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well again just thinking out loud, I get to sleep on it a few nights before making a decision -I do not see anything good coming for shareholders once WNR takes over - just lower yields on a stock 70% higher. By 11-7 I will know the outcome of the vote on the highway funds and that will fuel my position into ALDW which was coming regardless of this buyout news.
Before exiting, wouldn't it be prudent to come up with some sort of assessment as to hurdles WNR must go thru before anything solid can emerge? If, as has been suggested on this board, it were to take a year, NTI might continue to reward although I'd expect it to experience a steady decline. I'd sure hate to yield to death gasps.
Yeah, I feel bad about this development, too.
Figure changes daily with the stock price of WNR. We could hold for gains at WNR which is likely with them scooping our gem, but it would be slow coming and not much "fun" as you put it.
As always these SA guys are just another opinion I always seem to agree and disagree with their thoughts, saying some of it yes some of it no way I agree with. I know I am looking at ALDW and CVRR and have liked ALDW for a long time.
I do think WNR is stealing NTI and yes most of us know to buy on pull backs, kind of condescending imo
For me - getting the November dividend and exiting NTI is looking like a good plan, I get the feeling we may see large exit next month but with little public interest it may not happen -me, I will be looking for the door soon. Getting the November divi and 27 would make me happy.Going to miss her though.
NTI Stock Dividend Data
Dividend Yield 18.08%
Basic Materials Average 7.13%
Annual Payout $4.76
Paid Quarterly
Payout Ratio
118.7%EPS $4.01
Dividend Growth
2 yrs Since 2013
This "deal" is not a deal for us retail guys. We knew that going in. And sugar coating is standard practice, something else we know.
The situation is not going to go our way. New ways need to be discovered, implemented and, hopefully, enjoyed.
$27.62 is the figure I found, by the way. Don't remember where but it seemed realistic at the time.
Deal is 26.79 according to the SA math. OK Who is selling at 26.40? Any why iif WNR is saying they will pay 26.79 are they not buying all they can 1. at a discount and 2. for voting at less than 26.79? This should not go below 26.79 if folks get the memo that we can't change the WNR plan back to our benefit. All the recent events back to mid September... downgrade , unplanned "unexplained" work, etc. should be scrutinized. How about the bank/downgrader... same? Are they providing the loan to steal this and getting the free money from Fed to turn around and make a couple points on the deal? I think so!
The SA article pulls things together fairly well although it fails to adequately address MLP vulnerability to altering fundamentals of which the crack spread is certainly a leading indicator. Nor is attention given to differences in yield and/or income stability.
Looking back, I guess I think it's a pretty poor piece.
As for stating that ALDW and CVRR are not liked as much, most of us seem to feel similarly as our NTI positions are greater than those in the other two. However, to say that neither should be purchased until there's a pullback? who among us would be stupid enough to not know that? By the same token, I'll bet you that not a single one of us board regulars is adding NTI these days, given the obvious uncertainty brought on by WNR coupled with the significantly elevated unit price resulting from the WNR proposal.
Your thoughts? I hope everyone will chime in on this as it affects the lives and livelihood of every one of us.
Thanks!
http://seekingalpha.com/article/3612256-northern-tier-energy-what-to-make-of-the-western-refining-takeover?auth_param=46e5d:1b3178d:7e3cabb6f68c92e0eea1d01384d889e9&uprof=45
Northern Tier Energy: What To Make Of The Western Refining Takeover
Oct. 28, 2015 6:00 AM ET | 4 comments | About: Northern Tier Energy (NTI), Includes: WNR
Disclosure: I am/we are long NTI, KMI, PSX. (More...)
Summary
Western Refining is to buy Northern Tier Energy for $17.50 in cash and 0.2266 in stock.
This represents a premium of ~15%.
I believe this is not enough of a premium to buy out one of the best located refiners out there, but WNR controls NTI’s destiny due to its large 38% stake.
Western Refining (NYSE:WNR) has recently proposed to acquire all of Northern Tier Energy's (NYSE:NTI) common units for $17.50 in cash and 0.2266 of a share of WNR common stock, a 15% premium. At current prices, this comes out to a total consideration of ~$26.70 per unit of NTI.
NTI Total Return Price Chart
NTI Total Return Price data by YCharts
A deal was bound to happen sooner or later
That NTI is being bought out by WNR should not come as much of a surprise. After all, the refiner purchased a 38% stake in NTI and the general partner interest back in late 2013 for $775M (~$21.15 per share). This stake was being held by two private equity firms who had been slowly paring down their position for quite some time.
At the time, it was speculated that WNR would want to either do two things with NTI, either drop down assets into the MLP structure or buy out the whole firm.
Many thought the latter scenario was more likely. As a MLP, NTI has traded at a higher valuation compared to WNR. In 2013, the EV/EBITDA multiple of WNR was ~3.3x, half that of NTI's 6.7x. If WNR were to drop down downstream or sell assets directly to NTI, the company would have seen a massive benefit from the multiple arbitrage.
