I notice that short interest is up about 30% from previous posting. Although I cannot see shorting an MLP that has a good distribution and has been increasing them for over 2 years! I guess I am not smart enough to be a short?
its not how smart you are... insiders and underwriters (or their pals) short thru third parties before secondaries... partly to make money and partly to neutralize long positions. after the panic selling ends they close out the shorts and buy more shares. logic is that folks who bought too high for the div get screwed and say hey! i am losing some multiple of the div every day, i have to sell this, something must be wrong!!! the market is correcting, etc. first they look to see what is wrong and note the new requirement for sulphur. they use that to scare themselves even more, now they "know the reason" for all the selling and that firms up their resolution to sell and at most buy it back lower. but when the panic selling exhausts stocks like clmt go right back up, sellers miss the lows, they are too busy selling at the lows. so ask yourself: where do i want to double up my position? and buy these mlp's AFTER they do their secondaries... remember, since they distribute 90% of profits they raise money by borrowing or by issuing shares. if they borrow they are stuck with the interest costs but if they do it thru share issuance they avoid that. if you had advanced knowledge of the secondary and owned 100k shares that you could protect and you could make money all the way down and all the way back up, which method would you choose?! (well maybe You wouldn't cheat but plenty of people do). execs time secondaries for market tops and life is sweet. don't whine about the SEC not preventing this #$%$...there are two sets of rules in amerika, one for ruling elites and one for suckers. my guess: max downside on this is 31/32 in the current mkt environment so double here and double again if it goes one more level lower. the world isn't ending just yet and the baby boomers will kill for yield. i bought the panic... lucky i noticed it.