"i sold the $17.50 Feb puts there and got $1.15 per share "
Hey, that was you, was it?
I sold the UAN Feb $17.50 puts today and only got $1 for them. I noted that there had been 3 contracts sold before me with the last price $1.15.
I couldn't convince myself to own UAN (I bought SDT instead), however decided to make some money off it via the puts. Hopefully distributions will be as predicted and the unit price stays above $17.50 (my goal here is just the income not to acquire the units). Most likely I will roll it forward in 3 months or so to collect some more $.
For what's it's worth to this conversation, Citigroup has a Strong Buy and $64 target price on EVEP. It may not get to $80 any time soon, but it wasn't THAT long ago it was below $40 (there was an SPO the first of January for $36.80/share.)
Unless you bought it at $55 a couple weeks ago and are disappointed in the short term weakening, perhaps you should not be investing in high-risk stocks and stick with CDs.
Susan, it appears you have done no research to understand EVEP's assets. I know from your many posts that you are primarily a yield buyer and put seller and can't help but think you are looking at this through those glasses. The thing you are missing (which was in the research report) is that if a deal does come to fruition, EVEP's distribution will likely grow at a higher rate, so your analysis that this MLP can't sell at a 4% yield is built on a faulty premise. As to real data to support the valuation, the numbers are based on what other producers in the region, like Chesapeake and a few others are paying for acreage. CHK has a history of selling properties for multiples of what they acquired them for to other large oil companies, so there is precedent for this to occur.
Second, you should know that not all MLPs are valued the same. The ones with lower distribution growth typically trade at higher yields. Even though EVEP has not grown its distribution much over the last few quarters, the market values it at a lower yield because of its potential in these different shale regions. Third, your comparison to BBEP is so off base to be laughable. Look at any timeframe and you will see that EVEP has outperformed BBEP by a huge amount, due mostly to the fact that BBEP was mismanaged and had to cut their distribution. There's a reason BBEP sells at a higher yield and that's because the market has not yet regained confidence in their business plan, plus the overhang of Quicksilver's selling shares may keep it down. In a true meltdown scenario, that extra 2% that you get in BBEP yield is not really going to make a big difference if all stocks get killed. As to EVEP's recent rise, it had less to do with the general rise in commodity prices. You should know the majority of EVEP's assets are in nat gas which has not risen like oil. While EVEP did benefit from the rise in all MLPs, the focus on the shale regions is probably the primary reason.
Now as to the Fed, watching CNBC this morning and you may have heard them say that the Fed has to be seen as doing something. The same circumstances existed last year at the end of QE1 and at the first sign of a market selloff and softening economy, the Fed rolled out QE2. The Fed itself said that the wealth effect through a higher stock market was their primary goal (they know there's nothing they can do about the structural problems that effect the economy). As the last of the Fed stimulus ends and states start austerity measures, the Fed will have to continue easing. It may take a large selloff or further weakening of the economy to get the Fed to act -- who knows if this means S&P 1100 or lower before they will act. When was the last time the Fed stood by and let the economy work through its excesses? I encourage you to read zerohedge.com to view some thoughts on what the Fed's next steps could be.
I do agree with you that once QE2 ends, there could be further selling and EVEP's chart does look bad which is why I have held off adding to my position. But charts can always change when a catalyst occurs. Saying that EVEP could go back to $30 is like saying that BBEP could go back to $3. Sure anything bad can happen that is not foreseen, but the flip side is that something good can happen, like a large partner valuing EVEP's assets at a higher value than people who are only looking at yield can imagine. Good luck.
more downside to come EVEP is approaching $49 again. Why is it that you all cannot accept that the entire sector could fall another 20%....This was a $38 stock only 6 months ago. No one can know where the bottom will be but this is no time to be a buyer......to much global chaos, govt debt issue here in USA will continue to weigh on the markets etc. Sold more TWO today $10.78 and wait for better entry points all around.
Susan, one other point. I don't think "grossly over-priced" is a fair observation if by overpriced you simply mean that these stocks were once lower in the past, especially if the prices you are comparing them to were during the bear market of 08-09. On a yield basis, MLPs have historically traded at 300-350 bps over 10 yr Treasuries. The 10 yr is currently around or under 3% and probably going lower with a softening economy. Many of the MLPs have yields in the 6% range and have been raising their distributions several percent each year. Their DCF ratios are also comfortably over 1.25 and some higher. The market can always overvalue and undervalue any stock at any time. When buying in a bear market, you always have to be prepared to buy lower
Susan, was going to respond to you on the SFL board, but I am glad to see you here. If you look at the charts, it looks like there is support at $44, but as you know, support is only good if it holds.
I agree with many of your thoughts on the market. I have read many articles comparing this market to past markets in which we've seen crashes and there's enough instability to replicate the same. But you also have to look at both sides. While I have tended to be bearish because I don't believe anything was "fixed" from the causes of the last meltdown (i.e. debt issuance got worse, housing still going down etc. etc.) we also saw the power of the Fed to (temporarily) push the market up. Some states are even addressing their long-term problems as we've seen with Wisconsin, Ohio and recently New Jersey. The Fed can't afford to let the system (meaning the market) blow-up entirely and the market knows this. So the market will force the Fed's hand and sell off, which will bring about QE3 (while none of the QE's fixed the economy, they did prop the market up). Who knows, maybe even the sell-off will cause some type of agreement on spending cuts as both sides have an interest in getting something done. We know that whatever agreement is reached will be part kicking the can down the road, but we also know that the market can respond positively to these temporary measures -- as it did with QE1 and QE2.
Back to EVEP, there could be $5 more on the downside and maybe even $10 if we get a crash and the whole market goes south. But according to the Baird analyst, the upside could be $82 or higher. That's a favorable risk/reward. But I agree with you, it is hard to buy in here when things are unsettled globally and we haven't yet had a really big selloff.
Maybe not, but don't worry your dividend is safe. That's all you guys care about right?
I sold out a little early on this one, but I'm comfortable with being away. If you decide to sell around $40, I might buy depending on where I see the oil price settling. But then again, the regular CVX and XOM dividends might be the way to go. Let's see where things settle over the next 6 months.