You are absolutely correct. However, investors who know EVEP who sold into the momentum may be slowly returning for the next round. Cooperman's Omega doesn't get in as big as they did last qtr on a whim and it wouldn't surprise me to see him increase his position when next qtr.'s ownership reports come out.
The lesson for anyone that rode this MLP down is simple. An MLP is about income first; not momentum and it was the momentum guys that drove EVEP thru the roof. Second, never hang your hat on monetization as the means to the end of shareholder value.
Mgmt needs to go back to the drawing board as Credit Suisse suggested and begin to build value monetizing a lot less in 2013 as a result of CHK's recent forced sale. Remember, CHK sold low because they were focusing on oil; not natural gas. As far as natural gas goes MWE is the Marcellus derivative play to watch in concert with EVEP going forward.
CHK was about overleverage and hoping Marcellus was more about oil prospects and Reuters reports that oil extraction in Marcellus is relatively low so go back to basics as far as value goes and perhaps today's upgrade by Ladenburg starts a move that is more about reality rather than momentum chasers chasing momentum and then springing the trap door when they decide to sell out en masse.
I sold all my EVEP between $58-$64 because EVEP violated all the rules of MLPs including choosing a path of land speculation instead of the path of consistent and growing income. EVEP attracted income seeking investors who watched momentum investors launch EVEP into orbit and the smart MLP investors got out and now is probably the time to get back in. Posters like you don't have anything to offer but simple-minded retorts rather than thoughtful counterpoint based upon something akin to having some knowledge about something other than the ability to write simple-minded retorts.
I don't think Cooperman thinks as simplistically as the average individual investor. Generally when he sees value he buys value and his thinking is much longer than most individual investors that do not have the discipline to view the longer game.
I think he was waiting for the momentum investors to finally turn against EVEP before getting in. The small investor that tries to play in the pit with the big momentum dogs generally gets bit bad.
I took a small position in EVEP upon learning that Cooperman was in and I believe he still is in but he is thinking about the longer theme of natural gas which includes today's announcement that the Obama administration approved a huge natural gas export plan and approved a $10B export facility in Texas. For those of you who really have tried to understand what will be the real long term driver of natural gas it is the ability to export. If we try to freeze nat gas to a domestic use then we will have an industry that is commodity price driven within the USA and run by fits and starts... drilling followed by capping followed by uncapping, new drilling... capping.... you get it.
Exporting is the game changer because while we may have to pay higher prices for natural gas consumed in the USA we get an industry that can function more efficiently in terms of long term drilling plans without the constant worry of domestic pricing. The element of foreign pricing allows for higher equilibrium pricing. We just found out that a lot of Chinese natural gas is in locations that will cost too much to gain access to let alone try to build infrastructure. This makes imported natural gas a better bargain for the Chinese in the future.
So try to focus like a Cooperman or a seasoned investor and start to look at the long game. I admit to piggybacking on Cooperman but I beat him in on APL and now have quadruples there.
Investors in E&P MLPs are looking for superior income that is covered by DCF. EVEP has made a conscious choice to run as a speculative MLP failing to cover DCF and by all appearances choosing to rely on speculative land sales to enhance value. All fine and good when the momentum investors are with you because the income investors are most likely out and staying out until DCF is covered. Income investors have other E&P MLPs to choose from that fully cover their distributions with DCF.
No, I am an investor who has been thru 4 of these interest rate cycles and learned when to hold them, when to fold them, when to walk away, and most importantly when to run away from Mreits which give great gifts to investors in terms of huge capital gains in addition to the great income IF you play the cycle right.
nickspinner, you are without a clue. Gary Kain cannot change the market set when 30 year rates go up from 3.36% to 3.58% in two weeks. Perhaps you should understand what you own and when the best time is to sell out rather than get your head handed to you.
Stifel must still have some clients to get out of EVEP and is attempting to put forth a sucker's buy rating on an MLP that has had its momentum and its all gone now.
EVEP is simply adjusting to a yield more in line with the peer group in sector.
NO! EVEP is not nor was it ever some SUPER E&P MLP. Momentum investors juiced this baby but good on the basis of 2 or 3 opportunistic sales of land by CHK. Now we know those foreign investors overpaid for their parcels and got caught up in the hype. The reality is the land has to be worked and the gas has to be extracted and the prices are subject to market forces and the land per acre was overpriced.
That was the entire EVEP story. The sad part is how many investors fail to understand what momentum players can do to your stock..... good and bad..... good while it is climbing and bad when it is cratering.... and ultimately ride the momentum wave until it flat out makes no sense on the basis of a simple comparison of fundamentals of the peer group.
For god's sake EVEP's yield got to be 300 basis points lower than the peer group. Those of you who rode this down still don't get that the peak valuation was a liquidation valuation..... did EVEP mgmt. ever propose to liquidate or otherwise sell EVEP as a whole? Then what the heck are any of you still riding this thing down?
Hopefully, for those of you burned down in EVEP. Lesson learned and you get it the next time something like an MLP is taken over by momentum investors.
I have been burned in the past but I learned to ride with the momentum but then get the heck out when the getting is good.
Actually, you have been given a clear warning where EVEP's stock price is heading which will bring EVEP in line with the current distribution yield for E&P MLPs as a group. Ignore the warning at your own risk. The true value of Marcellus land is being shown to you by CHK and all the momentum investors are going to leave this stock as quickly as they can. Once the momentum investors are gone EVEP will settle into a range that provides a yield that is enticing to MLP income investors. In other words, selling in the $60s was exactly the right thing to do because MLPs are not momentum vehicles and everyone got caught up in a few sales by CHK to foreign investors that wanted in but now realize they paid a huge price per acre for nada.
