Read this article on Fool.com:
A couple of years ago I would not have noticed anything amiss with this article.. and would have probably blindly agreed with the argument because it comes from some investment-savy dude on Fool.com.
Without much ado, here is what I commented on that article:
On July 10, 2009, at 11:01 PM, Golbguru wrote:
Rich, it is extremely misleading to talk about MLPs like NGLS (Targa Resources) without even mentioning “distributable cash flow” and “coverage ratio”.
2009 Q1 distribution was $0.52 per common unit (share). For 47.16 million shares, that’s a total distribution of $24.5 million.
2009 Q1 distributable cash flow was $33.6 million. Gives a coverage ratio of little over 1.3. Most MLPs are in this range - and it is not bad at all.
Plus it is well within the limits set in its debt covenant (please see the balance sheet).
In summary, your statement “Seems to me that while Targa may not be able to sustain its current dividend, it could cut the divvy substantially”, is essentially baseless.
Moreover, you need to do more homework on MLPs and stop calling distributions as “dividends”.
I will leave it to my astute readers to figure out what MLPs are … till I come back and write a little more about them.
Looking back, I cannot believe that I am actually taking the efforts to read and understand company balance sheets now-a-days. I am glad I am doing it now.
I still don’t have a good grasp of the macro-market-economics yet, but after reading views of various economists and chartists, I am not sure anyone understands that well anyways. May be someday I will understand and appreciate it, but till then I am not going to sit on a pile of cash and do nothing (and see the cash get devalued as the inflation catches up with us eventually).
Disclosure: Long on NGLS and a whole bunch of other MLPs.
{ 37 comments… read them below or add one }
I have found that the Motley Fool simply writes about stuff in order to promote their stock trading services.
As far as MLPs are concerned I own some Kinder Morgan, which is a decent allocation to the sector. I won’t hold all my eggs in the MLP basket however, as they are subject to specific risks. I like being diversified in other income plays too.
I didn’t know there was a difference between distributions and dividends. Obviously I still have a lot of learning to do. I’m glad I recently found your blog.
And then once you get really good at reading balance sheets and understanding macro-economics, you’ll begin to see that due to shady accounting and a lack of market transparency, the numbers are ALL fudged.
Macro market economics are confusing. I studied it a bit in school.
Be careful who you hate as you can turn into them more easily than you imagine. Motley Fooha started out railing against stock research and now that is what they do…with no improvement in quality only the shrillness of the hype…
Are you going to update this blog anytime soon? Looking forward to more great posts.
You should do a post on the “recovery” and why it’s a foolish sentiment.
it is really good comment on Foolish Article ….keep it up….
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What are you talking about Zoe?
Good article, and i have something to say to all you readers out there. If you plan to open a small business or need a loan and have bad credit, go to Business Loans-Direct
It is in their interest to convince you that you and the rest of humanity are low, unimportant, and uncontrollable so you do not resist them or - worst of all - seek and possibly achieve enlightenment on your own.
They wish you to know all this to demonstrate that they are aware of you and not concerned with your activities. Any conclusion you draw on them based on the limited information available to you is likely to be wrong. An amusement more than a threat.
Your article on this blog is fantastic.
Well done! I’m a big fan of your blog and be sure to keep up the great work.
I plan on returning and linking to your site.
Sincerely,
Alan H.
http://www.alanhaft.com
Today there are a lot of articles on how the stock market runup is entirely unsupported, and yet up it goes. I’m wondering if I should listen to these “analysts” or just trust my gut that it’ll go up because the government won’t let it fail.
yeah i so support this. I mean there are alot of articles in the stock! I hope that the your gut is right this time because one false move from the governmentand every thing will fell.
” I am not interestd in the small business that takes so much of my energy and time with a small money reward,and I am not interested in the so-called easy money either,because which mean I have to take a risk of being ruinning my life,so back to the original point—–I am still trying to figure out a way that is wise to achieve my life aim. Sometimes that have to deal with the foolish people,which somehow really make me confusing…”
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Your blog looks interesting and I would like to submit your link to the advertiser. Would you please let me know whether I can submit your link or not?
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As a newbie I a was looking for some info. I stumble upon this post. Its awesome and interesting.
Hi, Its very long time that you have not update this blog. We are looking forward to you for another interesting update.
thanks for captivating information, but no long no up dation that is why we get bored while reading your only one blog. kindly up date new one so that viewers can keep their intrest alive.
Whoa, this is way over my head. i get scared as soon as I hear financial terms, even a balance sheet is enough to send me running…
Hey, I had a question about your site but couldn’t find any contact info. Could you please send me an email so I can get back to you? Thanks!
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Goes to show you shouldn’t believer everything you read and you need to do your own homework before you act on anything.
I agree with “in the money” this just shows it. well put.
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hi,nice title i like your sense of humor.thanks for sharing the links.
Hello, Your blog looks very interesting and I would like to submit your link to the advertiser. Would you please let me know whether I can submit your link or not?
It’s definitely been way to long since your last blog post, I hope you return soon my friend, I miss your insight on whats going on with the economy and things in general.
Till then,
Jean
Gotta love the Scrabble image–a classic!
Its very long time that you have not update this blog. we are looking forward to you for interesting update. I hope you will make it very soon.
I think a lot of it is the misinformation SOME salespeople give to customers because they themselves do not understand what will happen with the whole changeover.
There are a lot of sales people at the big box stores who work on commission and only care about their paycheck so they try to feed a little bit of the misinformation to get the customer to buy the biggest.
Why do I see Tiger woods being attacked by some members of the black community in America for not “doing enough to help the black community?”
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I have said this in other posts, the two are NOT mutually exclusive. That is to say, just because a signal is digital does not make it HD, conversely, HD is usually digital. From the service standpoint, the differences are glaring.
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