The days of a 25% guaranteed return are over......ARLP
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The days of a 25% guaranteed return are over......ARLP

By iwog following x   2016 Mar 4, 10:46am 21,915 views   86 comments   watch   sfw   quote     share    


But you can still get over 20%. =)

http://finance.yahoo.com/q?s=ARLP

#investing

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47   anotheraccount   ignore (1)   2016 Mar 15, 2:36pm   ↑ like (0)   ↓ dislike (0)     quote      

bought some VRX today.

11B in Sales this year. 30B in debt + 11B market cap. Total is only 4 times revenue. My guess this goes up 50% from here in a year. The downside is that there may be more fraud in the company.

48   BoomAndBustCycle   ignore (0)   2016 Apr 6, 7:17am   ↑ like (0)   ↓ dislike (0)     quote      

This company confuses me.... My research appears to show its a 20% distribution not a traditional dividend. Meaning your cost basis drops when they basically are giving you back part of your position as a distribution. Unlike with a dividend where your cost basis doesn't change.

49   anotheraccount   ignore (1)   2016 Apr 6, 7:55am   ↑ like (0)   ↓ dislike (0)     quote      

BoomAndBustCycle says

This company confuses me.... My research appears to show its a 20% distribution not a traditional dividend

That's how most etfs work. It should not matter as long as they can keep up the distribution. I've added some more to this position. I noticed that's it very thinly traded. A market order of a couple hundred shares can move this price 1%.

50   HEY YOU   ignore (7)   2016 Apr 6, 5:56pm   ↑ like (0)   ↓ dislike (0)     quote      

Selling one's shack can return 50% from overpaying buyers.

52   man   ignore (0)   2016 Apr 23, 9:43am   ↑ like (0)   ↓ dislike (0)     quote      

Since ARLP is a LP and generates k1, it's tax handling would be more complicated. Any first hand experience dealing with this situation? I am holding it in my traditional IRA.

53   iwog   ignore (3)   2016 Apr 23, 12:02pm   ↑ like (0)   ↓ dislike (1)     quote      

man says

Since ARLP is a LP and generates k1, it's tax handling would be more complicated. Any first hand experience dealing with this situation? I am holding it in my traditional IRA.

It is quite complicated which is why many people steer away from partnerships.

At the same time, it results in exaggerated returns like 20% so it's a double-edged sword.

I use tax preparation software which allows me to enter the K1 and puts the appropriate numbers in the right boxes. However there is generally depreciation information also included that is NOT handled automatically so you have two choices. You can either IGNORE these tax deductions, which are small on a yearly basis but add up over time, or you can follow the instructions with your K1 package and file the appropriate forms that are generally outside of common software tax prep.

Be warned however that once you sell your shares, you CANNOT use the purchase price as your basis. You will receive a statement showing the real basis after your years of deductions and equity share distributions. It will generally raise your long term capital gains liability, which is a good thing if you've been taking deductions every year. It's one of the tricky ways that rich people convert income into cap gains tax rates.

54   iwog   ignore (3)   2016 Apr 23, 12:05pm   ↑ like (4)   ↓ dislike (1)     quote      

Seriously how did I get two dislikes on a thread recommending an equity that not only paid out 25% when I recommended it, but has also gained 40% in a single month?????

Some of you are fruit loops.

55   iwog   ignore (3)   2016 Apr 23, 12:09pm   ↑ like (0)   ↓ dislike (1)     quote      

BoomAndBustCycle says

Meaning your cost basis drops when they basically are giving you back part of your position as a distribution. Unlike with a dividend where your cost basis doesn't change.

No, they don't give you part of your position back. You can sell and keep 100% of your gain. What they are doing is assigning you both deductions and depreciation. It's like owning a rental house that keeps going up in value while you keep depreciating it for a tax deduction.

When you sell the house, you get all the money, but the amount of capital gains you have to pay on INCREASES by the same amount that your basis DECREASES.

Like with real estate, this is actually a huge advantage, especially when holding it for retirement. You can take deductions while your income is high and pay taxes while your income is low.

56   HydroCabron   ignore (1)   2016 Apr 23, 12:15pm   ↑ like (1)   ↓ dislike (1)     quote      

iwog says

Seriously how did I get two dislikes on a thread recommending an equity that not only paid out 25% when I recommended it, but has also gained 40% in a single month?????

The same folks who believe that climate change is no problem, but a he-she using the ladies room will destroy life as we know it.

