Wow, we have been holding steady here for quite awhile. a big buyer is absorbing all the shares being dumped. Even at 22 we are still a bit cheaper than our peers.
One of the nice things about being an income investor, is that it provides a holding discipline during the wild and crazy stock movements. If you are content with the yield, you just watch. If the stock goes down, you buy some more because the yield gets even better. I think these MLP's are going to be discovered by baby boomers looking for income in the years ahead.
Assuming there were no fundamental changes to the story behind LINE, I can honestly say I would ad to the shares I just purchased @ 22 if we traded down to 17.
That said, I'm certainly not rooting for that scenario. I'd much rather trade up to 25 and deal with the pleasant dilema of deciding which covered call to write.
You're point about preparing your mind set for either event is an exellent way of entering any stock position.
It just depends on how long you want to hold. From my thinking, for every 100 shares you purchase you are getting roughly $2.50/share in distribution. In addition, I suspect you could write covered calls and get an addition $1.50-$2.00/share per year. This means that one could reasonably expect $4/share in cash per year.
Buying at $20/share means that in 5 years, your initial investment has been returned in cash. So even if the share price has not changed, you will have doubled your money in 5 years. This implies a 14% return per year. Buying in at $22 would lower the return to roughly 13% a year. So in the grand scheme the difference is not much. Plus, all of this assume that the distribution is not raised and the price does not increase.
If you think you would be strong enough to resist the urge to sell if the stock heads back down to $18, $17, or so, then now is a good time to buy. I just know that if I buy and then the stock moves down that low, I would have the itch to sell. So I am just trying to decide what level I need to buy in order to stop my future self from doing something stupid.
That would be my guess. A couple of days ago I say a 500,000 share trade. I've never seen a single trade that large before.
This action is just strange, although we should be use to befuddling price action given that we follow LINE. Nothing ever seems easy with this stock.
BTW, I agree that there are some large buyers out there, but there have also been a lot of odd lot trades, which is almost always retail.
Or a big seller is dumping sales to retail investors at this level. If you looked at the trades that were going through today, they were a lot small than the past couple days. Plus, more of them were odd lot trades, which indicates retail investors.
While I think we can see the clearing, we are not quite out of the woods. I am expecting one more dip below $20/share when the rest of the PIPES are dumped. After that I think the slow steady climb will begin.
As such, I am keeping some powder dry for that last dip.