Look, EVEP has gotten by with puny qtrly increases because mo investors bought into the land value thesis. BIG MISTAKE. I dumped at $64 because I wanted to own an income generating MLP that turned into a momentum play. The problem with momentum was CHK is so sick it had to sell Marcellus land well beyond those few opportunistic sales to foreign investors who clearly overpaid for acreage.
That is the short story and it is finally playing out. For today's investors.... you were given a few days of a tell based on those last land sales by CHK.... you should have been out over the past three days when the getting was good.... now you have to eat it big getting out today.
And anyone thinking this will resuscitate...... NOT A CHANCE! This is an MLP and the momentum investors will finally bail and income investors will take their place and mgmt. will have to start putting forward a realistic distribution growth path to keep income investors happy.
Don't tell me, you are one of those clowns that were on the CHK board as they continued to sell assets believing that Wall Street would reward CHK with a valuation based upon the marginal value of land sales made to foreign investors who would be better classified as being too stupid to live.
MHR is going to have to sell so much there will be very little if anything less and Wall Street investors are not going to waste their time on this POS when there are so many energy companies that do not have to self-liquidate because they over committed and drained the pool of liquidity.
I have to wonder when Soros is going to want to sell a big block of his shares or completely sell out since there seems to be little reason to stay in SLRC from a growth perspective. This BDC has been unable to cover its dividend since going public. Last time resulted in decent enough drop in share price that it made for a nice trade.
Raised price target. Credit Suisse did same thing to MMP after last quarter's earnings only to raise MMP back up to a buy again. I always ignore these downgrades of best of breed but is notable only to perhaps explain in part why PAA may go down today as knee-jerk investors that choose to shoot first and ask questions later simply sell something they have no real understanding of in terms of long term potential.
Proceeded on its long march to $200+/share. Goldman can move AIG shares for a day or two now but I suspect after next quarter's results Goldman will be shown to have a very short understanding of AIG's long term prospects.
Mickey, I think you meant get hit with a huge ordinary income that is adjusted to your net capital gain. Unfortunately, any investor that chooses an MLP better understand the mechanics of what they are buying into....
For example, I have a client that is going to generate a huge ordinary loss from the sale of a rental property at a huge loss. We are using MLPs as a means of converting to ordinary income for the offset of ordinary loss when the property is sold. We actually want that huge buildup of ordinary gains so that we can offset and avoid creating a net operating loss in the year of selling the property because the nol results in piercing thru the super low tax brackets in that year which means less value and return based upon usage of optimal tax rates from year to year. Complicated strategy and you may not immediately understand but MLPs can be used strategically in many ways IF you understand the outcome from the sale of MLPs.
ACAS is back to old form with significant increase in nonaccruals as percent of portfolio year over year. It makes sense for ACAS to go even longer now in maintaining a no dividend policy. The clue is management is focused on share repurchase (a form of self-liquidation and a no growth strategy in the interim) at significant discount. I have to say that is a better interim strategy than their pre collapse strategy of a phonied up dividend level based upon juiced up financial structured assets that collapsed to zero value.
Growth investors playing the discount to nav keep the stock value higher. The question is based upon the limits of noi ACAS will not offer investors a decent dividend yield for the risk of owning a BDC at these price levels to justify owning ACAS when/if it can convert back to BDC status. For now growth investors playing ACAS for growth rule the day and allow ACAS to buy in shares on the cheap. When the NOLs are all used up ACAS can settle out of the string of increasing quarter on quarter nonaccruals it will have to decide what it wants to be..... there is a possibility and I would expect if ACAS goes back to BDC status that its shares would be discounted in order for investors to attain an in-BDC sector yield closer to the market rates earned by BDC investors today. That would mean ACAS trying to get nearer to nav before conversion only to fall back after conversion as growth investors bail; income investors re-enter but demand an appropriate yield for the risk of ownership of a BDC.
If you are in ACAS for growth you will have to consider leaving when/if ACAS gets as close to nav as is possible. Income investors may get in immediately only to be disappointed by the yield and get out because no matter how you slice and dice it ACAS is NOT best of breed in its investment choices as it relates to mezzanine and investors have been better served by ARCC, PSEC, and several other BDCs that continued to pay dividends through the entire collapse
WPZ is a laggard now that its GP has force-fed a bad asset dropdown deal to WPZ. There are better long term opportunities in MLPs with no GP controlling their destiny. I happened to sell WPZ and put it in GEL and it has slam dunk outperformed. In the next market cycle it will be the MLPs with no GP that offer the best hope for continuing distribution growth because (eventually) higher interest rates will mute distribution growth. How much, who knows.... but I lost interest in WPZ when that chemical dropdown was forced upon it by its GP. Lower returns on a high capital cost asset with high capex and other maintenance costs is a loser compared to say pipeline assets.
Then, WPZ's GP bought into ACMP's GP and is going to do deals with ACMP. Ironically, I owned ACMP and see this as an opportunity for ACMP unless and until WPZ attempts for force any dropdown that is not consistent with ACMP's ops profile.
Actually, the problem is that AGNC and MTGE have to do larger and larger offerings in order to lever into spread differentials. Anyone who has gone a full cycle knows it always ends badly..... you just don't know when it will end badly. I got out recently because I have a feeling that it will not be the fed that sends the signal but Mr. Market sends the signal meaning a sudden, shocking event changes everything. In any event you can see just how violent investor reaction is to these hiccups because you don't know if it is a small hiccup on a longer road or if we have hit a fork in the road.
I hope there is no dividend and they buy in shares hand over fist at this steep discount. I doubt there is any better use of free cash flows and today's shareholders will better appreciate a big share buyback in the near term. AIG has no need to pay a dividend near term unless they wanted to attract income investors. Now is not the time to worry about income oriented investors IMO.