I am new here and I have not been tracking NRP. Right now NRP is right at 64.86 per share. After the 2 for 1 split (Apr 9) stocks usually settle down some. Anyone quess about where a good entry point may be? I see on the chart a leveling at about 55 per share. Do you think it could settle back to 27 or 28 after the split? I notice that the current yld is about 5.4%, is that lower than the normal yld? I have some shares in other MLP. Any help here is appreciated.
Are you saying that the volatility of a MSFT with 10B shares outstanding is equal to an EQIX with 30M shares outstanding? It's takes a lot less action to make an EQIX move than it does a MSFT.
"With increased volume you'll see a decrease in beta."
I do not think so and the preponderance of studies suggest that stock split mean nothing.
If you were good at math you would understand that. It is just a change in units with no impact on anything other than a slight increase in transaction costs for some investors.
Who cares about the short-term unless you are a trader. You shouldn't be invested in MLP's as a trader unless you want a tax nightmare. Look at the long-term effects. With increased volume you'll see a decrease in beta.
I was bored so I did just what you suggested - I googled stock splits + volatility, and guess what - the first six hits were studies that either confirmed that volatility increases after a stock split, or else accepted that volatility increased and tried to explain why it increased.
1st hits produced by Google: " Changes in trading activity following stock splits and their impact on volatility" - "after a stock split, there is a significant increase in the volatility..." Published by the World Bank in 1996.
2nd hit - "Volatility increases subsequent to stock splits: an empirical aberration" Journal of Financial Economics, 1985.
3rd hit - "The informational content of implied volatility around stock splits" (assumes the increased volatility and tries to explain it) written by a few professors at U of Illinois Urbana in 2005.
4th hit - "Small trades and increased price volatility after stock splits" This paper cites several prior studies that documented post-split volatility increases. I got bored trying to figure out who wrote this.
Anyway, I'm going to watch the Yankees- Red Sox, so forget the rest. The point is that stock splits increase trading volume (duh), and at least in the short term, they increase volatility, too.
Entry point? My approach will be to scale further into the position after the new units/shares are issued. With the float increase, post the issuance date, NRP will be easier to enter or exit.
My analysis is the same as yours.
I am thinking of selling NRP now and buying ARLP but notice it has been going up with NRP which makes me wonder what is going on here.
Any thoughts on that?
Disclaimer: I do not own NRP. But looking at it with a maybe to enter at some point. Right now the market for most stocks is red hot. Coal looks really on fire. If a person is a long term investor NRP is probably a good hold right now. I own ARLP and PVR. They each make up about a 4.6% position in my portfolio. Commondities is the place to be invested for now. It does not look like mkt is going to allow NRP to follow the usual pattern any where soon. Normally after a split the price settles back after it has run up before the split date. Sometimes it takes a month or two. Earnings play an important part to. Steady earning increases will keep the mkt price moving up. Since I already have some coal investments I am going to be patient and watch NRP for now.
NRP's business model is a killer. ARLP is more like BTU, ACI, etc. Think for NRP as a coal REIT with profit sharing on production. I consider it at FV here, and ARLP is the cheaper stock, but NRP is higher quality. I own both.
"Is April 9 your one year holding period mark?"
That is a good question....I should check on that. My first units are way over a year old but my more recent units may not be a year old.
I just checked and all my units are owned for more than a year...thanks for reminding me to check.
I can see the share price dropping to $30 post split and if that happened I think I might buy my units back maybe a few more in the process if I get to sell now for $75 as I hope.