Dagen McDowell

A new weekly series is headed to Fox Business Network today, opening up the lines to everyday Joe’s like me to call in and discuss personal finance and economics.

The show, Your Questions, Your Money Live,  will air every Saturday from 10am to 2pm Eastern Time, hosted by Dagen McDowell who appears regularly on Your World with Neil Cavuto and Cashin’ In (she actually won the Cashin’ In challenge for the last three years).

The crux of the show is to bring in Fox Business contributors and outside experts to answer viewer questions regarding finance,  markets, real estate and investing.

I’ve been watching the Fox Business Channel more frequently these days, and the Happy Hour show got me hooked.  The channel is not nearly as dry as Bloomberg, more level than most on CNBC, and seems like it’s geared more toward the common investor than the Wall Street suit.

I look forward to the airing of today’s first show, and I suspect it will be a good complimentary fit to the rest of the lineup at the Fox Business Network.

Several days ago I asked my buddy MJ over at Dyslexic Research what he thought of Ingersoll-Rand (IR: chart, web, Y!).  I’m not really an industrials guy, as my area of knowledge rests more in energy (specifically oil and gas) and tech.  That said, I’ve been making efforts to broaden my knowledge and diversify my portfolio.

MJ, however, is very much in tune with industrial sector, and I figured he’d have a good opinion on the company.

So it was with great interest that I read his opinion post on the company.

As MJ mentions, Ingersoll-Rand is in early stages of acquiring Trane (TT: chart, web, Y!).  You know, the air conditioner people.  But it turns out that Trane is much larger than I thought, and offer product lines outside of the home HVAC units.

MJ believes that Trane is a stronger company than Ingersoll, and as such, Ingersoll benefits more from the acquisition than Trane does (which is good if you’re looking at Ingersoll stock).  However, he also suggests that this would be a great opportunity for Ingersoll to screw up a fairly healthy company.  And I agree.

I’m not sure I agree with Ingersoll’s sell off of Bobcat, as that seemed to be a very robust product and a fairly bullet-proof brand.  Trane could bring some street-cred back to IR, but it will take some time according to MJ:

After seeing mergers from the inside out, it will take roughly six months to a year for the two companies to properly integrate into one another and see potential synergy savings. After that both companies might be able to flourish. -Source

In my opinion, a lot will depend on how they structure the acquisition.  If Trane operates as a subsidiary, I think the integration process will be fairly smooth, as it will be a matter of book keeping.  However, if it is a merger in the truest sense of the word, I’d look at 18 months before you see signs of a single, well oiled machine.

I’ll let you read about MJ’s outlook on Ingersoll and his official opinion on the stock at his blog, and he’s brought up some very valid concerns.

For now, I’ll keep digging but will keep Ingersoll-Rand on my watch list.

Duncan Energy Partners (DEP: chart, web, Y!) reported Q3 financials today. They reported a net income of $4.5 million for the quarter, which rounds out to $0.22 per unit, fully diluted share, missing Reuters estimates by $0.01 per share.

Gross operating margin was $19.1 million for Q307 as compared to $22.5 million for Q306. The difference can be attributed to business interruption insurance recoveries, startup expenses for 2007 (remember that DEP went public in February of this year) and the write off of conversion costs when they tried to convert a NGL storage cavern to a natural gas storage cavern, and determined the cavern would not be suitable for natural gas storage.

Consequently, if you adjust for these unusual costs incurred in 2007, the gross operating margin was ahead of that in 2006.

Distributable cash flow for the third quarter was $8.7 million.

“We are pleased to increase the cash distribution rate to our partners this quarter for the first time since our IPO in February,” said Richard H. Bachmann, president and chief executive officer of the general partner of Duncan Energy Partners. “Future increases in the quarterly cash distribution rate are expected as the distributable cash flow from our commercial businesses, whether from our existing assets or the acquisition and/or construction of new assets, warrant.” -Source

Higher than expected capital expenditures brought the overall distributable cash flow for the quarter down, part of which was due to a state requirement to have partial pipeline integrity done by the middle of December.