However, the worsening outlook for the MLP structure, due to the low price of oil, has made such a scenario unlikely. Since NTI retains no cash flows for growth, it would have needed to sell equity to fund any transaction. With the way energy stocks are trading, NTI would not have gotten a good price for its equity.
Though, the second option, with WNR consolidating the whole of NTI, is not that bad either. NTI, due to its location, has an advantage over other refiners. The company has access to discounted Bakken and Canadian crude feedstocks, allowing it to boost its refining margins well above what the crack spreads indicated. This can be seen with the often 20% annualized distributions paid by NTI. WNR will benefit greatly from adding NTI's assets to its own.
Furthermore, compared to others in the sector, NTI has one of the best refinery locations. Though, the main drawback is that by having only one refinery, the company is hurt whenever operational issues force a shutdown. This was put on display in 2014 when a minor fire resulted in a much-reduced distribution for one quarter, and for the recent Q3 2015, when unplanned maintenance took the refinery offline for a few days. In other words, NTI carried more risk than the more-diversified WNR.
Is the 15% premium enough?
In my opinion, WNR is stealing NTI at the current price of under $27 per unit. Sure, investors would get an upfront premium. NTI's unit price was already trading above $27 per unit as early as August, when the Whiting refinery outage boosted crack spreads across the country.
In addition, NTI's share price is down in recent weeks largely due to the impact of the unplanned maintenance and the Refinery Outage. I believe the stock price would have organically recovered to near or above the current offer price from WNR just via its fundamentals.
Conclusion
Overall, I am not too happy with this proposal. NTI is worth more than WNR is offering. However, given that WNR owns so much of the common equity, I doubt we'll see the acquisition fail. In any regards, at least we'll have the option to keep some equity in NTI via the token 0.2266 per unit stake in WNR.
As to where to invest capital now that NTI is being sold, I do not like the other downstream MLPs Alon USA Partners (NYSE:ALDW) or CVR Refining (NYSE:CVRR) as much as NTI and would wait for a pull back on both. If I were not already long, I would probably pick Phillips 66 (NYSE:PSX) among the refiners, with Valero (NYSE:VLO) as my second choice.
I will soon be taking some profits in NTI and buy more of another distressed energy stock, namely the pipeline giant Kinder Morgan (NYSE:KMI). Though, I will wait for the next distribution, which will likely come in mid-November.
We both recognize that NTI's being swallowed up by WNR is going to happen and with it, our hi-yielding beauty. I've found few companies capable and determined to reward shareholders like NTI has, so its demise is going to hurt. For all intents and purposes, CVRR is already controlled by C. Icahn for the most part. Alon may be the best alternative out there, save for some more traditional REITS.
WNR has done well over the past couple of years, gaining wider spread recognition from rating agencies. However, that doesn't diminish my sense that NTI (and we unit holders) are about to be raped.
If this plan of theirs has been in the works for some time now, I'm wondering if it will impact on the amounts set for quarterly distributions? The whole thing stinks, of course, as WNR has been extremely close-mouthed about their intentions dating back to their announcing they became the General Partner.
Bad deal for all except WNR... no thank you. Not long ago their stock was the most shorted stock in energy... 39% in 2013.
I suppose we all oppose this deal!!! Won't it take months to hash out? If and when it goes through I'll head to ALDW and CVRR with the profits!!! I'll be reading all opinions on this deal!!!! Thanks!!!
Well I have enough conservative holdings in my 401 and Ira -I am like a gun slinger in the wild west on my E-trade and Scottrade accounts -I want more risk and more reward outside the box - this is why I am trading online WNR does not have enough bang for the buck if I have to pay 40+ that's just me. I would rather push into ALDW as I am heading that way in the near future anyway - early voting already started- will let everyone know the outcome as it will clearly effect ALDW and its market next year.
I'm with you on ALDW, realized it would be the smarter choice if we lose control over NTI due to WNR's 38% held now and likely as not a greater percentage forthcoming---even without this proposal going through.
WNR's payout history isn't terrible, paying about what GE does and I've got a nice bunch of that. However, my cost basis in GE is ridiculously low as I began during the banking crisis and kept part of my original stake despite skimming healthy profits along the way. But WNR is just another company whose stock has reflected increasing value and is loved by analysts. But not by me.
Actually, WNR's payout history isn't so bad if you like getting paid in pennies. I prefer the drama of an MLP, regardless of payout history. Today's news, for example, is hardly bad although I sense we both might prefer that the situation hadn't arisen.
I have a feeling the cards are already stacked in favor of WNR/s proposal. The Committee, legal beagles, insiders negotiating for us---they'll clean it up to clear SEC issues and hurdles but I won't be especially trusting of the process as nobody takes care of me like I do. I've been adding units of NTI lately without thinking about WNR. It's been solely a case of liking NTI and feeling comfortable in having handled my positions sensibly.
Why do you point towards ALDW and not CVRR? Is it the asphalt connection alone?
