Jason Knapp
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Jason Knapp in Special Situation Investing News,

Why This Stock's Juicy 11.5% Yield is Safe...Special Situation Investing News 9/9/2015

I recently came across some very relevant analysis about a company that has been discussed a number of times here recently and one of my largest personal holdings CorEnergy Infrastructure Trust $CORR.

One of the biggest risks associated with the company and the reason most often cited by bears for not owning it is the company's large customer concentration with a financially distressed company. Specifically, I'm talking about $CORR's recent acquisition of the Grand Isle Gathering System from Energy XXI $EXXI. Many people believe that $EXXI will eventually go bankrupt. If so, the great unknown is what would that event mean for the revenue that $CORR derives from the company?

The article that I found the relevant information in was published on Barrons.com this afternoon. Is actually is about the renegotiation of a pipeline contract between Williams Companies $WMB and Chesapeake Energy $CHK. Now I realize that technically $CORR is a REIT and not an MLP, but I believe that the same analysis applicable to both. Here's the relevant part:

"Of course, a beleaguered E&P company has the ultimate trump card if contract terms are too onerous — declaring bankruptcy. In that event, for the MLPs, it may seem better to accept lower pricing than no business at all.

But Judge’s [Janney analyst Nathan Judge] research finds that even when a customer goes bankrupt, pipeline MLPs don’t suffer that much:

Generally, we have found that the downdraft would be less than 5% of DCF and would not result in a distribution cut. It is worth remembering that most of the volume in gathering and transportation networks is from existing wells which would not likely be shut in, even in a bankruptcy proceeding."

Williams Renegotiates With Chesapeake: A Risk for MLPs?

http://blogs.barrons.com/incomeinvesting/2015/09/0...

My contention all along is that the infrastructure that $CORR owns is critical to the operation of its clients and that they will continue to need it even in the event of a bankruptcy. The above analysis certainly supports that position and justifies my long position in this double-digit yielder. Of course, only time will tell if we are right.

And now for the rest of the Special Situation Investing News:

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Spinoffs:

Activist Investing Daily: Is Yahoo Done?

http://seekingalpha.com/article/3497596-activist-i...

Yahoo’s Aabaco #Spinoff Faces Major Setback As IRS Refuses To Rule On Taxable Status

http://www.stockspinoffs.com/2015/09/08/yahoos-aab...

IRS decides not to rule on @Yahoo’s tax-free Alibaba spinoff plan

http://www.bloomberg.com/news/articles/2015-09-08/...

Cree Renames Its Power & RF Division Wolfspeed, Prepping A Spin-Off To Unlock Value For Shareholders

http://www.forbes.com/sites/greatspeculations/2015...

Former $CBB Spinoff CyrusOne Should Benefit Nicely From The Cervalis Deal

http://seekingalpha.com/article/3496266-cyrusone-s...

Spinoff Odds & Ends: Honeywell, Symantec

http://www.stockspinoffs.com/2015/09/08/spinoff-od...

Courtesy of Bluegrass Capital @BluegrassCap:

$CSWC industrial co spinoff: record date 9/18, distribution date 9/30

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SPACs

Cambridge Capital Acquisition Corporation $CAMB to Merge with Ability Computers & Software

http://finance.yahoo.com/news/cambridge-capital-ac...

Good news for former #SPAC Tecnoglass. $TGLS Cost of Skyscraper Glass Hits Dizzying Heights

http://www.wsj.com/articles/cost-of-skyscraper-gla...

Former #SPAC Del Taco Restaurants $TACO Coverage Initiated by Citigroup with a "Buy" & $17 Target

http://seekingalpha.com/news/2766216-del-taco-plus...

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Merger Arb:

Dealpolitik: Good Times Ahead for Arbs

http://blogs.wsj.com/moneybeat/2015/09/04/dealpoli...

Doctors’ Association Sees Harm in Insurance Mergers

http://www.nytimes.com/2015/09/08/business/doctors...

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Investment Write-Ups:

Calamos Dynamic Convertible & Income Fund: It's Starting To Get More Appealing

http://seekingalpha.com/article/3497106-calamos-dy...

This is exactly why I find them interesting. REITs headed for worst year since 2008.

http://seekingalpha.com/news/2766356-reits-headed-...

FMC Corporation: As Shares Slump, Insiders Buy Millions Of Dollars In Shares

http://seekingalpha.com/article/3495286-fmc-corpor...

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Activist Investing:

Activist Investing Daily: Marcato Moves On?

http://seekingalpha.com/article/3496166-activist-i...

H Partners #Activist Target Tempur Sealy Names New CEO

http://www.wsj.com/articles/tempur-sealy-names-new...

Nelson Peltz #Activist Target Pentair Moves to Add Trian Director to Board

http://www.wsj.com/articles/pentair-moves-to-add-t...

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Whale Watching:

Bill Ackman Interview with Fox Business

http://www.valuewalk.com/2015/09/bill-ackman-china...

Ackman says China may pursue bigger currency devaluation -FOX

http://www.reuters.com/article/2015/09/08/us-hedge...

Warren Buffett talks shopping abroad, #Election2016 and poverty

http://www.reuters.com/article/2015/09/08/us-berks...

Warren Buffett plans to invest $32 billion, soon

http://www.cnbc.com/2015/09/08/warren-buffett-econ...

Media General to Buy Gabelli holding Meredith Corporation for $2.4 Billion

http://www.nytimes.com/2015/09/09/business/dealboo...

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Other Investing News:

Dick Bove: BofA board 'should be eliminated'

http://www.cnbc.com/2015/09/08/bofa-board-should-b...

I don't like the sound of this. $ABY & $ABGB have been a mess. Abengoa Yield CFO resigns immediately

http://www.reuters.com/article/2015/09/08/idUSL5N1...

Patrick Drahi Positions Himself to Be a Player in U.S. Cable

http://www.nytimes.com/2015/09/08/business/media/p...

What’s the Next Major Deal to Close in the Oil Patch

http://www.bloomberg.com/news/articles/2015-09-08/...

GE's Alstom Prize Shifts Focus Back to Finance, Appliance Sales

http://www.bloomberg.com/news/articles/2015-09-08/...

SunEdison to Buy 33% Interest in Dominion Portfolio of Solar Assets

http://www.wsj.com/articles/sunedison-to-buy-33-in...

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