Bachmann went on to say that he expects the capital expenditure levels to drop going through 2008.

Duncan Energy Partners owns a 66% interest in the following business segments:

NGL & Petrochemical Storage Services

This segment consists of 33 underground salt dome caverns in Mont Belvieu, Texas, with an underground storage capacity of approximately 100 million barrels

Third quarter gross operating margin for these storage services increased 24 percent to $7.7 million from $6.2 million in the third quarter of 2006.

Natural Gas Pipelines & Services

This segment consists of an Acadian intrastate natural gas system that gathers, transports, stores and markets natural gas in Louisiana. All together the system is made up of more than 1,000 miles of high-pressure transmission lines with a throughput capacity of 1 billion cubic feet (“Bcf”) per day and 3 Bcf of natural gas storage capacity.

Gross operating margin for the third quarter of 2007 decreased to $3.3 million from $6.2 million in the third quarter of 2006, primarily as a result of higher expenses associated with pipeline integrity work. DEP executives expect the higher operating costs to decline in the future.

Natural gas throughput volumes for the third quarter of 2007 were 761 billion Btus/day compared to 743 billion Btus/d for the third quarter of 2006. So they’re moving more gas per day than they were last year, attributed to expanded pipelines and processing.

Petrochemical Pipeline Services

This segment consists of two petrochemical pipeline systems, aggregating 284 miles of pipeline that transport propylene in Texas and Louisiana.

Gross operating margin decreased to $3.0 million in the third quarter of 2007 from $10.1 million in the third quarter of 2006. Approximately $6.1 million of this decrease is attributable to lower tariff rates period-to-period.

Prior to the DEP IPO, EPO (the owner of the general partner of DEP) paid the maximum tariff rate for the use of the Lou-Tex and Sabine Propylene Pipelines. In turn, EPO charged third parties a lower rate to ship volumes on these pipelines. The third party contracts were assigned to us at our IPO. Accordingly, DEP earns a lower transportation rate than that charged to EPO prior to February 2007. Petrochemical transportation volumes averaged 39,000 barrels per day (“BPD”) for the third quarter of 2007, compared to 38,000 BPD for the third quarter of 2006.

NGL Pipeline Services

This segment includes the partnership’s 286-mile, South Texas NGL Pipeline System that transports natural gas liquids (“NGLs”) from two fractionation facilities located in South Texas to Mont Belvieu, Texas. This system became operational in January 2007 and generated gross operating margin of $5.1 million during the third quarter of 2007 on 73,000 BPD of NGL transportation volumes. Volumes are based on NGL production from EPO’s Shoup and Armstrong fractionators.

The Corner Office Thoughts On The Quarter

In general I’m not too disappointed. They missed revenues by $0.01 per share. I don’t get too bent out of shape about one cent per share on a $25 stock.

Startup costs, insurance and conversion write off didn’t help, but these are not fundamental traits of the company, so I don’t see them affecting the long term potential of the company itself.

I like the developments in the natural gas pipeline and gathering systems that will come on as early as next quarter, and through next year that will add to revenues through the coming years.

Oil prices hit $91 per barrel in electronic trading today, and heating oil prices are high and headed higher going into winter.

They aren’t shy about increasing dividends, which is really a major reason I’m in the stock.

There is huge potential with the company, it’s well run by the likes of Dan Duncan who is no oil industry slouch.

I’ll continue to by DEP on dips, and look forward to what I foresee as strong fourth quarter results.

I received an email from Steve Carpenter yesterday. Typically when I receive emails from someone I don’t know, I’m enticed to “file” the message accordingly, however I opened this one, not knowing what to expect.

Steve is the founder and CEO of Cake Financial Corporation.

After reading his email, I found myself intrigued with his new service. Cake is a new online financial service that allows individuals to display their actual portfolio,and keep track of how the portfolio has done over a period of time. It also lets you share your portfolio and real-time trading information with trusted family and friends without ever revealing sensitive personal information like net worth, number of shares, or portfolio sizes.