First thing is why would NTI sell out ? WNR can only drag down the payouts for those that go along - 42 dollar stock ????- could be more motivation for me going into ALDW
look at this poor payout history - I am out on WNR no reason for me to want to buy/own it.
http://www.nasdaq.com/symbol/wnr/dividend-history
Nothing good here imo for NTI share holders
A partial answer to questions raised in my earlier post:
It is anticipated that the Board of Directors of NTI's general partner will delegate to its Conflicts Committee the authority to consider and respond to the proposal and that the Conflicts Committee will engage its own independent legal and financial advisors in connection with considering the proposal. The Board of Directors of the general partner of NTI caution the unitholders of NTI and others considering trading in the securities of NTI, that the Board of Directors of the general partner of NTI has just received the proposal and no decisions have been made by the Board of Directors or its Conflicts Committee with respect to the response of NTI to the proposal. There can be no assurance that any agreement will be executed, or that any transaction will be approved or consummated.
The proposed transaction is subject to the negotiation and execution of a definitive agreement and approval of mutually acceptable definitive documentation, and approval by the NTI Conflicts Committee, Western's board of directors and the common unitholders of NTI. There can be no assurance that any such approvals will be forthcoming, that a definitive agreement will be executed or that any transaction will be consummated.
For me it comes down to;
1. Will the MLP status be affected?
2. Am I improved in the future by WNR's strength?
3. What/who will represent NTI holders via counter offers?
If there's a chance that NTI will be swallowed up and cease to exist as an independent MLP, I'll sell at or near $27.50 which is slightly under the currently valued proposition and then I'll scour for other opportunities.
WNR is a fine company. However, shareholders of that company haven't fared nearly as well as have we of NTI. And at my age I'm not willing to sit around, waiting to see what WNR has in mind. When WNR became the General P, I was questioning what they had in mind. It was never revealed, something that has bothered me ever since. Circulating rumors at that time recognized the possibility of WNR's placing certain of its assets into NTI to firm up the operating base of both business entities.
Similar rumors will likely abound once again. This time, though, I doubt I'll be quite as impressionable, owing to WNR's failure to apprise us of any intentions earlier on.
The unit price is bidding much higher in premarket, by more than $2. Obviously a lot of market players smell short term opportunity here.
I'm seeing that I can pull ahead today but I want more than a windfall profit. I want NTI!
Western Refining offers to buy Northern Tier Energy for ~$2.52B
Oct 26 2015, 07:28 ET | By: Carl Surran, SA News Editor [Contact this editor with comments or a news tip]
Western Refining (NYSE:WNR) says it has offered to buy the shares of Northern Tier Energy (NYSE:NTI) it does not already own in a deal that values the refiner at ~$2.52B.
WNR, which currently has a ~38% stake in NTI, says it has offered $17.50 in cash and 0.2266 of its share for each NTI unit.
This concern for tax considerations is surprising me. I don't do my own tax prep, deferring to a fabulous accounting firm at the opposite end of our country---I'm in southernmost Texas while Joy and her firm are in Seattle, WA. She's incredibly hardworking and well intentioned, handling everything I throw at her.
My tax stuff is probably as complicated as you might imagine. Buying and selling stocks is part of the picture, also long term sales versus short. Then there's the fact that I'm over 65 and collecting social security monthly. Also I have a duplex on the ranch plus horses and more...so you can see this is more difficult than most individuals might handle independently.
That said, I'm the wrong person to give advice or even pretend to know when it comes to taxes. My CPA is so thorough, it seems to me that she'd have expressed concern by now if there were reason for concern. Or it may be that this whole tax worry is over nothing.
One thing is for absolute certain: At times I have had up to 9,000 units of NTI. When units are above $27 as has happened in the past couple of years, that meant I had a quarter of a million dollars in this one company. That is a lot of money for me to have in an "aggressive account" as opposed to the purchase of land I think of as "passive." If I were opening myself to needless taxation, it would have come up, surely.
There have also been two passive purchases over the past twelve months involving land. I sold a lot of NTI units to come up with part of the cash for the ranch and then a follow-on purchase of five acres more. I don't hesitate to think of cash tied up in stocks as available cash for that's exactly what it was when I purchased units or shares. And it keeps me flying straight to always recognize that stocks are just another word for money except for the risk involved. MLPs lessen the risk factor for me.
If I were afraid of the potential tax bit, I'd go to H&R Block and tell them flat out that before I'd consider them for handling my tax work, I need to know the implications of this discussion. I'd be watching the advisor to determine his/her familiarity with my situation and then take it from there. Meanwhile, I'd stand to discover the answer to your question. Thus it might be a win-win for Block and me.
You're sniffing around and I'm sure you're going to get answers. Please share them here and, if you'd be so kind, also at the CVRR and ALDW boards. This is an instance where we all get to work together for the greater good that common interest offers.
Thank you!
