Access Midstream Partners (NASDAQ:CHKM)

CAPS Rating: 3 out of 5


Player Avatar SF321 (< 20) Submitted: 12/16/2010 11:49:50 AM : Outperform Start Price: $24.26 CHKM Score: +26.88

Initially attracted to a newly minted MLP that is trading at 0.87 of tangible book. Further attracted by the fact that CHKM has the right of first refusal on any midstream assets that Chesapeake chooses to sell, and management is telling anyone who will listen that there is substantial opportunity for drop-down transactions from CHK (they seem to be stopping just short of assuring that this will be the case when it comes to the Marcellus, Haynesville, and Fayetteville Shale plays).

The phrase "Preserve revenue model with no direct commodity exposure" makes me all warm and fuzzy when it comes to cash flows and consistent dividends.

I would be more excited were it not for CHK's unpredictable leadership. The famous $75 million bonus for the CEO, buying the CEO's art collection for $12 million, sponsoring the CEO's NBA team to the tune of $4 million, whispers of buying every employee an iPad regardless of position (because why not?).

CHKM is a company I have confidently owned for awhile in my actual portfolio, but I do find my self scanning the newswire more often than I would like, due to my unease regarding the GP. Hence, an unspecified time frame.

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