Spekulatius Posted March 4, 2018 Share Posted March 4, 2018 i have been trying to read up on MLP in IRAs, i guess specifically due to FELP. Should you hold FELP in IRA or a taxable account considering what is currently going on at FELP (no income, potential future distribution and a large cap gain.) I guess the more specific question is if you bought FELP in the past year and has a large cap gain, does it make sense to sell it now in your IRA account to capture the cap gain, assuming you don't have to pay cap gain tax because its held in IRA? and then buy back FELP in your taxable account to potentially side step future UBTI you might have to pay in your IRA????? It is not recommend to hold MLPs in IRA. While it is correct that most MLP don’t generate the dreaded UBITA (unrelated business income) things like hedging games or business reorganization can create UBITA that get even a moderate position over the $1000 threshold. Interactive Brokers forbids even to have MLPs in IRA‘s at all. Link to comment Share on other sites More sharing options...
heth247 Posted March 7, 2018 Share Posted March 7, 2018 Just listened to CC, my key take away are 1. currently leverage ratio at 4.04 2. they have capacity to place up to 11MM ton to export (if the railroad issues is resolved) 3. they are 85% contracted for 2018 already Anything else to add? Link to comment Share on other sites More sharing options...
Bojack Posted March 7, 2018 Share Posted March 7, 2018 I am wondering why FELP is so disconnected from the other coal plays, which generally are killing it over the last 18 months. obviously this is the definition of a special situation, but even as distributions accrue it goes down... any thoughts? imo there are legit questions over when/how the distributions will be paid out... debt is severely limiting FELP's ability to pay out the accrued arrearages and under current operations they will take a couple years to get to the point where they can meet the minimum quarterly distribution and pay out arrearages. there are a couple catalysts to get you there more easily but each of these catalysts face their own legitimate questions like if/when deer run will be back online or if the illinois basin coal cycle will turn im long felp and like the story but i think the concerns out there are valid Link to comment Share on other sites More sharing options...
heth247 Posted March 7, 2018 Share Posted March 7, 2018 I am wondering why FELP is so disconnected from the other coal plays, which generally are killing it over the last 18 months. obviously this is the definition of a special situation, but even as distributions accrue it goes down... any thoughts? imo there are legit questions over when/how the distributions will be paid out... debt is severely limiting FELP's ability to pay out the accrued arrearages and under current operations they will take a couple years to get to the point where they can meet the minimum quarterly distribution and pay out arrearages. there are a couple catalysts to get you there more easily but each of these catalysts face their own legitimate questions like if/when deer run will be back online or if the illinois basin coal cycle will turn im long felp and like the story but i think the concerns out there are valid I think those questions are valid, but does not explain why the share price collapsed recently down to below $4. The most likely reason is due to the nat gas price. FELP is already at leverage ratio 4.04. In less than a year, they should be able to pay out 50% of excess cash flow, which will translate to a doubling of current distribution. Deer run coming back is just a matter of time, and when it comes back, this will be a growth stock despite of being the bottom of domestic coal cycle. Export + Amstrong alone can provide enough opportunities for FELP to grow. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted March 7, 2018 Share Posted March 7, 2018 Conf Call Notes: Leverage ratio at 4.04. Focused on delevering. Ideal leverage ratio is 2.5x. Apparently they haven't been doing any open market purchases of debt. A reference to certain capital expenditures required now, but in 2019, they should be a much better position to delever. Exports were 27% of tons sold in 2017. They seem very confident about placing a similar amount into the export market in 2018 with exports going primarily to Europe, but they also mentioned specifically India, Turkey, Egypt, and Morocco. Taking advantage of rail direct to port for exports while some competitors have recently struggled with river issues. Export capacity could be anywhere up to 11 million tons, but see a minimum of 5 million tons in 2018. I thought I heard them say it could be possible to place 5 million tons directly to India, Turkey, Egypt and Morocco, but I'll have to listen again. 2018 Pricing. Domestic flat. Export could be higher in 2018. 85% of 2018 coal is contracted. Hillsboro charge of $43M related to permanent sealing of that district of the mine. Filed for insurance claim for lost equipment. No more information when they might open Hillsboro again. Referred to "guys in Indiana" who were aggressive in putting supply into market. I'm not sure if this is a reference to Peabody? Murray takeover of Armstrong should help rationalize supply. Link to comment Share on other sites More sharing options...
