Don’t Get Fooled By Niska Gas Storage Partners (a LLC)

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Limited Liability Corp,  Niska Gas Storage Partners (ticker:NKA), is trading down around $4.50/unit today–down from a 52 week high of over $16. Recently the company announced a 35 cent quarterly distribution which, annualized, gives them a current yield of over 30%.  Of course the very high yield should be a tip that something is wrong and investors should stay away.  That something is the coming distribution cut.  On October 31st when Niska announced the current distribution they also commented–“however, in light of the current challenges in natural gas storage market conditions, it is likely that the distribution will be reduced or suspended if current market conditions persist”.  Of course these words to income investors are death–investors are buying for income and it looks like there won’t be any starting next quarter.

Niska is the largest independant owner and operator of natural gas storage in North America and they have had more than their fair share of issues in the last year.  They have taken major hits because of migration of ‘cushion gas’ (the gas in storage needed to maintain pressure) as well as low storage requirements after last winters cold weather caused huge drawdowns in the natural gas supply.  Recently they have replaced their entire upper management in a bid to get back to profitablility.

Niska may well be a good speculation for the future, but won’t be a income stock with any safety for the next couple of quarters.


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Tim McPartland

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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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