Day to day I will usually be buying and selling frequently throughout the week. The returns on my investments in stocks are so good that I don't care about the cost of my tax preparation. However, my bill for tax prep covering 2014 came out to right around $500. That is a trifling amount when you consider that I'm raking in a nice income.
Please tell us a bit about the tax complications in terms of filings for you getting in and out of NTI as often as you do.
Do you do this yourself, hand it off to an accounting/tax group etc.?
That is a consideration for me in trading NTI.
Thanks
Earlier this week I mentioned that I added 200u of NTI. Did it again minutes ago---at $24.03. I don't pay too much attention to what the pundits have to say when it comes to helping me decide whether to add, drop or stand pat so thank you, Citi! When I see NTI available at around $24, I figure it's time to forage.
This is pretty simple stuff... I don't live for each quarter's distribution. But I definitely pay attention to the overall picture. That means I average the year's 4 quarters. If I like what I see, I continue to hold and I'll certainly add on swoons of magnitude.
I thought I'd done really well, picking up some ALDW earlier in the week but obviously lost some ground today although I'm nicely ahead of my buy point.
But NTI stands out right now in that it dropped earlier in the day, affording a nice buy at just above $24; closed at $24.23 for a tidy gain over the last twenty minutes or so. More important is that I think this stock is not going to disappoint, come the day next month when the General Partner will declare Q3's distribution to be paid a couple of weeks later. Will it pay the dollar I expect of CVRR and ALDW? Probably not, what with having suffered some down time that affected throughput. But here's the scoop:
Northern Tier is a great company! I've been in it since its first quarter of operation as an MLP. It's handed me a lot of money. I put an awful lot at risk but my instincts reassured me it was a smart move. And it has been a spectacular payer.
Because of the damaged Q3 throughput, I saw fit to move some cash out of NTI and into CVRR and ALDW. This is a calculated risk which is another way to admit I don't know what the hell I'm doing but I sure hope I don't wind up with egg on my face. lol Still, I've got 4,030 units of NTI, alongside 500 CVRR and 1200 ALDW. And if NTI states that the next distribution will be pared all the way down to 50 cents? It's still a couple of grand alongside the other two that will probably pay about $1 each. That's decent money.
There's no such thing as a sure bet but I figure that over the next two weeks we're going to see a generally rising trend in our three MLPs. And I have every intention of riding the wave. Next week may well present the last gasp opportunity for those of us with dry powder and the belief that these picks will continue to reward the faithful. If so, I think it's a sure thing that units will be rising into early November when NTI and ALDW let it be known how we co-owners will fare. CVRR declares on 10/29, I believe. If all goes well next week, it could portend a bit of what we might expect with the other two.
Good fortune to all!
back to NTI
Here’s my take on the distribution for q3 >$1, but depends on the cost of the Q3 unplanned maintenance, $$ set aside for the cash reserve, and how much total PADD production remains off-line. I wonder how much the non-cash loss on held inventory will be as crude prices have fallen a bit betweem Q2 and Q3 (10% at least).
That will impact the earnings report.
Q4 looks worse then Q3, even with no downtime, as the cs and Bakken/WTI differential decline. On the plus side, the WCS/WTI differential is high and growing (poor Alberta).
I assume that NTI is still using as much WCS as they can.
Interesting news in the refining report week ending 10/16
“ongoing downtime in PADD 2, with over 500MBbl/d to remain offline into November” --- Good
Crack Spreads PADD 2 Chicago 2:2:1
1.5% 3qtr increase over q2 in that PADD 2 CS ---Q3-Good; Q4-Bad
4Q14 $19.93
1Q15 $18.81
2Q15 $21.87
3Q15 $22.29
QTD 15 $18.41
10% loss in NTI output in Q3 –---- Very bad
2.5% decline Bakken/WTI differential in Q3 (Q4-50% decline so far). Bad; Q4-Very bad
27% decline in WCS/WTI y/y ----- Very good
Yep! And I picked up 200u of NTI at $23.93 about a half hour ago.
Looked back from August I see I was selling trading units at $25+ down to around $24.50. This is a no-brainer for me as it makes money for me over and over again. And even if it didn't? Great company to co-own, I'm happy as a lark to be doing this with NTI.
And if we dip further I'll be adding more.
Hope you're well and finding good opportunities, too!
Well my friend... here are your 23's...
This is my first year owning NTI so I'm hoping it may not be too costly. Let me know if you're able to find your information!
I would not even want to offer direct advice, as it was given to me when I was totally ignorant of the law. (Caught me by surprise)
That said, it was not total distributions received > $1000, but a portion tied to the income breakdown. I will try to find the info I had, to give you a specific line item for the "unrelated income" that is directly effected by the IRS code.
The penalties were the saber-rattling scary sort where the funds would be treated as un-taxed income from prior years, and penalized for removing them from tax deferred or tax-favored accounts. It is never the IRS audit in the same year that's scary, its one where they reach back a few years, and penalties and interest start on that date.