The common folk; real Americans; the cotton from which we weave our moral overcoat; the engine of hard work which drives our country; the people of the land.

You know: Morons.

57   bob2356   ignore (1)   2016 Apr 23, 4:23pm   ↑ like (0)   ↓ dislike (0)     quote      

man says

Since ARLP is a LP and generates k1, it's tax handling would be more complicated. Any first hand experience dealing with this situation? I am holding it in my traditional IRA.

What tax handling do you do within your traditional IRA? This doesn't make any sense. You just get distributions and that is taxed as ordinary income.

58   iwog   ignore (3)   2016 Apr 23, 6:15pm   ↑ like (2)   ↓ dislike (1)     quote      

bob2356 says

You just get distributions and that is taxed as ordinary income.

Actually they don't. Most of the distribution is not taxed at all because it's offset by deprecation of coal deposits. Most of the taxable gain is converted year by year to equity which is then taxed at cap gains rates when the equity is sold.

ARLP in particular has a very low tax liability on distributions but a very high gain in taxable equity which builds up every year.

59   bob2356   ignore (1)   2016 Apr 24, 4:56am   ↑ like (0)   ↓ dislike (0)     quote      

iwog says

bob2356 says

You just get distributions and that is taxed as ordinary income.

Actually they don't. Most of the distribution is not taxed at all because it's offset by deprecation of coal deposits. Most of the taxable gain is converted year by year to equity which is then taxed at cap gains rates when the equity is sold.

ARLP in particular has a very low tax liability on distributions but a very high gain in taxable equity which builds up every year.

What are you talking about? He said the stock was held in his IRA. There is no taxes or tax calculations within an IRA so I don't know why he is worried about tax law. You simply get taxed as ordinary income when you withdraw your money from the IRA no matter what happens inside. Income, capital gains, stock distributions, whatever don't matter inside the IRA. None of it is taxed until you withdraw then it is all ordinary income.

60   man   ignore (0)   2016 Apr 24, 8:16am   ↑ like (0)   ↓ dislike (0)     quote      

From Forbes http://www.forbes.com/sites/greatspeculations/2014/11/17/mlps-can-generate-tax-bills-in-retirement-accounts/#74556b691b44

Most MLPs conduct business activities including energy, pipelines and natural resources. When retirement plans conduct or invest in a business activity, they must file separate tax forms to report Unrelated Business Income (UBI) and often owe Unrelated Business Income Tax (UBIT) ... According to Form 990-T and its instructions “Who Must File,” when a retirement plan has “gross income of $1,000 or more from a regularly conducted unrelated trade or business” it must file a Form 990-T (Exempt Organization Business Income Tax Return).

I think iwog said that for ARLP, UBIT would not cross the max yearly limit of $1,000.

61   bob2356   ignore (1)   2016 Apr 24, 10:47pm   ↑ like (0)   ↓ dislike (0)     quote      

man says

Most MLPs conduct business activities including energy, pipelines and natural resources. When retirement plans conduct or invest in a business activity, they must file separate tax forms to report Unrelated Business Income (UBI) and often owe Unrelated Business Income Tax (UBIT) ... According to Form 990-T and its instructions “Who Must File,” when a retirement plan has “gross income of $1,000 or more from a regularly conducted unrelated trade or business” it must file a Form 990-T (Exempt Organization Business Income Tax Return).

Interesting, never heard of anything being taxed inside an ira. looked it up and there only about 100 mlp's. Really arcane stuff.

62   BoomAndBustCycle   ignore (0)   2016 Apr 24, 11:07pm   ↑ like (0)   ↓ dislike (0)     quote      

iwog says

Be warned however that once you sell your shares, you CANNOT use the purchase price as your basis. You will receive a statement showing the real basis after your years of deductions and equity share distributions. It will generally raise your long term capital gains liability, which is a good thing if you've been taking deductions every year. It's one of the tricky ways that rich people convert income into cap gains tax rates.

I file my taxes with Turbo Tax and just import my TDAmeritrade info automatically to calculate my cost basis and determine exactly what I owe. Will this work for an oddball stock like ARLP?

63   carrieon   ignore (0)   2016 Apr 25, 2:48am   ↑ like (0)   ↓ dislike (0)     quote      

My gold and silver stocks are up 50% in past three months. They would be up 100% ytd, if I started Jan 1st.

64   errc   ignore (2)   2016 Apr 28, 12:18pm   ↑ like (0)   ↓ dislike (0)     quote      

Look, iwog wrong again!

