Still right at the 50 dma. This hasn't been above the 50 dma since May, but it may have some wind provided the Fed keeps talking and China or Glencore doesn't blow up Next stop could be $9 because there might be some shorts on the other side of the 50 dma that would have to cover going into the distribution announcement. But it is going to have a hard time getting through $10.50 without a good acquisition announcement or good coverage.
So the question is what are you going to do with that gain, which is equal to almost 4 years of divies? Are you going to take some off or continue to roll the dice, before KMI reports. There is no doubt that MLPs have bounced and thankfully I still have some. But let's wait until they report and give some guidance before we declare alls clear.
stagg, he's exactly right. The other countries, Iran, Venezuela etc. need the money and they will fill in the supply and keep prices low. They will make up the shortfall in price by cutting programs to their populations. The biggest news item was that Norway's sovereign wealth fund is selling. There is going to be an increasing supply of stocks being sold by all of these sovereign wealth funds and that is going to push financial asset prices lower unless the Central banks come in to mop up that supply. The financial media is not going to mention this because they don't want to "scare" retail out of the markets, but this is how cycles turn.
I don't know Gambler. Clearly Russia is playing the Saudi card to try to get them to reduce production, but if they reduce, won't that just lead to all of the others picking up that supply? I just saw a headline that the Saudis may be reducing expenditures, perhaps on their rich subsidy programs for their population. In the long run, this is going to cause them problems because their population is going to turn against the govt, but govt's never change unless they are forced to. The other factor is that all of these oil rich countries who were recycling their oil dollars into equities through their sovereign wealth funds are now going to be selling equities to replace that flow.
The long term problem is that the petrodollar is in danger, which of course is what history tells us -- every country that has had a reserve currency has lost it through excessive printing and trying to defend their empire all over the world.
I don't mean to be disagreeable. Most posters only focus on fundamentals which are also backward looking as they tend to only reflect past performance and management's guidance, which is subject to change when conditions change. I'm of the view of trying to see both sides. I'm not an expert on technical analysis but it is a useful tool and it is more than just driving by looking at the rear-view mirror because it captures where the supply and demand meet and at what price. For example, the RSI attempts to capture whether a stock is overbought or oversold.
EPD and MMP are frequently mentioned as the stronger ones in the sector, but that doesn't mean that they have to trade at a premium to whatever valuation metric is the norm for the sector. Putting aside the disruption in the energy sector, the other factor impacting MLP valuations is that all high yield securities are getting re-priced. Before the great yield chase brought on by low interest rates, MLPs used to trade at yields some 3-5% spreads over Treasuries, and that was compressed as with many other spread products. High yield spreads are blowing out throughout the market and to ignore that is to ignore risk.
Finally, I agree with you that I would not try to short MLPs because you can never tell when the Fed will announce something that will make everyone get on board the "risk on" trade.
Good luck and thanks for discussing in a thoughtful manner.
I read where WMB has actually been subsidizing the distribution of WPZ, so there might be a fear that with ETE in control, they won't subsidize it anymore. Eventually, WPZ is going to be merged into ETP, probably without much of a premium. That would be better in the long run but probably caps future gains in WPZ price.
Forgot to mention that I read that Chinese markets were closed for the last week. Will be interesting to see what happens there when they resume trading.
Stagg, I was frankly surprised by the snap back in the price of oil, but this week's inventory and production numbers seemed to end the rally. As I said before, even in bear markets you can get violent rallies that sucker people in to thinking that the worst is over.
Many stocks have rallied, but I think it is important to see where they are in their charts and whether they just rallied right back to resistance. UVE has a different chart than most other stocks in that it looks like it just broke out.
I really meant to start a discussion on how companies are missing earnings. I didn't mean to get into the whole controversy over GMO. We beat that one to death months ago. Can't we talk politics or religion or something less controversial.
I didn't see any posts from the permabulls on the latest oil inventory and production report. I wonder why. Just in case anyone missed it, oil stocks are the highest in 80 years. Production was up week over week.
len, it appears the lousy jobs report brought back the "bad news is good news" for the markets, meaning that the rate hike is off. It also means that if the Fed keeps to form, they will be riding to the rescue of a deteriorating economy with more QE or negative interest rates. Of course, those policies can't create an improved economy, but they can keep the stock market up.
And you don't see any risk in relying on some "article" for your facts, that you didn't even check them against the company's own SEC filings, nevermind disclosing who wrote the article?
Do you even know what the Company pays for an interest rate before reaching the conclusion that it is low? Did you know that they are paying 10% on their second lien facility? But you are sure that it is "low" because?
Not sure why you have deemed them a "great" company. Why are they great? Did they cure cancer or some other disease? Did they invent a new technology? All mREITs basically just earn a spread by borrowing at one rate and buying paper that pays a higher rate. I'm not sure that qualifies them as being great. Now, a stock can be a good performer and make investors money and become a "great" investment if it can do so consistently over time through both up and down cycles. Let's see how they do during the next down cycle before you proclaim them as great.
BTW, shorts don't just indiscriminately attack a stock for no reason (although there have been some cases). Usually there is some reason (not readily apparent to retail investors until it is too late) for what attracts shorts to a particular stock. I don't short stocks because you could lose more money then you invested and you never know when the Fed is going to try to rescue the market by printing more money. mREITs are dependent on credit and credit has deteriorated.
Not sure where you got this info from, but I think you have made errors in your math. This is from their last 10Q:
On June 30, 2014, the Partnership completed an acquisition of a 25% non-operated net working interest in oil and natural gas liquids producing assets in the Rangely field in northwest Colorado from Merit Management Partners for approximately $408.9 million in cash, net of purchase price adjustments (the “Rangely Acquisition”).
You say this brings in $4.3mm per month (or $51.6mm per year) and will break even in 4 years. But that doesn't add up with what they said in the 10Q, where they said the purchase price was $409mm. 409mm divided by 51.6 is 7.92 years, and I didn't even account for decline or the cost of their debt.
Further, the 10Q broke out their revenues among oil, nat gas and liquids. For the last quarter, the oil revenues were $35861 and total revenues were 97260, so oil was 36%. This acquisition did increase their exposure to oil but it is still only 36% of their revenues, but I get the argument that at the margin an improvement could lead to an improvement in their overall revenues.
However, the realized price of their oil revenues is stated at $83.15 based on their hedges. As their oil hedges roll down, there will be less revenue. Oil would need to increase above $83 for them to replace those hedges and to book gain over the hedge price.
I understand the need to pump the stock with info, but you really need to compare with what they said in the 10Q or someone is going to call bull---t.
Another multinational, Monsanto, reported lower earnings and is crashing. Their answer is to cut more jobs and buy back more stock. Hmm.
My mom owned this for years and we sold it last year when it was approaching all-time highs.
Well they said it right there: "debt to EBITDA above 6x." That would breach their debt covenant ratio which is now 5x and drops down back into the 4's in another year (see one of my previous posts for the exact dates or look them up yourself).