Stryker, I am just below the $1,000 mark. Would you suggest I sell NTI in my Roth to avoid any penalties? Do you know what the penalties are? Is it basically the same as owning NTI in a non-tax-sheltered account?
I'm too young to have a tax advisor (28), granted that sounds foolish to say. I have a sneaking feeling that if I consult a tax professional I'll probably end up spending $500 on tax advice.
Thank so much for everyone's input on this! I wish most of my money wasn't tied up in my Roth!
Mine would have been as well, in an SAR-SEP account (similar to IRA, but grandfathered when they were phased out ) ~ when I received a call from my financial adviser, suggesting caution ~ and sending me the tax-code related items.
I just reduced some MLPs in the retirement funds, and included more in the non-retirement accounts. I had the same plan to just let it re-invest as a no-brainier.
It is definitely in the current U.S tax code; would have applied to my situation, I adjusted to avoid tax issues. Was just sharing since some raised questions re: holding in the post-tax holdings.
I meant to add that the Roth and one of the IRAs account for at least $8000 annually. It's a back of the napkin thing but certainly waaaay above that $1,000 you mention.
I've got three IRAs, one of them... a Roth. There hasn't been a single instance of penalty assessment. Not to say you are wrong or your information incorrect, only that there's a disconnect somewhere in all of this. I'm unable to say anything definitive as I haven't the information.
Still, I appreciate your stimulating things around here---good information leads to smarter decisions and wiser investors.
Now then, why am I so freakin' stupid? lol
Yep!
69 and a half is the official launch point for mandatory withdrawals.
And owing to the nature of our MLPs, there's a only a small portion to be taxed even if not in a sheltered account.
Bottom line: I ALWAYS make money on our favorites with NTI being the front-runner. That has me feeling I'm in the catbird seat without any queasy feelings whatsoever.
There can be penalties if you make over $1000 a year in income from the MLPs in an IRA.
Google / Look up:
"MLPs in an IRA Unrelated Business Taxable Income"
You probably know.... having passes the threshold.. at 70... 5% per year forced ira distribution starts there doesn't it? A small part of the distributions from MLP's are taxable too?. Not much. Return of capital mostly... until sold tax is deferred. Tax is permanently avoided by inheritance and cost basis is stepped up to that date of inheritance. That gift was from Ronald Reagan in 1986. Many see it now as low hanging fruit for congress :(
That's amazing! I know Texas has long enjoyed some of the lowest rates for gasoline in comparison t the rest of the country. But $1.80? Wow!
We are at about 2.50 up north. State tax disparity does not account for all the difference. Margins must be all over the board. Strip away the taxes etc. and 1.30 is the futures wholesale unleaded price through the end of year and winter with seasonally lower US consumption. We were down in the 1.80's retail at the low late last winter. Where it will bottom this time around is anyones guess. Supply has been increasing...
http://www.cmegroup.com/trading/energy/refined-products/rbob-gasoline.html
My wife has both a Roth and a conventional IRA. I manage the accounts as both are stock oriented. Her Roth holds about 800 units of NTI, and I have it set up as a DRIP. We've held units in NTI in this account since it first opened to public trading as an MLP.
Ameritrade has never said a word about it, nor has our accountant. There's a caveat here, however, in that we have yet to withdraw money from the account. She is now 69 1/2 so I may not be seeing the whole picture. However, I'd bet that there would have been a notice from the government and the brokerage, were fees becoming due.
I'm not a tax authority by any means. I'll suggest you call your CPA or any prominent national chain such as H.R. Block to ask.
Good question that many of us would find interesting!
Gas has been running in the $1.92 to $1.96 or so range here in south Texas for the past two weeks or thereabouts.
My position is currently held in a Roth IRA account. To my knowledge, dividend distributions to Roth IRA accounts are still tax free, however I just read an article on Investopedia the other day stating that if you own certain MLPs in a Roth IRA account you may still owe taxes.
Does anyone have any experience or thoughts on this?
Thanks so much!
Enjoy the NTI CVRR and ALDW boards...Great group!!! Holding 1,000 units @ 24.56 and will continue to hold NTI...Keep up the great work!!!!
The other two refiner MLP's could pay slightly more than NTI next month due to the 15 day repair to one of NTI's 2 units. It could still be close... I have smaller positions in the other two. I am betting all three will outperform with more than double the the yield of the traditional pipeline MLP's.
I think gasoline will dip below $2 a gallon before the end of December as others have predicted. Supply from old AND new technology is not likely to fall below or near world demand for a long time, maybe years... The world is building storage also as fast as possible to help deal with all the crude oversupply, imo.
Welcome aboard jochle! There are plenty of "silent partners" here and all are welcome to add their opinions or ask questions. Whatever the payout is I am confident it will be the best yield of any MLP's I own or follow. NTI is vertically integrated and enjoys strategic advantages.
