Inter Pipeline Fund - IPL.UN

I’ve put in a limit buy for IPL.UN at $9 per unit. For those of you unfamiliar with the company here is a little blurb about them:

“Created in 1997, Inter Pipeline Fund is a major petroleum transportation, storage and natural gas liquids extraction business based in Calgary, Alberta, Canada. Inter Pipeline is a publicly traded limited partnership that owns and operates a diversified combination of energy infrastructure assets in western Canada, the United Kingdom, Germany and Ireland. This asset portfolio generates long-term and predictable cash flows, thereby providing unitholders with a growing and stable source of monthly cash distributions.”

I’ve decided to put a limit price in for IPL.UN for many of the same reasons outlined by Moneygardener in his May 18th post. If my order is filled I will be buying these units with a portion of the proceeds from a bond that matured in June. I am not expecting a large increase in either the share price or distributions from IPL.UN however, what I am expecting is a steady and consistent distribution. I am treating this purchase as a replacement to the small fixed income portion that I used to have in my portfolio. I am aware that there is more risk involved and of the argument that trusts can never be considered a replacement for fixed income. However, I am comfortable with the additional risk and with bond yields barely over 5% I am willing to bet that IPL.UN will maintain their distribution (or not reduce it significantly) and be either at or above it’s current value in 5 or 10 years. If my thesis holds true I’ll handily beat any bond that I could purchase with a 5 or 10 year maturity date.

Here are some of the reason that I’ve put a limit buy in:
•Currently transport 18% of total western Canadian conventional volumes and 50% of oil sands volumes.
•Inter Pipeline's NGL business currently processes approximately 40% of the natural gas exported from the province of Alberta.
•At 9$ a unit it will yield 9.33%
•Trailing P/E 14.9
•Estimated 2007 P/E 17.6 (at 9$ a unit)
•Estimated 2008 P/E 15.5 (at 9$ a unit)