25% lmao

65   iwog   ignore (3)   2016 Apr 28, 5:43pm   ↑ like (2)   ↓ dislike (0)     quote      

errc says

Look, iwog wrong again!

If I can always be this wrong, I don't want to be right.

66   iwog   ignore (3)   2016 Apr 28, 5:48pm   ↑ like (0)   ↓ dislike (0)     quote      

BoomAndBustCycle says

I file my taxes with Turbo Tax and just import my TDAmeritrade info automatically to calculate my cost basis and determine exactly what I owe. Will this work for an oddball stock like ARLP?

Nope.

You'll need to import the k1 which Turbo Tax will let you do and calculate your deductions which it will probably not let you do. However your k1 package will include detailed instructions on which forms to file and what supplemental information you will need to include. It's not that hard after you've done it a few times.

67   justme   ignore (0)   2016 May 5, 2:29pm   ↑ like (0)   ↓ dislike (0)     quote      

Rail traffic (carloads) in coal is down 39.7% from same month (April) last year:

https://www.aar.org/newsandevents/Press-Releases/Pages/2016-05-04-railtraffic.aspx

QUOTE: In April 2016, five of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with April 2015. These included: miscellaneous carloads, up 25 percent or 4,743 carloads; coke, up 16.1 percent or 2.354 carloads; and chemicals, up 1.5 percent or 1,909 carloads. Commodities that saw declines in April 2016 from April 2015 included: coal, down 39.7 percent or 160,624 carloads; petroleum and petroleum products, down 25.1 percent or 15,122 carloads; and grain mill products, down 7.1 percent or 2,760 carloads.

This link in turn came from an article about a rail traffic recession:

http://www.zerohedge.com/news/2016-05-05/haunting-pictures-transportation-recession-freight-rail-traffic-plunges

Given the observed coal voume reduction, I felt compelled to check out how ARLP was doing recently. Here are two news items on the ARLP Q1 results, from April 26. Dividend has been reduced.

http://finance.yahoo.com/news/alliance-partners-l-p-reports-110000247.html
http://finance.yahoo.com/news/edited-transcript-arlp-earnings-conference-185430922.html

ARLP looks too risky to me, closing price today is $14.98.

68   iwog   ignore (3)   2016 May 5, 2:47pm   ↑ like (0)   ↓ dislike (0)     quote      

justme says

Dividend has been reduced.

Just a little and everyone expected it, which is why it went UP after earnings were announced.

Also coal use is going through the roof this summer since it looks like we might be breaking all heat records this year and air conditioning will be used 24/7.

ARLP may be very much a global warming play since summer air conditioning uses a lot more energy than winter heating.

69   justme   ignore (0)   2016 May 5, 3:14pm   ↑ like (0)   ↓ dislike (0)     quote      

I always found it obscene that fossile fuels are being burned in mass quantities in order to generate cooler indoor (or inside car) climate, thereby creating a feedback loop of increased global warming coupled with an increased need for indoor cooling.

70   EBGuy   ignore (0)   2016 May 5, 6:15pm   ↑ like (1)   ↓ dislike (0)     quote      

justme said: I always found it obscene that fossil fuels are being burned in mass quantities in order to generate cooler indoor..
The irony is, that if AZ had passed their obscene solar tariffs, we would be seeing more off-grid DC AC (air conditioner) systems. As it is the technology continues to move forward.

71   FortWayne   ignore (0)   2016 May 5, 8:33pm   ↑ like (0)   ↓ dislike (0)     quote      

Btw Iwog, Hillary promised to kill coal. So if she wins, this is going to be a very short term investment.

72   Philistine   ignore (0)   2016 May 5, 9:51pm   ↑ like (0)   ↓ dislike (0)     quote      

FortWayne says

Btw Iwog, Hillary promised to kill coal. So if she wins, this is going to be a very short term investment.

Buy the rumour, smell the news!

73   iwog   ignore (3)   2016 May 6, 8:06am   ↑ like (0)   ↓ dislike (0)     quote      

Clinton isn't going to kill coal any more than Obama killed coal.

The right wing bullshit machine never ends and just recycles all the old bullshit into new bullshit.

74   justme   ignore (0)   2016 May 6, 10:12am   ↑ like (0)   ↓ dislike (0)     quote      

EBGuy says

off-grid DC AC (air conditioner) systems. As it is the technology continues to move forward.

