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|Subject: Re: Juicy high yield trading idea||Date: 3/21/2012 8:14 PM|
|Author: persistentone||Number: 33881 of 35499|
If I like to fly in fast airplanes, I want a pilot who can do two things:
1) Fly fast
2) Keep the airplane in one piece so we get to fly another day
Any time you have a situation where the pilot has incentives to fly the airplane fast, but doesn't feel a need to keep the airplane in one piece, you have a problem, particularly if you are inside the airplane. :)
By analogy, I maintain that an MLP like ETP with general partner ETE is built to give the general partner strong incentives to keep ETP in good shape. If they reach for too much distribution and "crash" the company, ETE's huge unit holdings in ETP become worthless. This incentivizes them to *both* reach for higher distributions *and* keep the company intact.
I maintain at Stonemor there is an incentive to reach for distributions, and insufficient incentive to keep the company from crashing. At Stonemor, the pilot is flying the plane remotely, and if goes down no big deal to him he will just get a new airplane and fly again.
If you don't see the difference between those two cases, ouch, what can I say. Happy flying. :)
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