Sarge, it's the chart. I should have gotten out when it crawled back to 21 but I was out of pocket and not watching the market. With the ex-date coming, you would think that someone would be buying to capture the divy, so if it was down today, I imagine it will continue to fall. Anyway, the whole thing reminded me of SDLP and in that case, it didn't matter what their outlook was on the dividend.
I've been saying it is too early to be a bottom fisher in energy. Maybe with oil at $38 and after tax loss selling season ends, it could be time to look.
Exactly. They've been promising a jv for the Utica assets ever since they finally stopped promising a sale of the same Utica assets. Maybe these guys are such a-wipes to deal with that no one wants to do a deal with them.
A few weeks ago I think Huff mentioned some airlines as buys. AAL, DAL and LUV had all rolled over and sold off. At the time, it looked like they could go lower still, as I don't trust downward sloping charts. But it is starting to look like each has found support and may be turning up.
On AAL, it looks like it bounced 3 times around 39 and has now cleared the 50 dma. It needs to clear resistance at 43, but doing so, it could run to 49.
On LUV, it bounced off of 32 and has started a new upward slope. Some resistance at 38, but then clear to 41,
On DAL, it bottomed at 40 and now looks to have broken its downward channel.
Good call by those who made it.
First, technically, it is a disaster although now oversold. Could get a bounce but then there is risk down to $13 and then $12.25. I'm staying away.
Fundamentally, I did some back of the envelope calculations as follows. Their spread is 2.79%. The book is $13.89 and they are using slightly less than 6 times leverage. The G&A and management fee is 1%. Doing the math, I come up with a divy of about 54 cents next quarter. The way I try to estimate mREIT divies is not always correct, but if WMC cuts theirs again, the stock will go lower as the market will lose faith. The risk could be down to $11 (assuming the market requires a 19% yield for this type of risk).
WMC has traditionally yielded much more than other mREITs even though they have had a fairly good record of paying out an outsized dividend. But there may be signs that record is coming to an end.
Icon, it can be a normal human emotional reaction to think of our stocks as personal decisions and that is one of the biases that I have frequently discussed in my posts. We all can suffer from it and it keeps us from being better investors. In fact, our reaction to opposing views can even make us prone to even bigger losses because we don't want to admit that we made a mistake and face the potential ridicule of posters saying "I told you so." It's not a competition between individuals. Instead, we should be trying to learn from the mistakes that each of us make, and continue to make. It's always easier to buy a stock than to sell one because when you are buying, you are filled with hope and analysis that supports your view that the stock will go up. But when you sell, there's the doubt that you might be wrong, and we tend to be optimists instead of pessimists, unless you happen to share my background of having been raised a Red Sox fan, when until 2004, disappointment and disaster, were always just waiting to happen.
No, the process of realizing that management were idiots took longer for many of us to realize. It wasn't like the stock was $70 and when it fell to $65 or 60 or 55 we said they were idiots. They did mislead if not outright lie as to the possibility of a sale of the Utica acreage (still only a handful of acres have been sold, and the previous excuse was that there was not enough takeaway capacity, which led them into Cardinal and UEO. Those did turn out well, but the stock is still down huge. The mismanagement took some time to play out. Yes, the old adage, fool me once, shame on you; fool me twice (or three or four times) shame on me, applies.
Sarge, on KMI, go to the 1 yr chart and find the prices on Sept 2013 and draw a line straight across. Support there could be around $31.5, but it also could revisit the March 2014 bottom at $29.
The way I look at it (which could be completely wrong) is that when you have a plunging stock, let the stock tell you that it has reached a bottom and has stopped going down. Many times you see these stair step patterns down where the stock will bounce up to the next stair and then continue down. Many stocks have that pattern now.
Frankly the whole energy sector is broken and as long as people keep talking about it, that means there are still plenty of people to capitulate, meaning lower lows to come. Maybe when Time magazine (is that still published?) puts a "Death of Oil" on its front cover, we will know it is time to buy.
