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Covestor: Additional Important Information
MLP Protocol 
WELLS FARGO: Up-Grading – (CPLP) – shares to: OUTPERFORM
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Capital Product Partners – (NASDAQ: CPLP)
Price: At time of this Report – (01/10/12) : $6.60 per share
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(CPLP) : Upgrading Shares to : Outperform – (1)
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Sector: Ocean Shipping
Senior Analyst: Michael Webber
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Shares Outstanding: 70.8 Million Shares
Market Cap : $467 Million Dollars
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Current Distribution Payout: $0.93 / Annual
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Current Distribution Yield: 14.09% – Percent
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We have increased our price target… to a range of : $9.00 ..to.. $10.00 per share
This price target has been revised… Upward …. from our previous price target range of – $7.00 – $8.00 per share
We are upgrading shares of CPLP to Outperform from Market Perform, as we believe shares are both significantly undervalued and
that CPLP’s core business (product tankers) is potentially poised to start a cyclical recovery in 2012.
Following the completion of its merger with CRU, the chartering of its spot VLCC fleet (Q4), and renegotiation with COSCO over its
large dry bulk charter (Q4), we believe most potential hurdles are behind CPLP at this point, and we believe its risk/reward profile is skewed
meaningfully to the positive.
We are maintaining our current annual distribution estimate of : +$0.93 per Share… for 2012 and 2013 respectively…..
This +$0.93 per unit distribution estimate…. then creates a current distribution yield of ==> +14.01% percent
This then represents a 700+ basis points premium to the MLP universe’s average yield…. which stands at just ==> +6.8% percent.
Our price target range is based on a – target distribution yield of — +9.00% percent .. to .. 10.00% percent
This then would still represent a 200 basis point ..to.. 300 basis Discount — to the MLP – group average at large.
(CPLP) is now …. Paying a Yield of more than – 2x – times : The “MLP” – Universe Average payout yield of just : + 6.8% percent
We believe the dividend distribution is secure and view the current yield as an attractive entry point into both the stock and the broader product tanker market.
Product Tankers Poised To Improve In 2012.
We believe the product tanker market has the pole position for a gradual 2012 recovery.
This is due to both an improved supply outlook (orderbook stands at 13% of current fleet, off of a peak of 53%) and to both secular and
near-term demand catalysts.
We believe gradually expanding global ton-miles should support the long-term health of the product tanker rate environment with the potential
loss of 700 kbd of East Coast refining capacity and the Enbridge reversal of the Seaway pipeline potentially providing intermediate-term support for rates.
While we are not expecting a sharp correction in the product tanker market over the next quarter, we believe the market is balanced enough to allow these
potential 2012 demand catalysts to gradually improve the product tanker day rate environment and support product tanker stocks.
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“Wells Fargo Securities” – LLC – 375 Park Avenue – New York, NY 10152
The petroleum products trade is quite different from the crude oil trade…… with much higher – barriers for entry
While the crude oil trade covers refinery inputs…. (CPLP) provides “petroleum products” transportation of ==> The refined Output of a refinery.
Refined oil products moved in OSG product tankers include gasoline, jet fuel, diesel fuel, heating oil, kerosene, alternative fuels, home heating oils, vegetable oils and motor oils….. etc.
Due to the wide variety of cargo types transported on these… specialized vessels … the nature of the products trade is extremely complex.
Vessels require special coatings/skins within their internal cargo tanks…. to facilitate cleaning and to protect cargo from contamination.
Cleaning operations are rigorous, particularly when switching between cargos, and crews are required to maintain specialized certifications in order to handle a variety of product grades and frequent changeovers.