maybe4less Posted March 7, 2018 Share Posted March 7, 2018 I am wondering why FELP is so disconnected from the other coal plays, which generally are killing it over the last 18 months. obviously this is the definition of a special situation, but even as distributions accrue it goes down... any thoughts? imo there are legit questions over when/how the distributions will be paid out... debt is severely limiting FELP's ability to pay out the accrued arrearages and under current operations they will take a couple years to get to the point where they can meet the minimum quarterly distribution and pay out arrearages. there are a couple catalysts to get you there more easily but each of these catalysts face their own legitimate questions like if/when deer run will be back online or if the illinois basin coal cycle will turn im long felp and like the story but i think the concerns out there are valid I think those questions are valid, but does not explain why the share price collapsed recently down to below $4. The most likely reason is due to the nat gas price. FELP is already at leverage ratio 4.04. In less than a year, they should be able to pay out 50% of excess cash flow, which will translate to a doubling of current distribution. Deer run coming back is just a matter of time, and when it comes back, this will be a growth stock despite of being the bottom of domestic coal cycle. Export + Amstrong alone can provide enough opportunities for FELP to grow. Why do you say that Deer Run coming back online is just a matter of time? Do you have some knowledge/expertise in coal mines? I certainly don't, but was thinking it was a pretty bad sign that they could not put out the fire and had to abandon their equipment. Thanks Link to comment Share on other sites More sharing options...
Patmo Posted March 7, 2018 Share Posted March 7, 2018 I am wondering why FELP is so disconnected from the other coal plays, which generally are killing it over the last 18 months. obviously this is the definition of a special situation, but even as distributions accrue it goes down... any thoughts? imo there are legit questions over when/how the distributions will be paid out... debt is severely limiting FELP's ability to pay out the accrued arrearages and under current operations they will take a couple years to get to the point where they can meet the minimum quarterly distribution and pay out arrearages. there are a couple catalysts to get you there more easily but each of these catalysts face their own legitimate questions like if/when deer run will be back online or if the illinois basin coal cycle will turn im long felp and like the story but i think the concerns out there are valid How are there legit questions if it is established that it will only take a couple years to get to that point? The mechanics work in our favor, more dists accrue to the common while the company deleverages, and when the time comes they will have all the cash flow necessary to make good. It's just delayed gratification, I don't see how that is a negative... Link to comment Share on other sites More sharing options...
heth247 Posted March 7, 2018 Share Posted March 7, 2018 Why do you say that Deer Run coming back online is just a matter of time? Do you have some knowledge/expertise in coal mines? I certainly don't, but was thinking it was a pretty bad sign that they could not put out the fire and had to abandon their equipment. Thanks Sorry, that is just my opinion and I am not an expert in coal mines. They have said that they are spending lots of resources on it, and Murray has every incentive to get it restarted, otherwise his sub-units will never get paid (within 5-10 years). Also, here is some quote from the mayor: Eight members of the Hillsboro Planning Commission met at 12:30 Thursday, Sept. 21, in city hall to both make and listen to reports from their various committees. Mayor Brian Sullivan combined hopefulness (he said indications are the Deer Run Mine will again produce coal, though nothing is certain, including a time line) and remorse (again based on indications–not certainty–he feels the Dynegy power plant west of Coffeen will shutter). One of those indications is the lack of spending on maintenance. He commented, "In an ideal world for the local economy, the mine would reopen and the power plant would stay open," but he feels that's not realistic, so planners need to be aware of the possibilities. http://www.thejournal-news.net/news/mayor-shares-optimism-pessimism-on-economy/article_0d88cd64-a199-11e7-a058-872425db6ac5.html Link to comment Share on other sites More sharing options...
Bojack Posted March 7, 2018 Share Posted March 7, 2018 I am wondering why FELP is so disconnected from the other coal plays, which generally are killing it over the last 18 months. obviously this is the definition of a special situation, but even as distributions accrue it goes down... any thoughts? imo there are legit questions over when/how the distributions will be paid out... debt is severely limiting FELP's ability to pay out the accrued arrearages and under current operations they will take a couple years to get to the point where they can meet the minimum quarterly distribution and pay out arrearages. there are a couple catalysts to get you there more easily but each of these catalysts face their own legitimate questions like if/when deer run will be back online or if the illinois basin coal cycle will turn im long felp and like the story but i think the concerns out there are valid How are there legit questions if it is established that it will only take a couple years to get to that point? The mechanics work in our favor, more dists accrue to the common while the company deleverages, and when the time comes they will have all the cash flow necessary to make good. It's just delayed gratification, I don't see how that is a negative... Why invest in FELP when you can go buy FAANG and make money today? again I think the story is compelling and im long, but I do think these issues are playing a role in FELP breaking below 4, not to mention how illiquid FELP is and the continued dilution as the warrants are exercised. I understand the delayed gratification and am willing to wait, but until there's more clarity there's a legitimate opportunity cost here when there are some other opportunities to make money in places like tech which keeps going up relentlessly. Link to comment Share on other sites More sharing options...
