Bob, there's been some discussion about MWE and the MLPs in general on the MWE board and on i.v. The two thoughts are that many if not all the MLPs are moving up because of the recent merger mania involving WMB and the TRGP/NGLS being in play and because two new MLPs funds were recently formed and have about $1 billion to invest in the sector. I bet that we haven't heard the last of the big acquisitions.
I'm wondering if the Cohens would consider an offer for the APL/ATLS/ARP complex. An analyst on their last call suggested that APL's Permian Basin assets were worth more than the entire company.
I'm going to put my contrarian hat back on for a second. This is starting to look like a blow-off top to me. It resembles past action -- the frenzy surrounding IPO's and merger mania. Vin and Bob surely remember the action in the dry-bulk sector. How many LNG and other marine type stocks have come public and have had parabolic moves? And it's not just boats, but frac sand MLPs and other "high-growth" MLPs. It always starts with a legitimate fundamental rationale -- in this case the need for energy infrastructure be it midstream or LNG, combined with the chase for yield. Personally, it's hard to not buy, especially when you witness things like EMES (frac sand) double in a couple of months, despite maintaining an overbought RSI throughout the entire rise. Greed over fear. The end of the quarter is Monday. As with all blow-off tops and parabolic moves, you just don't know when it ends. I should listen to my own advice and start selling and stop chasing, but the pull is just that great.
Gambler, the WSJ used to publish a list of all closed end funds each Monday which listed the yield and premium/discount to NAV. They may still have a list. Also, there are several fund families that offer this product: Invesco, Nuveen, Blackrock, Putnam. Most have a tab on their websites for their closed-end fund offerings. Here are some: VCV VMO VGM VKI VKQ IIM MUH PMM PMO.
A couple of points. The better yielding funds are leveraged (taking advantage of the Fed's low rates). The Yahoo numbers for yields etc. are not accurate. Best to go to the dividend announcements and calculate the yield yourself. Most of the sponsors provide the NAV on their websites, but the exchanges also post the NAV, usually by inserting the letter x before and after the symbol (it will come up on Yahoo Finance if you try). Many funds are selling at near 10% discounts to NAV. Most pay monthly. There is also a closed end fund website (I think its sponsored by Nuveen) that details the amount of undistributed income for each fund and other stats. You have to watch out to make sure a fund isn't paying out more than it is earning in interest, otherwise there is risk of a divy cut.
I bought a portfolio of these for my mom several years ago and mostly held them. Many of them had great runs from 2011-2013 with annual gains of 20% plus. They typically pay out cap gains in Dec so the charts have some declines due to that. They topped out (watch those RSI levels) at the start of 2013 when it looked like rates were going to start to go higher and gave back many of their capital gains, but started back up at the beginning of the year. With the Fed on hold, if the economy weakens, these could turn in another good year, but because of the leverage if inflation heats up or the Fed mentions raising rates, they will decline. In retrospect, I should have taken the gains back at the end of 2012.
No, its ^BKX, the KBW bank index (sometimes called the Philadelphia bank index, but I don't know why). I think you have to put either a $ or ^ in front of the symbol. Minyanville's Todd Harrison frequently mentions it in his writings as a barometer for the economy. in general, with the rationale that the banks can't do well unless the economy is doing well.
Gambler, I am a proponent of trading positions in the mREIT sector. To me, the ex-dates and frequent spo's whenever they trade at a large premium to book value, give one the chance to be opportunistic. I don't think the time is like it was a few years back when the mREITs just went up and up.
I am waiting to pull the trigger on selling NYMT. Ex date is Thursday. Maybe everyone has caught on to the game as it is only up 3 cents today. On the otherhand, I think I might hold WMC into the ex-date. My gain so far on WMC is about equal to the upcoming dividend, but WMC's is trading at a discount to its peers and below book. I think their divy was a surprise and investors might trade into it and out of the previous outperformers (like NYMT). Also, rates look like they are more likely to surprise to the down side than to the upside (at least right now). At current prices the yield is over 17% while most of the sector yields 13%. I also don't expect WMC to do an spo since they did a large one in Q1. It will be interesting when the Q2 GDP is reported, as a miss there could force rates down toward 2.0%. I have also bought some closed end muni funds yielding close to 7%.
Apples and oranges. ACMP is a midstream and has a high distribution growth rate. EVEP is upstream and has zero distribution growth. However, the upstreams like LINE, VNR and BBEP, have been going up lately. Probably a little of the oil price increase due to the Mideast and the sector getting some attention because the yields in the midstream have gotten low because of recent price advances. There has also been news in the Utica with Aubrey's firm buying more acres.
