You may want to take a loss on the highest cost shares before they turn into long term capital losses. You have to wait 30 days to buy them back in. For tax reasons you want long term capital gains and short term capital losses. When a stock is not working for a year, it is time to sell some and regroup/rethink.
Bad idea, unless you're prepared to complicate your tax filings. Selling a partial position of an MLP prevents you from taking the carry-forward losses that you have accumulated. It's a good bit of extra accounting that you might want to avoid. If you want to take losses, then take them. JMO. You can buy back in in 30 days if you want.
I never intended to project the idea that this was a win/win proposition. The minute you think that, you are courting disaster. There are any number of pitfalls that could happen. The cut/no cut argument is just one possible set of events. There are other issues that could seriously complicate matters. NRGY's loan covenants will get reviewed at some point and that is always an interesting time. Banks have a way of extacting a higher cost of lending just at a time when it is most painful. And there is always the possibility that NRGY will have to go to market with some additional units as part of a loan covenant review. And just look at today's NG price. Low and going lower. And if NRGY has hedges in place to protect it against upside moves in propane for delivery, then those are surely moving in the wrong direction, too.
Have you considered the possibility that if the distribution is cut by 10-20% that it would be good for the stock price? Paying a distribution that exceeds the DCF puts the stock under enormous downward pressure. Banks and other financiers do not like the idea of paying out more than you take in. They will only tolerate it for so long. That is why the stock is under pressure. Sellers are betting that the NRGY will not be able to raise DCF enough before the banks get antsy and force a distribution cut. NRGY will act long before the banks force them to. That is the current bet in the stock price.
If the distribution were cut to a point where it was only 90% of DCF, that would surely be seen as a positive for the stock price.
I understand. If you are right, it is a can't lose situation, 12.5% or increased share price. Never seen a can't lose situation before but I hope you are right. I need to see $29 to break even now. I am afraid that there are too many investors who won't see your logic and panic if the divie is cut. That would drive the share price down, don't you think?