This is definitely a good use for solar panels in a place like Arizona or SoCal or Central Valley, California. When the sun is out, the AC can run, and when the sun goes down it stops. As illustrated by the link, a minimal amount of batteries will do. Maybe zero batteries, even, with a bit of smart power electronics instead. Get a reversible AC/heatpump and use the system in the winter as well, although the demand-matching properties will not be as good (daytime heating only).

75   iwog   ignore (3)   2016 Jul 7, 4:41am   ↑ like (0)   ↓ dislike (0)     quote      

Aaaaaaaand blast off!!

76   BayArea   ignore (0)   2016 Aug 3, 3:49pm   ↑ like (0)   ↓ dislike (0)     quote      

$19.35, how high will this thing go (I got in at $19.03, but not looking long).

77   iwog   ignore (3)   2016 Aug 3, 3:53pm   ↑ like (0)   ↓ dislike (0)     quote      

Coal Prices Soar to 17-month High
http://en.tempo.co/read/news/2016/08/03/056792832/Coal-Prices-Soar-to-17-month-High

I've held this thing for over 10 years and only sold it in 2014 because I sold everything. I'll hold it forever as long as I don't see a collapse in coal usage or a major cut in dividend.

78   BayArea   ignore (0)   2016 Aug 3, 3:57pm   ↑ like (0)   ↓ dislike (0)     quote      

Did you say the annual div is 15%?

I see the price 10yrs ago is almost identical to today...

79   iwog   ignore (3)   2016 Aug 3, 4:04pm   ↑ like (2)   ↓ dislike (0)     quote      

Forward dividend is 1.75 per year so that pegs the dividend at about 9% however Alliance beat earnings fairly significantly last quarter and they have a reputation for increasing.

Was a lot easier recommend when this was selling for $10 but I still think it's a good income stock.

80   errc   ignore (2)   2018 Jan 12, 8:37am   ↑ like (0)   ↓ dislike (0)     quote      

Bump for context.

I doubt that the truth matters to The Haterz, but it’s important to Honest and Genuine people
81   DoofusRicky   ignore (1)   2018 Jan 12, 9:10am   ↑ like (0)   ↓ dislike (0)     quote      

This stock was paying over 20%? And it didn't go belly-up? That makes my meager earnings appear quite meager.
82   Patrick   ignore (0)   2018 Jan 12, 9:31am   ↑ like (2)   ↓ dislike (0)     quote      

Sadly, had to whack two more comments.

Don't care who any user is or is not. Other users are not allowed to be the topic of discussion anymore.
83   anon_13ce6   ignore (0)   2018 Jan 12, 10:34am   ↑ like (1)   ↓ dislike (0)     quote      

Patrick says
Sadly, had to whack two more comments.

Don't care who any user is or is not. Other users are not allowed to be the topic of discussion anymore.


Not sure who's comments you whacked hopefully not a moderators. If so, maybe people being up in arms is a bit more understandable.
84   Sniper   ignore (10)   2018 Jan 12, 11:15am   ↑ like (6)   ↓ dislike (3)     quote      

errc says
Bump for context.


Thanks for the bump, let's look at historical price.

BayArea says

$19.35, how high will this thing go (I got in at $19.03, but not looking long).


That post was from August 2016,

ARLP is trading right now at $20.82

That's over a year and a half, doesn't sound like a great return.

A DOW index fund from August 2016 till now returned 39% (plus dividends), that would have been a better investment. (DOW went from 18,500 to 25,700).
85   Satoshi_Nakamoto   ignore (0)   2018 Jan 12, 2:27pm   ↑ like (3)   ↓ dislike (1)     quote      

So it looks like it was indeed a good play for about a year since the original rec. And then lagged S&P for another year. But the sell recommendation never came from the analyst who recommeded the stock. Tsk-tsk-tsk.
86   errc   ignore (2)   2018 Jan 15, 7:36am   ↑ like (1)   ↓ dislike (1)     quote      

Satoshi_Nakamoto says
So it looks like it was indeed a good play for about a year since the original rec. And then lagged S&P for another year. But the sell recommendation never came from the analyst who recommeded the stock. Tsk-tsk-tsk.


Here’s a nice opportunity for a teaching moment.

Us wealthy people don’t fret over the day to day changes in the on paper value of our equities, rather we seek out dividend paying instruments. Be sure to let us know when you find one that pays a DD distribution, with the potential to double before I can utilize long term cap gainz. Thanks

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