Because it is variable distribution most of the talking heads are not going to recommend it. Some, like Cramer, tell people to avoid it. Glad I ignored that advise three years ago and have received 25k in distribs! The three new refining MLP's are a new chapter in the sector as far as I can tell and will keep gaining respect and investors seeking generous returns. GLTA!
Hey everyone,
I've been watching NTI for some time. I'm much newer to the market, MLPs and NTI than you, however I'm eager to learn more. I've got just over 500 units in NTI.
I've been watching this thread for some time to learn more about how the stock is performing and to glean information I can't find elsewhere. I appreciate all of the conversation that takes place.
I was reading through the last few threads I missed and noticed Catdaddy's comment about managing and scheduling drivers. Obviously this isn't the place for sales pitches or solicitation, but I just wanted you to know that I work for a telematics company - focused on driver safety, cost savings, and business process improvement. If you don't already have telematics it may be something to consider looking into if you plan on continuing to impress your team!
Let me know if its something you're interested in and I can provide some additional information.
I know I never comment, and it may sound odd, but I do feel like I've started to get to know each of you, even just sitting here in silence.
Lets hope for that $1 distro!
Well, today we find oil is about flat (up 4 cents two hours before the close of trading. NTI is down just shy of a half dollar, CVRR is down 22 1/2 cents and ALDW is under by three pennies.
I'm not making much sense out of this information. Two of our MLPs are about flat, keeping in mind that the Barclays upgrade yesterday was probably the primary driver pushing ALDW. It was higher, still, early today but has gone the way of crystal radios. With NTI testing lower waters, I'm leaning towards this as part of the churn I've been noticing. After all, with no news out there to affect the NTI price, what else might explain noticeable drops or rises in unit price?
If this is the case, then I'd be watching to see if NTI tests the $23.50 area in the next few days. And I could believe a simultaneous drop in ALDW to $23. The Icahn connection may be enough to support CVRR at something above $20 but I'm guessing here.
Heck, I'm guessing on everything but it's all I've got to go with.
C'mon, folks---help me out here with your ideas!
Pete and catdaddy.............
Both of your stories are inspiring. For me, it's what my MSW wife calls "resilience." Social workers do all they can to help the disadvantaged assimilate meaningfully. This means the idea is to engage in an ebb and flow process wherein we give, we're compensated. For me, personally, the most important element has to do with how we choose to assess and spend our blessings.
Buying units of ALDW at good prices yesterday was exciting as I believed that prices paid would soon reveal profits. Seeing yesterday's closing price to be above my new unit cost was slightly nice but not more than that. And now, seeing it still higher is---well, again, nice---sort of.
It is so easy to look out my office window at home and view the prettiest 16 acres in the world! The corral, barn, shelters, horses and donkey, bunnies and doves and a flock of guinea fowl---these are joys. Yet it is through our stewardship that any of this can even BE!
As portfolio managers, each of us bears responsibility if only to preserve capital. So we read and share ideas and information here. We examine our results and scour the universe searching for other opportunities, should the sky fall in on this particular planet.
Each night I tally...a spiral pad tells me each day's closing net value. Fridays I do a weekly reconciliation so that I can always tell how effectively I'm managing things. And in this fashion I can compare the latest numbers with those of previous weeks and months. It keeps my ego at bay and me honest.
But behind all of this is an indisputable reality: I am so incredibly lucky to live in this! I'm in the environment I've wanted all my life with the right woman who is my wife and chief resident farmer constantly adding flowers and shrubs; on land awesomely beautiful with acres and acres of gorgeous green native grasses snuffing out sunflower-like weeds. This land will soon feed the sheep I'll be buying and sheep stewardship will nourish my soul.
There's a balance to be appreciated when life's stormy nights give way to breathtaking sunrises. I don't try to explain things beyond my comprehension but I know when I have an awful lot of reasons to be thankful. So I have to say, then, that I'm thankful to be alive and able to share such life experiences with you.
This has been quite a moment we've shared. I hope others here will join in without fear or even forethought. We're all in this together, no question about that. And we share that sense of responsibility to help one another prosper. I doubt that it's much about the money, it's the sense of balance deep down that tells us it's OK to be happy...to laugh, to love and best of all---to be.
Pete and catdady.............
Yours and Cats stories brought back a lot of memories... I too have been through it all and kept my faith...
When I was almost 13 my cousin shot me in the eye with a BB gun. I spend my birthday and two weeks in the hospital with both eyes covered. My mom read Huckleberry Finn to me cover to cover. Finally the eye pushed the copper shot out far enough to squeeze it with a tweezer. The eye healed itself.
