some point this year but sold when I heard about pressure on the storage rates. The pipeline segment cannot carry the company alone. sec.gov I think a distribution cut is increasingly likely. Last quarter, they only covered ~60% of their distribution from distributable cash flow, which is not sustainable. Now guidance is falling some more, which means that the coverage will not go much higher. I expect a ~40% distribution cut for NS, to get back to 100% coverage, which would translate into a 60% cut for NSH. NSH could trade at about a 4-5% yield after the cut. This would translate into a unit price in the low teens.