For Investors Only: Another Opportunity -- This Time EEP

Prices of EEP shares dropped almost a couple of bucks today; quite a drop. One would have thought there were operational problems.

It appears the drop was due to the announcement that the company will issue 5 million shares.  The drop is not likely due to ex-div date which has already occurred (November 2, 2010).

Yes, more shares dilute earnings. But how many shares does EEP have outstanding?  120 million.

An additional 5 million shares is inconsequential against this 120 million shares already out there. Then add this to the fact that a) the money raised will help pay for recent acquisition; and, b) CPA's probably know the best way to manage this: more debt or more stock.  (For similar business model/decision, take a look at how Ford handled their problems compared to GM when the industry imploded.)

EEP pays almost 7% and is benefiting from huge presence in the Bakken.

When I see these pullbacks, it tells me it's a) nothing more than an excuse of Wall Street traders for taking profits; and, b) an opportunity for investors to accumulate more shares, once the low is established. After hours, I see the price is up a tiny bit.

The same thing happened in the past 72 hours for two other companies in the Bakken: WHX and EOG. EOG recently dropped all the way to $88 and has now rebounded nicely. WHX had an even greater drop before it recovered.

By the way, Whiting telegraphed that this quarter would be disappointing. Some weeks ago, Whiting said they would miss their production quotas because of limited capacity on Enbridge following two spills.