June 3, 2002; Sponsors of High Greed Partnerships Are Tainted
We often ask ourselves whether our concern about
apparent fraud in partnerships is overdone.
We seem to be a lonely voice. When
we remind ourselves that fraud isnít usually proven until after investors lose
their investment we have new justification to continue pointing out our
At the same time even thirty or forty billion dollars
is not much in the context of the stock market.
Yet a larger issue seems to be taking shape.
With the further erosion of confidence in partnership sponsors Kinder
Morgan, El Paso, Williams, Dynegy
and Duke, the connection appears to be growing between willingness to set up a
partnership to fleece investors and willingness to engage in other questionable
practices. We urge investors to
reconsider their investment in any company that sponsors a high greed
partnership. Some of the sponsors
we have mentioned have much larger market capitalization than their partnerships
and are owned by investors who may not actually own partnership units. There are sponsors we have not mentioned among refining
companies and coal companies among others.
If you know of a company contemplating a high greed partnership, tell
them not to do it. If they already
have one, tell them to scale back the general partner tax, rein in their greed,
tone down the hype, collapse the debt pyramid and disclose honestly the current
and potential dilutive effect not only on reported income, but also on EBITDA,
cash flow per share and book value