Tens years later just before my 23rd birthday my house burned down while I was in Wyoming with my girlfriend who is now my wife. Friends said we might as well not come home as there was nothing left. I had only my clothes and lived in a pickup camper in a friends driveway. We got married and I became a logger for a year working outside in the North woods. Winter that year was normal and snowy but it felt warm working outside. Our daughter was born in April the following year and was the most beautiful thing I ever saw with lots of black hair. We rented a tiny house for $75 a month and were very happy. Our son was born three years later. We both worked hard and lived within our means. She went back to college and got her degree and masters, after our kids were in school. I worked as a truck driver, a store manager, a buyer and business owner when interest was 22% to bankroll our inventory. We sold the main business to pay the bank when the bank president got in trouble with a relative's bankrupt loan, ...he asked others to pay some of their principal back to cover the bank being scrutinized by the examiners. We decide to sell and pay off the whole loan. We kept a chain saw dealership and two gas stations, one of which went through a $120,000 pollution cleanup from previous owner leakage. We paid about 20% of the bill over 10 years and the rest was funded by the state superfund. It sill cost us 25k! We closed the station and chain saw business after that and rented the building out. We still own the property and it now has a decent cash flow. The rent over the years paid the street improvement assessment of $33,000 in addition to our original loan. In the last year the cash flow has come up a lot with the assessment payoff finished.
I went on the road as a salesmen earning only direct commission. I became the top salesman in the US at my agency for two years in the late 90's. It put my kids through college and paid our college loans, house, cars, and additional second mortgage loan. Another bank had loaned us 100% of the cash for an airplane on floats, which also was paid off during that time. I finally sold it last Fall after owning it 20 years. Those 21 years in sales made all the difference. I represented some of the companies I had bought from during my retail experience. I do not envy retail business owners.
Other experiences taught me the life lessons I needed to be successful. Before we were married we planted trees for a government contractor at 9,000 ft in the Cascades. It had been clear cut in the past and was eroding. I became foreman after an accident with failed brakes on a pass put much of the crew in the hospital. When we finished the contract we started home and were in Jackson Hole when we received news about the fire.
I helped build apartments as a framer when I was 16 yrs old. I learned how wood frame buildings are constructed and built my own barn in my 50's.
I learned early not to envy the rich. My dad used to say "Money creates just as many problems as it solves." He was a successful business owner but sold at the peak and retired to hunt and fish. I know lots of wealthy folks now that do not seem happy...
When I retired I took over all my investments and promptly lost a bunch of money bag holding a stock I could have made big on... Just another lesson in life. I still have a lot to learn. :)
You are, indeed, an amazing person! People bandy about terms of God this and church that. But it takes a real man to understand and fictionally attempt to step into another's shoes in the hopes of sharing the same air and linking up to another's feelings. You're one who is quite capable of jumping head first into life itself.
The top eye surgeons at Rice and Baylor insisted I would never see again. A Metrolift bus (for the blind) brought me to the gym I attended. I was doing laps in the pool when I was shocked. I saw enough to feel my way around the stairs but not drive or read. But in a crazy moment I saw words on something. I picked up those "words" which was the corner of a magazine page that had landed in the pool and landed on the bottom. I realized water magnified the print due to my leaky goggles I used to offset pain from chlorine. That instant told me I'd read again with some sort of magnifying instrument.
I'm a crazy researcher and figured a few things more---I decided to have a surgeon do a cataract on my dead eye and other surgery on the other. He was opposed but did it. It restored a significant amount of acuity. He had glasses made up with no prescription in the second eye and a partially corrective lens for the cataract eye. Something moved me to take the glasses and reverse them, holding them backwards over my eyes but the corrective lens now covered the dead eye.
Voila! I could read the chart for both eyes! The surgeon took no money for the surgeries, explaining he's an ophthamologist but also a civil engineer and this was the most unbelievable thing he'd ever seen. I'm not into religion but he was an angel. lol
We both got lucky, I suppose. But in the dozen or so years since, I've come to respect those daring to confront their worst nightmares, prepared to lose if things worked out that way.
Working the stock market was the ultimate challenge for I knew intellectually that one could make money, lots of it. But we've got to be prepared to take the punches along with the prideful moments. Still, the intellectual pursuit coupled with good instinctual responses has enabled me to do well.
I've also learned that only a fool brags about his conquests. Like you, I know we are all here by the greatest bit of good fortune. Nobody gets anywhere alone and it's not distance that has value but finding ourselves not alone. After all, how much is my laughter worth if I'm laughing alone?
Thank you for your eloquent post. As I've said before, you most certainly are a treasure to be enjoyed by us all.
jugs that is nothing short of a miracle on your eyesight being restored. Our health is priceless, its not all about money I learned that the hard way when I was young.My mom used to always tell me money cannot buy happiness and I would respond" it buys everything that makes me happy" I climbed up the cash mountain real early then took a fall out off the top. I came into some really bad times.Looking back I now know it was reaping some things that I had sown.I ended up losing everything I owned down to the clothes on my back, I was truly broken by life. Only then did I look up and realize what really is important, my health, my family and my fellow man. We are all put on earth to help one another but somehow in my prideful escapades I lost sight.It was a slow rebuilding process but I felt free for the first time in a long time and I was flat broke but happy.