The way it works is that you link up your brokerage account with Cake, and it keeps track of your performance, and allows you to compare your performance with that of your peers. You can see how others are trading, and even collaborate investment strategies online.

For each Cake member, you can see the overall performance of that persons portfolio over a range of 5 days to 5 years. You can also see what’s on that members watch list, see who’s in their Cake network, and even read their investing journal.

It’s basically a conglomerate of the ultimate financial blog sites. What’s great is that since it’s linked directly to your brokerage account, it lends credibility to your financial performance.

Cake’s number one priority is protecting personal and financial information. Founder and Chief Technical Officer, Doug Reed, has had some experience creating secure financial environments in the past, so he’s got some experience keeping the privacy hacks at bay.

I’ll keep researching Cake, and perhaps have Steven answer a few questions in Corner Office Interview.

Until then, here are some more links to Cake:

Cake Financial Home

Cake Financial Blog

The Cake Financial Players

Cake On Cramer

Two days ago I wrote a post on more exotic stocks to deepen your exposure in the market. More specifically, I wrote about the S&P Covered Call Fund (BEP: chart, Y!, ETFconnect).

Well, I’ve had more time to research the stock, so I’ll present what I’ve dug up. I may ask Winston to chime in here too, as he’s more in tune with more advanced aspects of the market than am I.

The first thing I’ve noticed is that the NAV has not been keeping up with the share price. In fact, it’s going downhill while the share price has been marching up, leaving it at a premium of about 19% to the NAV.

Now on to the dividend. They are paying out about $2 per share annually, which translates into about $34 million per year with just over 17 million shares in circulation. However, compare this to the $12 million (net) they took in in the first 6 months of ‘06, and you can see they are about $10 million in the hole each year. That won’t continue for long.

In other words, the dividend is attractive, but don’t expect it to stay where it is.

I have a feeling that the price appreciation is due to a large influx of individual investors staking claim based off of mentions on the likes of CNBC, TheStreet.com, and other talking heads shows that drive us commoners to a specific stock.

Much like CLM though, the train will find the end of the tracks sometime, and you better be prepared to jump!

A couple days ago I revealed a way to get a free research report from Reuters.

I downloaded a research report on a company I’ve had some interest in for a while, and compared it to other public data I’ve found online from SEC filings, earnings reports, and other sources.

On the surface, the Reuters reports don’t reveal anything that isn’t already available online through SEC reports or press releases. However, the report is well organized with 12 pages of aggregated data from the last few years.

Normally, these reports come with a $20 price tag, which is pretty hefty considering all the information contained within is publicly accessible from other sources online.  However, if your time is valuable, Reuters provides a good summary of the company, however it offers no forward looking guidance on how the company will perform in the future.

The reports are easy to read and financial data is well orgainized.  The sidebar of the report defines common terms and financial calculations.  Bar charts show annual data for the last three years, and monthly data for the last six months.

Overall, the Reuters Research Reports are well organized and data is presented in an easy to read context.  The $20 price tag (per report) is a bit steep considering I’ve got multiple free sources that provide essentially the same information, but for those who are just starting out researching stocks, the research reports provides a good summary of fundamental data.

Other sources I use:
Yahoo! Finance
S&P Reports (free to TD Ameritrade users)
Edgar SEC Filings
Charts from StockCharts.com
MarketWatch.com Tools & Research
TheStreet.com

TD Ameritrade has joined up with Reuters to offer a free research report on the company of your choosing.

Just use the code Q2EARNINGS06 when you order a report from Reuters.

Each report contains:

- Historical stock price trends
- Complete company financials
- Key ratios and statistics
- Consensus estimates and analyst recommendations
- Income statements, cash flow reports, etc.

Reuters reports are valued at $20 a piece, so I figure it’s worth a shot to take them up on this offer.  Having never read a Reuters report, I’ll let you know what I think of their content.