The argument is not about maintaining the stock price. The argument is about maintaining the solvency of the company and/or creating a buyable bottom in the stock price so that one can get even on underwater shares. There is no buyable bottom at this price because the only thing that is going to stop the price from going down (as long as oil keeps going down) is for the company to buy back units, but it makes no sense to pay a distribution and buy back units.
As for the geniuses running the company, Walker bought shares at $22. These guys have all the research about oil and gas supply and demand, yet they didn't hedge out long enough. Haven't they heard about the Marcellus and all the gas coming out of there? They fired the acquisitions guy and one guy moved on, so clearly they weren't pleased with some of the exec performances.
Gambler, it's sad, but my best trades this year have been when I decided to sell things as they started to turn south, thereby avoiding much worse losses. Stuff that I held has done worse. Sometimes your best loss is your first loss.
Still trying to catch up, but it looks like the market responded well to GLOP's report, however the stock looks like it hit resistant. After a bounce like it just had, it's normal for there to be a selloff, but I'm watching this closely as the ex-date is this week (the 6th?). It should be running up into that ex-date.
I know they had a good report and raised the divy guidance, but the market doesn't seem to care about that and when the ex-date passes, there won't be anything to hold up the stock.
I could be wrong, but sometimes the market gives you a chance to take an exit even if the exit is for a loss.
Stagg, you could be correct about China and India, but taking a page out of DH's book, you don't really know who put that story out. It could be a pr agency hired by the coal companies to help prop up their falling stocks. Many times the market just cares about perception and the current perception is that coal is dead (or in the process of dying). But that's how opportunities are created (but you may be very early on catching a rebound in coal).
As for the party being over for energy MLPs, you may be right for the upstream MLPs, but the model still works for midstream and there still are a bunch of projects to build. But like most things, the midstream MLPs got too popular and too expensive, and some have too much debt (but not all). Continued selling by ETFs may drive down their prices, but just like your argument for coal, that will create opportunities.
I've been out of pocket the last few days. Saw the big miss by WMC. Glad I sold when I did. I think there are a few thoughts here. First, these mREITs can be difficult to analyze because of all the moving parts, which is why it is sometimes better to trade them instead of just holding them. We are just not going to see the book value gains that we did a few years back when MBS prices were increasing as the Fed bought every bond available. Second, it appears that WMC is finally starting to come back to the pack in terms of its dividend amount (not the yield). Gracieblackbelt from the WMC board (who used to work at WMC) fears that the dividend could shrink to 50 cents. That's still a great yield on a $13-14 stock, but the market tends to view shrinking yields as a disappointment (especially when coupled with a declining book value). So there is risk the stock will get hit if the dividend disappoints. The stock is sitting on the 200 dma after briefly piercing it. There is support at $13. If we get a strong employment number, rates could rise and mREITs could sell off again. I would wait before re-entering as the next divy announcement is not until mid Sept.
WMC was fun while it lasted, but we have seen it countless times in the market that all good things do come to an end.
Stagg, it's funny, but I was looking at ARLP and its gp, AHGP's reports today. While their stocks are down, they both managed to increase their distributions. AHGP is now yielding 10% which is absurd for a gp of an MLP. The financial metrics are not bad for ARLP with debt and DCF coverage all within comfortable ranges. They did mention that their competitors are straining -- I think a number of them are trading under $1 and on their way to bankruptcy. It is very possible that ARLP could be a survivor in a damaged sector, but it is also possible that the bad color of the sector could continue to weigh on the stock price.
In cases like this, it is best to let the charts tell you when things may have bottomed out. You have to go back quite a ways to see some support around $16. It might be best to wait until the bankruptcies of their competitors has a chance to wash through. good luck.
My take is that corporate raiders like Icahn like to buy stocks of companies where they can cut costs and sell underperforming units, do spin outs etc, to bring out a better sum of parts. Even though some mREITs are selling a good % below book, as soon as it was announced that an Icahn bought into one of these stocks, the discount would be erased significantly. Most mREITs are not big caps, so there isn't much liquidity for a raider to amass a stake without moving the price.
That's incorrect. They have $75mm, less than $2 per share. Still better than nothing. They used the UEO proceeds to pay down their credit line to zero.