valcont Posted March 8, 2018 Share Posted March 8, 2018 Don't think Murray will bring back the Deer run anytime soon. An asset dropdown from MEC is more likely. I think you guys covered most of the questions. I didn't understand one question about the domestic coal pricing policy. Was he referring to that Perry's Resilience Pricing proposal? Thought that was shot down by the FERC. I like that he is trying to place more coal in the export market. Hopefully we'll hear more in the 2nd qtr. India will be experiencing coal shortages this year. http://www.business-standard.com/article/companies/coal-india-misses-production-target-again-imports-likely-to-increase-118030700219_1.html Link to comment Share on other sites More sharing options...
heth247 Posted March 8, 2018 Share Posted March 8, 2018 Don't think Murray will bring back the Deer run anytime soon. An asset dropdown from MEC is more likely. I think you guys covered most of the questions. I didn't understand one question about the domestic coal pricing policy. Was he referring to that Perry's Resilience Pricing proposal? Thought that was shot down by the FERC. I like that he is trying to place more coal in the export market. Hopefully we'll hear more in the 2nd qtr. India will be experiencing coal shortages this year. http://www.business-standard.com/article/companies/coal-india-misses-production-target-again-imports-likely-to-increase-118030700219_1.html I think that resilience proposal was not completely dead. FERC vote it down and push it to the utilities to determine if current resilience is sufficient and will hear it back in 60 days. Either way, I am not counting on that. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted March 19, 2018 Share Posted March 19, 2018 Coal mine expansion could swallow family farms in southern Illinois https://energynews.us/midwest/coal-mine-expansion-could-swallow-family-farms-in-southern-illinois/ For the Kerns, the farm represents family, the beauty of nature and the cycle of life. But it sits on top of rich coal deposits owned by the Tennessee Valley Authority (TVA) and leased by a company controlled by coal magnate Robert Murray, who recently acquired a majority interest from billionaire Chris Cline. Under a deal Mark Kern’s father signed on behalf of hundreds of local farmers in 1976, the Kerns could be forced to sell their beloved land. The threat has loomed since November 2012, when representatives of the mining company Sugar Camp Energy — a subsidiary of Foresight Energy — began visiting. Ben Cox, a local “land man” hired by Sugar Camp, said the company needed the Kerns’ farm for mine infrastructure and cited the 1976 deal giving them the right to buy it. That’s when Pat took to the trails, to grasp every chance to enjoy and appreciate what she might lose. And maps on file at the Illinois Department of Natural Resources show long wall mining is planned in 2024-2026 in the tract containing the Richardsons’ home. Link to comment Share on other sites More sharing options...
heth247 Posted March 19, 2018 Share Posted March 19, 2018 Fortunately, for 2017, my FELP K-1 form line 20V shows a negative value, so we don't need to pay UBIT... yet. Also, my FELP K-1 form has the IL state schedule showing net income as negative, so I guess I don't need to file IL state tax (I am not a resident of IL state) either. Anybody can confirm this ? Thanks. i have been trying to read up on MLP in IRAs, i guess specifically due to FELP. Should you hold FELP in IRA or a taxable account considering what is currently going on at FELP (no income, potential future distribution and a large cap gain.) I guess the more specific question is if you bought FELP in the past year and has a large cap gain, does it make sense to sell it now in your IRA account to capture the cap gain, assuming you don't have to pay cap gain tax because its held in IRA? and then buy back FELP in your taxable account to potentially side step future UBTI you might have to pay in your IRA????? It is not recommend to hold MLPs in IRA. While it is correct that most MLP don’t generate the dreaded UBITA (unrelated business income) things like hedging games or business reorganization can create UBITA that get even a moderate position over the $1000 threshold. Interactive Brokers forbids even to have MLPs in IRA‘s at all. Link to comment Share on other sites More sharing options...
