from here. I own APL for the yield. Got in around 14. Is there any price appreciation left to go. APL to 30 or possibly more? What will move this stock? NG price? National energy policy putting emphasis on NG? Just curious about what people are thinking. I also own CHK.
The call premiums have not been that expensive for a while. I have made good money buying calls and riding them up. I think the potential gains are much less now so I do not own any.
I would look at puts but am so heavy in APL that I would be foolish to double down on puts.
I have been selling puts on Sandridge SD and MMR McMoRan. Premiums have been as high as 1% per week time value and I would not mind owning them. Premiums are high as people are expecting market moving news in the next few months. Sandridge is the Mississippian play in Oklahoma that APL is taking part in. There is some talk of it being a game changer for SD and might be a large bump for APL in a couple of years. The geology of the whole area is fascinating and continues to give more and more hydrocarbons.
As far as selling while owning options they are easy to close out the same day if you want.
FWIW I expect APL to be better than $30 in a year after listening to the last presentation. They have a similar dollar amount of internal opportunities as Laurel Mountain was going to provide next year. I could not tell if they meant $125 million or $250 million. They said they could add 60 million in capacity in West Texas for 10 million. I could not tell if that was because the consolidator plant was designed to be expanded easily or ??
I also like that APL is back to being very oily.
I think increasing distributions will result in stock price appreciation. I doubt if very many investors take to time to look at where their MLP's pipeline systems are located and the potential for organic growth which can be produced at large discounts to purchasing assets from 3rd parties.
APL may trade higher than its peers because it now has no debt, much less risk than other players at the present time--no longer a growth story, but its dist is locked in now and there wont be any debt surprises, dilutions, huge capx, etc........
APL mgmt indicated distributions in the $0.45 to $0.50 range in the 3rd qtr of 2011.
One assumes this is based on dcf from ops so then you have to consider the growth possibilities over the planned annual distribution to make a determination on whether there will be new growth opportunities for APL.
APL may have the most dry powder of any MLP right now.
Also consider that APL had the assets that became the Laurel Mountain joint venture but they did not have the balance sheet strength to follow thru on the huge capex that was going to be needed to develop Laurel. Now they have the balance sheet strength to pursue opportunities.
I suspect Chevron's planned ramp up would be faster than APL could do given its small scale compared to Chevron. Atlas had to sell itself to Chevron for the same reason... it could not do the mass infrastructure build to take full advantage of their Marcellus acreage as quickly as Chevron can now do.
If you place APL in the mlp sub section or niche player of energy group you have to go with the distribution controlling the price. No legitimate mlp is selling higher than 9-10% distribution. The new funds specializing in mlp's and current interest rates have raised prices and dropped distribution rates of 5.40 to 7.4 %. rates. Only those specializing in oil/gas are at higher ranges due to oil percentage. Having said what I have ,only distribution increase will raise the stock price and it probably will settle near a 8% distribution if the growth is exceptional.ie EVEP LINE
Need to by safety at this time, because MLP's will fall on increase in interest rates. I am buying TBT and thinking of cutting back on MLP's at this time. I really do not want to sell MLP's, still. Cannot think of any other way to invest under these conditions. I did not expect interest rates to go up at this time, I was told by all news organizations that QE2 would hold interst rates low. Well welcome to investing I suppose.
What are you talking about?
Interest rates in the US are not going up.
South Korea raised rates and there is speculation China will do so. Is that what you are referring to?
For that matter Brazil has rates over 10% I believe and Australia has raised many times since the recession.
Why is that a reason to sell your MLPs?
Personally, I think that you have to decide if your happy with $1.50 to $1.60 yield for the next two years. If so, then hold. If not then sell as close to $25 as you can.
Thats just IMO of course. But there is no compelling reason to hold APL once the Marcellus is gone.