ALDW will be dead money for the next year at the minimum. Why am I so certain? I am not, because certain means 100%. However, there is a high probability. Why, you may ask? For the last forty or so years refining has been a nickel and dime business with the occasional aberration or market imbalances. This has not changed. With a better distribution network for inland oil the crack spread will not improve any time soon. Next, never believe a broker analyst. They sound certain (100%) but the probability of certainty is next to nothing. Like Steve Jobs said: Looking back you can connect the dots! My addition to that: Looking forward you have to have a vision! What broker analyst you have ever heard of who had a vision, even a drug induced one? Move on. There are better opportunities then ALDW. Be save!
The best opportunities are the value plays and ALDW is oversold. Remember, be greedy when others are fearful. Also, crude is going down because of all the increased production which is at record levels. The pipelines started moving crude out of Cushing earlier this year. Now, the refiners are swimming in oil and need to turn down the flow. Production is exceeding demand.
" For the last forty or so years refining has been a nickel and dime business with the occasional aberration or market imbalances. This has not changed."
Most people on these boards seem to think refinery history started when these MLPs IPO'd. I've pointed out many times that the last 1-2 years were the aberration not the norm, but the message doesn't get through. It was only a couple of years ago that there was all that angst about refineries closing en-masse due to poor profit margins and leaving the country (especially the North East) with insufficient refinery capacity and gasoline shortages. But 3 years ago is too far back for most people on this board and they believe it must be ancient history that cannot be repeated.
Actually all investments are based on income and profits. If this stock can distribute over a dollar in the next 4 distributions then it is worth holding. If not it's a sell.
You move on. Your 40 years of history ended some time ago. Now free crack spread is the aberration and whipsawing shorts is the norm. Looks like a V bottom is in and plenty of upside interest will be helping you decide what to do next.
"Your 40 years of history ended some time ago."
The old "this time it's different" argument.
Of course, it never is.
It was only 3 years ago that refineries were about to close en-masse due to such poor fundamentals for the indistry.
There were a couple of years of better times due to unprecendented-in-history spreads.
That doesn't mean the previous 40 years are ended. Even the recent re-expansion of the spreads is still due to logistical bottlenecks which pipeline companies are working to overcome.
It's much more likely for conditions of the previous 40 years to re-establish themselves rather than for those of the last 2 years to be extended for long.
And what if the US repeals the prohibition on crude oil exports?
That would result in a collapse of these spreads.
Well, that is certainly your decision to sell. However, I will not be selling, especially at this point while the shorties are running scared. You have a lot of shorts who thought this stock was going to go down to 5 dollars in the next few days. So, I believe there is going to be a HUGE short squeeze coming down the pike. I wouldn't sell my shares right now for "all the tea in china."