Author Topic: ARLP - Alliance Resource Partners  (Read 2870 times)

rukawa

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ARLP - Alliance Resource Partners
« on: March 28, 2016, 10:37:24 AM »
There is an LP (ARLP) and GP (AHGP). There is a pretty good writeup on seeking alpha

Seeking Alpha: http://seekingalpha.com/article/3804196-alliance-resource-partners-attractive-seems
VIC: http://www.valueinvestorsclub.com/idea/ALLIANCE_RESOURCE_PTNRS__-LP/136224

Some statistics:
EV/EBIT =~ 5
Dividend Yield = 23%
P/B = 0.7
EBIT/Interest expense = 11.6

Worries
1) They could cut the juicy dividend
2) Coal could be in permanent secular decline
3) How much does LP pay GP




Steven B

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Re: ARLP - Alliance Resource Partners
« Reply #1 on: March 30, 2016, 08:47:15 PM »
Rukawa,

I'll throw in a few more risks: Utilities are becoming more and more willing to rely on spot prices and are generally becoming less inclined to let ARLP enjoy the juicy spread they've enjoyed for a long time. Even if natural gas would normalize it's very possible that they would no longer be able to attain the profits they once had.

Also they may have a cash flow problem coming up in a few years. If you disagree with the above it would be a nice bet.

Stuart D

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Re: ARLP - Alliance Resource Partners
« Reply #2 on: November 05, 2019, 12:42:46 AM »
Coal prices are down. This looks like one of the better companies in a currently distressed industry. Large (20%) insider ownership. Strong commitment to paying out large (>10%) distributions.

Management seemed upbeat in the recent 2019 Q3 conference call. With other companies in distress they have picked up new contracts. Quote from the transcript below:


Quote
Matthew Fields -- Bank of America Merrill Lynch -- Analyst

Hey, guys. Just a little bit on the commentary you made about picking up 11 million tons under contract since the last quarter. You said, I think, 3 million of that was from consolidations in the industry. Does that mean you won business from competitors that are in financial distress or have filed? Is that what that comment means?

Joseph W. Craft -- President, Chief Executive Officer and Director

It means that we either bought some contracts or paid for some contracts, and/or just a same contracts for people that we're closing operations. And for most of that volume, and then there was another contract that we got where competitor had shut its operations, and the customer was not getting tons from that particular competitor, and we won a bid by bidding lower than others to secure that business. So that market would not had happened, had that competitor not ceased production. There are three -- at least three maybe four, but there are at least three that I know off the top of my head contracts that we got for 2020 production that were direct results of [other companies'] mines closing.
« Last Edit: November 05, 2019, 12:49:42 AM by Stuart D »

RadMan24

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Re: ARLP - Alliance Resource Partners
« Reply #3 on: November 14, 2019, 04:23:47 AM »
Thermal coal is just high risk high uncertainty. Peabody really freaked the market out when it was rejected for refinancing. They spent tons of cash repurchasing shares to no avail. If you want in on coal depressed, I would lead you to Warrior Met Coal. Or even Ramaco. Then maybe possibly Arch. Alliance and Peabody are at the whims of so many variables itís tough to say how safe the cash is.

With Alliance, yield is 18% but the last cycle yields got even higher. You just gotta pay attention to domestic and international coal markets to get a sense of how things are going, and if they will come out unscathed.