'Mad Mail'

Enterprise Products Partners LP (EPD)

Q:      Hey Jim,
I bought Enterprise Products Partners for its nice yield, but the most recent dividend came into my account as a dividend, and then a few days later was adjusted to be a Return Of Capital. Should I take this as a sign that EPD can’t afford to pay its dividend any longer, or should I just consider it a short-term economic/accounting issue? I thought the tax treatment of dividends wasn’t announced until the end of each fiscal year, so my gut reaction was to take this as a very negative news.
   -- Summer

Jim:    Now, I went to my friend Rich Steinberg, at Merrill Lynch, who knows this group more than anybody… I have known him for the last 25 years… and it is a sign of nothing… it just happens to be a mis-mark… it is a return of capital… it comes out as a dividend… but don’t think of anything other than the fact that these stocks have been going down in part because they had a very good first part of the year… but there is no sign of any stress at EPD… and Kinder Morgan Energy Partners (KMP) remains my favorite but yours is pretty darn good too… I would be a buyer.

'Mad Mail'

Kinder Morgan Energy Partners (KMP)

See EPD comments above for:
KMP

'Mad Mail'

General question...

Q:      Jim,
With the earning hits and potential insolvency of major corporations and State governments, combined with the recent major drop in security prices in which the pension funds my be invested, how secure are pension payouts to current (and optimistically future) retirees? Will this be the next economic shoe to drop?
   -- Ron

Jim:    Ron, first of all no state has ever went bankrupt, so let’s remember that before we get to panicky… second, I am far more concerned about the annuities at several of the major life insurance companies than I am about the pensions from individual states… why, because the states can raise taxes… the pension annuities cannot… because they are private companies… so let me just say that in my list of parade of horribles… that one is really near the end of it… because I have got a list that is as long as your arm.

'Mad Mail'

Procter & Gamble (PG*)

Q:      A few weeks ago you said you couldn’t recommend Proctor & Gamble around $60, but if it were to dip to around $53, you would call it a buy. Then, on a more recent episode, you recommended selling PG at around $49. Can you explain your though process that led you to this conclusion? What made it attractive 3 weeks ago at $53 and a sell now at $49?
   -- Brian

Jim:    Well, what I said was that if it went much lower it would be good and I used $53... and then the company reported… really just an awful quarter… it was an awful quarter… and you know what, this is like the Foster-Wheeler I mentioned earlier… these companies come out there with these really bad quarters… like John Menerchains, I have to change my mind if the fundamentals change… Proctor just did not do a good job… and I love the company… just not the stock.