Don't be so sure about that 8% yield not becoming a reality. Take a look at what the ECB did today! Sustainable is high yield LP's & MLP's are on fire sale. Babies flushed out with the energy bath water.
Costain said that he did not see the stock reaching $20 this year, which seems to be the price they want , in order to take another dropdown. My target for this year remains $18.
I like KNOP very much. Solid company. Rode from 11s as well and I still like it here at 16+. But, I think repricing yield to 8% may be a ways out and the global economy may put a spanner in the works before that. To my mind, it is prudent to take a decent % off the table. Just my 2 cents. I closed my position completely but will get in if a panic ensues.
Already has popped 50% from when I loaded the bulk of my units. However, KNOP has much further to run. If I assume a final pricing to a distribution yield of about 8% that equates to a $26/unit price. Furthermore, what the "smart money" failed to realize and continues to fail to realize is KNOP's access to debt capital is skyrocketing in tandem with unit price. This was and is a big fear about the MLP's... The fear was they would lose their access to debt capital and have to raise capital via the sale of equity which when demanding a 20% distrinution yield was out of the question. Now, as we get closer to a 10% distribution yield, all of a sudden debt capital becomes cheap again for growth via more take-downs. All longs who may have taken a beating but stayed the course are very happy they did. THose like me who bought so cheaply have a tiger by the tail and I certainly am not going to sell for the sake of a 50% profit when KNOP has so much more profit to offer me.
In the short term , it will be volatile due to oil price fluctuations. In the medium term KNOP will rise. My price target by year end is $18.
Agreed, I think the dead cat bounce is over and we'll get another chance to buy this much lower. Which is insane of course, but that's where we're at.
Absolutely false. If oil goes to $20 there will be absolutely stellar buying opportunities. I personally don't see it getting to $20 but a trip back town to $28 is certainly a possibility. The lower oil goes, the more pressure MAJOR oil producing nation states feel. In the U.S. we have banks with workout departments and bankruptcy courts... Our social and economic stability doesn't depend on oil revenues. For Russia and members of OPEC that is a totally different story. Oil goes to $20 and you'll have revolutions taking place in no time. As such, more it sells off the sooner you'll see producing nation states CUTTING production. Saudi Arabia can sell 10 million barrels per day at $25 each for a total of $250 Million or 9 million barrels per day at $45 each for a total of $405 Million. This fact will be coming home to roost soon enough with OPEC members and Russia.
I'm not selling what I have but I am also not buying more right now. I want to see if oil takes another trip down to the mid $20's if KNOP can get swept down with it so I can load more at a sub $12 price. That would be fantastic.