Sarge, look at the 3 year chart of the BKX (the Philadelphia bank index). It has had a nice run from a bottom in 2011 near $35 but looks like it might be topping and rolling over. It looks like it fell out of the nice upward slopping channel and looks to have formed a small head and shoulders pattern. That doesn't mean it can't recover and get back into the channel, or that it just goes sideways for some time. However, I would think that banks need rising rates and a strengthening economy to profit further and it doesn't seem like we have that, otherwise the 10 year would be going higher.
Stagg, STAG has had a tremendous run, up from $10 in 2012. It may be consolidating its gain. If it can continue to raise its dividend, then the stock price should continue to go up.
However, Wells Fargo had a report on REITS and many of the metrics were near all time highs. Maybe you can find out what the historic high metrics were for STAG and see if it may have some gas left. I think we might see some mergers in the REIT space as that gives the acquiror a chance to buy a large amount of properties and use their stock as currency.
Gambler, I've owned it for a few years. It paid a good yield and was going along well until KM announced that EPB's distribution would be flat, then it dropped over 7 points. There is some speculation that KM may eventually merge it into KMP, but the premium would be negligible. EPB does have a pipeline into Elba Island on which an LNG facility is being built. Overall, I'm disappointed with the drop in price and no growth, but the yield is pretty good and there's is the wild card of LNG. But as I have said over and over again, MLPs are not just about chasing the highest yield.
If WMC can stay above $14.75, it should make a run to $15.25, where the gap down started. At that level, it will still be yielding over 17%.
Unlike NYMT, which isn't running up yet into the ex-date next weeki, WMC probably has less risk of an spo. I might hold WMC after the ex-date since the quarterly report should be positive. Let's see where it goes.
One can never tell when the investment banks are talking their book or giving cover for the Fed. So then the Fed should admit that it is wrong and that their QE can't increase aggregate demand and produce their 2% inflation, but instead, they will say that they just need to keep at it. There is no wage inflation from demand pull (didn't you suggest that ACA would cause cost-pull inflation?). But prices are up for food. Health care and insurance. But if the stats don't measure those or include clever offsets, then I suppose they don't count. Gold bounced off the mat so someone thinks differently. Not saying we go to 4 or 5% inflation, but over 3% for a quarter or two, and those Fed funds futures are going to start to move up. From 0.25% to 0.50% is a 100% increase.
Sarge, there's a poster on the i.v. board named Factoids who also writes on Seeking Alpha. He has written several columns on MLPs and what attributes produce the best gains (e.g. growth beats higher yields all of the time, and the general partners and MLPs without IDRs produce the best). Unfortunately, it took me a while to realize this and I am stuck with a few high-yielding MLPs when I should have bought others earlier.
Gambler, WMC is not the weakest of all mREITs. They simply were outperforming after the other agency mREITs had declined and then caught up on the downside. The 67 cent divy produces a yield of about 18% which is higher than most of the sector which is around 13%, so I expect WMC to gain against the rest of the sector. Also, it had looked like rates were going over 3%, but now it looks like a weaker economy might keep rates in check, which should be good for WMC.
Stagg was too bullish on WMC when it was peaking and too bearish when it was oversold. It is difficult to get the timing right because of the constant battle between an economy that strengthens and then weakens and the perception of what people think it going to happen and how they think the Fed will play what they think might happen.
Jack, you certainly called the slowing of the economy correctly even if the timing on WMC wasn't perfect. The only problem going forward is that inflation is creeping up and the Fed is behind as usual, meaning that when they eventually have to catch up, they will overdue it and cause the next recession. Same story as always: they never want to take the punch bowl away when they should and then can't believe it when all the partygoers start having accidents.
Keebon, I bought ETP and ETE at the same time when I first started learning about MLPs. I wanted to run the experiment to see whether it was better to own the higher yielding MLP or the lower yielding faster growing GP. That has been answered conclusively. I, too, got impatient with ETP and sold for a small profit. They were stuck with propane and trying to make money in the intrastate gas market when that market disappeared. They have since now transformed themselves.
As we see with the recent WMB deal and if a TRGP deal develops, the gp's are the ones to own. I note that I once owned NGLS because of its yield and did not buy TRGP when it came public at $26 because it only yielded 2%. Ed remembers well. NGLS is a double and TRGP is a quadruple. Similarly, ETE has outperformed ETP by a huge margin. The one downside is that ETE now has at least 5 underlying partnerships and according to tax rules, you are supposed to report each MLP separately on your tax return even if you also own the underlying MLP.
No, stagg, you did the right thing. WMC was vastly overrated when you owned the shares and they had to come back to the pack. But then the spo was sloppy and the selling got overdone. Sometimes with the mREITs, you can trade them profitably in between spo's and ex-dates, and then sidestep the risk.