|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
NuStar Energy LP: Insider Buying Suggests Potential Near-Term Upside for This 8-Percent Yielding Limited Partnership
Posted by: Elliot Gue (IP Logged)
Date: August 3, 2012 06:03PM
NuStar Energy LP (NS) CEO Curt Anastasio has frequently remarked that he spends 90 percent of his time talking about 10 percent of his business. That’s not surprising given that the 10 percent is a perennially disappointing asphalt business.
NuStar’s focus for several years, however, has been building up its core energy transportation and storage operations. The company will start up two major pipeline projects in the Eagle Ford Shale later this year.
And it has several other projects in various stages of development that will ramp up cash flows in 2013 and beyond.
NuStar will also take a hit in the second quarter at its fuel marketing operation, which suffered from the sharp drop in oil and natural gas liquids prices.
Management, however, has taken dramatic steps to eliminate future risk, deconsolidating by selling a half interest in the asphalt operation and implementing new policies to fully hedge fuel marketing commodity-price exposure.
The moves required a substantial non-cash writeoff against NuStar’s second-quarter earnings, while subpar results at fuel marketing depressed distribution coverage.
Over the long term, however, they advance Mr. Anastasio’s goal of restoring “above peer” distribution growth by systematically building the fee-based pipeline and terminals business.
And management plans to maintain the $1.095 per unit quarterly distribution in the meantime.
There are more than a few skeptics. That’s demonstrated by generally bearish analyst opinion as well as trend-follower Standard & Poor’s credit rating cut.
Insiders, however, have been net buyers, while Fitch has affirmed the rating at investment grade.
NuStar’s 8 percent or higher yield and hefty capital gains potential make it a solid dividend investing play.
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.