heth247 Posted March 19, 2018 Share Posted March 19, 2018 Coal mine expansion could swallow family farms in southern Illinois https://energynews.us/midwest/coal-mine-expansion-could-swallow-family-farms-in-southern-illinois/ For the Kerns, the farm represents family, the beauty of nature and the cycle of life. But it sits on top of rich coal deposits owned by the Tennessee Valley Authority (TVA) and leased by a company controlled by coal magnate Robert Murray, who recently acquired a majority interest from billionaire Chris Cline. Under a deal Mark Kern’s father signed on behalf of hundreds of local farmers in 1976, the Kerns could be forced to sell their beloved land. The threat has loomed since November 2012, when representatives of the mining company Sugar Camp Energy — a subsidiary of Foresight Energy — began visiting. Ben Cox, a local “land man” hired by Sugar Camp, said the company needed the Kerns’ farm for mine infrastructure and cited the 1976 deal giving them the right to buy it. That’s when Pat took to the trails, to grasp every chance to enjoy and appreciate what she might lose. And maps on file at the Illinois Department of Natural Resources show long wall mining is planned in 2024-2026 in the tract containing the Richardsons’ home. Good find! Look forward to read the second and third part. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted March 20, 2018 Share Posted March 20, 2018 Why King Coal wants to dig up family farms in Illinois: it’s a sweet deal https://energynews.us/midwest/why-king-coal-wants-to-dig-up-family-farms-in-illinois-its-a-sweet-deal/ Link to comment Share on other sites More sharing options...
jrallen81 Posted April 2, 2018 Share Posted April 2, 2018 Assuming the FirstEnergy bankruptcy is part of the latest move down, just because of the Murray tie? Link to comment Share on other sites More sharing options...
heth247 Posted April 2, 2018 Share Posted April 2, 2018 Assuming the FirstEnergy bankruptcy is part of the latest move down, just because of the Murray tie? Mostly likely it is due to the 2M warrants exercised in Feb. Those warrant holders are killing us by a thousand paper cut...I wish the company suspended the distribution and direct all excess cash flow to buyback. Link to comment Share on other sites More sharing options...
Guest roark33 Posted April 2, 2018 Share Posted April 2, 2018 At some point, people will recognize that FELP and other commodities companies are like roller-coasters, you can make money if you get the timing right, but their value will never really grow because their cash flow just doesn't exceed their capital expenditures and cost of capital. This was an unpopular opinion when the stock went from 2 to 7, but probably not so much anymore. Link to comment Share on other sites More sharing options...
jrallen81 Posted April 2, 2018 Share Posted April 2, 2018 I'm not so sure about that. If they can pay down debt and stabilize cash flows (even if erratic) at a higher level, there is clearly value. Even if they simply increased the distribution over time it would catch attention eventually. Link to comment Share on other sites More sharing options...
Picasso Posted April 2, 2018 Author Share Posted April 2, 2018 I thought I recognized you in the park the other day roark. Link to comment Share on other sites More sharing options...
Guest roark33 Posted April 2, 2018 Share Posted April 2, 2018 100% posted my comment hoping to get a humorous comeback. You did not disappoint!! Link to comment Share on other sites More sharing options...
Green King Posted April 2, 2018 Share Posted April 2, 2018 I thought I recognized you in the park the other day roark. Lol well played. Link to comment Share on other sites More sharing options...
heth247 Posted August 6, 2018 Share Posted August 6, 2018 Quite silent on this board. Everybody feel depressed due to the unit price despite the improved outlook? ;) During last Friday's conference call, CEO said something like "there is no limit on FELP's export volume". But I remember earlier this year on another call, he mentioned something like "11MM tons limit due to the railway". This is conflicting information. Anybody knows why? Link to comment Share on other sites More sharing options...
wachtwoord Posted December 8, 2018 Share Posted December 8, 2018 https://www.spglobal.com/platts/en/market-insights/latest-news/coal/120718-foresight-working-to-reopen-idled-deer-run-coal-mine-in-illinois?hootpostid=98b2fd401dd1372a9e1c0b9504121d1e Link to comment Share on other sites More sharing options...
heth247 Posted December 8, 2018 Share Posted December 8, 2018 Hopefully this inactive thread will be rekindled along with Deer Run mine. ;D Link to comment Share on other sites More sharing options...
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