Once I was willing the teacher did appear and my life got slowly back on track, the right track with a spiritual foundation. I am not a super religious type of guy but I most certainly believe in God.I now have 5 grown kids 4 girls and a boys 10 grand kids and one great grand child as my 16 year old grandson got a girl pregnant last summer. A disaster ? no because I have learned one thing about babies- they come into this world when its time to come ready or not -lol and who are we to say?
Again what a blessing to have your eye sight restored I can't even imagine how life would be with out my vision - we earthlings take a lot of things for granted and need to be grateful for what we have- not what we want.
I hope all eyes are peeled on ALDW---trading at nicely under $24. People just don't get it---thinking that lower oil translates directly into lower profits for the refiners. Now, while the crack spread ain't what it was until fairly recently---the fact is that we have every reason to expect that the next distribution will be fairly hefty. And as I see it---suppose payouts are less, even 50%? These are still great income producers for those comfortable owning them.
They are not risky insofar as going concerns may be. Instead, it is the fact that they are "variable" payers. We never know what the amount of our income production will be until corporate guidance is issued. And this is on a quarterly basis without benefit of long term knowledge as is often the case with companies such as GE or BAC
where investors often know what to expect for the rest of the year.
I'm OK with that. What the heck---this isn't my only income source. And with positions in all three MLPs, I'm feeling well enough cushioned.
I hope everybody here recognizes the "rolling churn" evident in ALDW today. We've seen it in NTI, certainly. And CVRR is hardly a stranger to it. I'll bet that a check of volume for each of these during episodes of churn will reveal that each MLP is, indeed, being played---aka manipulated. However, I think I'm not any better, stylistically, for here I am---taking advantage of these swoons, however they may be induced or by whom or what.
We are here because we're hungry for self-enrichment. It can be a beautiful thing---this self-serving act of foraging. And I love it!
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Northern Tier Energy is an independent downstream energy company with refining, retail, and pipeline operations that serve the PADD II region of the United States.
Refining BusinessNorthern Tier’s refining business primarily consists of an 89,500 barrels per calendar day (96,500 barrels per stream day) refinery located in St. Paul Park, Minnesota.. The refinery’s complexity allows it to process a variety of light, heavy, sweet and sour crudes into higher value refined products.
The St. Paul Park Refinery is one of only two refineries in Minnesota and one of four refineries in the Upper Great Plains area within the PADD II region. The PADD II region covers Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Ohio, Oklahoma, Tennessee and Wisconsin. The refinery’s strategic location allows it direct access, primarily via the Minnesota Pipeline, to what the Company believes are abundant supplies of advantageously priced crude oils. Many of these crude oils have historically priced at a discount to NYMEX WTI.
The Company will seek to benefit from access to growing crude oil supplies. As of [June 2013], the Canadian Association of Petrochemical Producers estimated that total Canadian crude oil production is expected to grow to 6.7 million bpd by 2030 from 2012 production of 3.2 million bpd . Crude oil production from the Bakken Shale in North Dakota has also increased significantly, from approximately 98,000 bpd in 2005 to approximately 934,000 bpd as of January 2014, and is expected to continue to grow due to improvements in unconventional resource production techniques. [April 2014].
The refinery’s location allows it to distribute its refined products throughout the Midwestern United States. The refinery produces a broad slate of refined products including gasoline, diesel, jet fuel and asphalt, which are then marketed to resellers and consumers primarily in the PADD II region.
Northern Tier also owns various storage and transportation assets, including a light products terminal, a heavy products terminal, storage tanks, rail loading/unloading facilities and a Mississippi river dock. The refining business also includes a 17% interest in the Minnesota Pipe Line Company, which owns and operates the Minnesota Pipeline, a 455,000 bpd crude oil pipeline system that transports crude oil (primarily from Western Canada and North Dakota) for approximately 300 miles from the Enbridge pipeline hub at Clearbrook, Minnesota to the refinery. The Minnesota Pipeline has historically transported the majority of the crude oil used and processed in the refinery.
Retail BusinessAs of March 31st, 2014, the retail business operated 164 convenience stores under the SuperAmerica brand and also supported 79 franchised convenience stores, which are also operated under the SuperAmerica brand. These convenience stores are located primarily in Minnesota and Wisconsin and sell various grades of gasoline and diesel, tobacco products and immediately consumable items such as non-alcoholic beverages, beer, prepared food and a large variety of snacks and prepackaged items. The refinery supplies substantially all of the gasoline and diesel sold in the company-operated and franchised convenience stores.
Northern Tier Energy also owns and operates SuperMom’s Bakery, which prepares and distributes baked goods and other prepared food items for sale in the company-operated and franchised convenience stores and other third party locations.
A more indepth presentation of NTI:NYRS ~ GS Presentation FINAL.pdf
WEBSITE:http://www.ntenergy.com/
tax advice http://www.dividend.com/dividend-education/everything-dividend-investors-need-to-know-about-mlps/?utm_source=Dividend.com+-+Free&utm_campaign=8b232b0694-Dispatch_free4_3_2013&utm_
K-1 tax information available on line. See web site under Investors
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