Could not stand it any longer and had to buy HCLP, a frac sand MLP. I've been watching it since May but refused to buy because it violated my rule for not buying when the RSI is over 70. There were a few times when it corrected, but I didn't buy. EMES, another frac sand company, went from $45 in March to $105.
Fish, "doing the same thing the others are doing." That statement really needs to be checked. Yes, all the mREITs invest in MBS and hedge and use leverage, but that's where the similarities end. Of course with the Fed weighing in with both hands and feet on the scale, who knows how this is going to work out.
SC4, you raise two points. One is the fear-thing about buying a stock back at a higher price. This fear has kept me out of some stocks that I sold too soon. Many will average down when a stock goes lower, but not average up when it is clear that a stock has very long legs.
Second, in mREITs, it's not just the leverage of repo debt that counts. The investments themselves can be intrinsicly leveraged. Subordinated CMBS and mezz loans (two current NYMT investments) are very leveraged. Recent yields of 33% on subordinated CMBS in NYMT's portfolio tells one that they are very leveraged instruments. Know what your mREIT owns. Not all 13% yields are created equal.
Sarge, as a contrast to my sale of NYMT, I decided to hold my WMC through the ex-date because 1) WMC is still trading below book value so there's little risk of an spo, and 2) WMC is yielding between 17-18% and is primarily in agencies, so not only are you getting paid more, but they have a less riskier product than subordinated CMBS and mezz loans. Also, it looks to me like the economy is slowing somewhat which will put pressure on rates downward. Of course with mREITs we have to constantly be aware of the Fed's action on short-term rates. Bullard said yesterday that the market is not understanding that rate hikes are coming sooner rather than later, but he may just be trying to talk the market down. The Fed is like the boy who cried wolf.
SC4, welcome back. I do not want to be a long-term holder of any mREITs. I view them as opportunistic trades. Very few of them have continued upward in price without any type of correction. Last year, we saw the dislocation in the agency mREITs (AGNC etc.) when the taper hit and their book values got hit. I am still underwater on a piece of MTGE.
My past experience is that mREITs buying subordinated CMBS and mezzine loans are risky (look what happened to a little company named CRIIMI MAE back in the Russian crisis of 1998 and to Gramercy Capital and Anthracite Mortgage). Investors have become complacent when it comes to the Fed almost guaranteeing that rates will remain low.
My rationale is this: NYMT is yielding 13% annually. So if I can make the equivalent of 13% by trading out of the stock (and reduce my risk), then I have achieved a greater risk-adjusted return. Most investors are only focusing on yield/return without any regard for risk.
As it turns out, I would have done better yesterday by holding NYMT and collecting the divy, but we didn't know that that's how it was going to turn out. Earlier in the day, NYMT had declined greater than the divy. Today could be a different story.
Finally, I probably could have made more if I executed my entry point better. I bought on the spo date thinking that the stock would bounce up immediately after the initial decline when in fact it traded down another 30 cents or some 4% lower. If I play this next time, I will be more patient.
A blow off top occurs near the end of a bull market advance in which stocks increase at an even greater rate than what they had been increasing. The magnitude of the advance is greater and the time in which it occurs is much shorter.. On a chart, the prices almost go vertical.
This is why I think this could be early signs of a blow-off top. Too many stocks are having moves that aren't connected and that are outsized. Calling the exact top or the event that pricks the bubble is impossible.
Kee, here are the percentage increases since Jan 1 (without divs) for some of the GPs that I have mentioned.
ETE: 44% (18 points since Jan)
WGP: 34% (20 points)
TRGP: 51% (45 points)
Correction, I was told by another poster and verified with Fidelity that ordinary stock orders are adjusted for divy payments (i.e. reduced). This does not happen with option strike prices for regular divies.
"Why is it you folks distrust ALL the GOOD numbers and believe ALL the BAD?"
First, the post was in response to your post in which you said "you don't prove your point by saying the economy is worse than it really is." So then an economic number is given as proof that the economy is not as good as maybe you say (remember you gave the job stat as evidence that the economy was strong), and that is dismissed as caused solely by the weather. Really, the weather caused all of that damage?
Second, numbers are always massaged and the headlines rarely explain the full picture. That's why we can have a lower unemployment number, but also a lower participation rate. That's why we can have increasing food and energy and asset prices, but deflation in other areas. . That's why we can have "job growth" of 200,000 jobs, but made up of lower paying, less than full time jobs.
The historical evidence is that the Fed has an awful prediction record (no matter which political party is in power).
Here is a reason to wait at least until the smoke clears from tomorrow's opening. The 50 dma is 14.38 and the 200 dma is 14.21. Frequently, investors mechanically place stops at the 50 dma and 200 dma which don't adjust automatically for the ex -div dates. There have also been plenty of stories about algorithm traders that "hunt" these stop losses with the result that the stock goes lower when they are taken out. I have not seen this particular action in WMC, but I have seen it with certain royalty trusts.
Huff, didn't you mentione Marine Harvest a few years back? Saw it mentioned in one of the SA articles on DSSPF. Yield 22%. Stagg, I'm surprised you haven't found this one. Salmon farming.
I was hoping for a little bit of a divy run into the ex date tomorrow. Now watch it happen into the close. Anyway booked a nice gain for 2 months of work. I'll revisit after the next spo. Interestingly, if the stock is marked down tomorrow by the amount of the divy (27 cents), that could bring the open near the 50 dma and trigger some sell stops. Normally that would be an opportunity to buy, but they most likely will do an spo since they are trading so much over book.
That has been the game so far, but this time the Fed is tapering. They have said they would reconsider if things got bad. The problem is that they also have been saying they needed to do QE to make things good, but how successful has it been if the economy starts to go south the minute the stop it. My guess is that they would need both a deteriorating economy (longer than 2 negative quarters) plus a stock market plunge in order for them to restart QE.
Rates are going to drop. Agency mREITs should benefit unless the whole market goes down. Is this the news that finally causes the market to correct as we head into the end of the quarter with everyone up and looking to take some profits?
It will be interesting to see the action in the BDC's. They had quite a run before the disruption of the removal from various indices, but have recently bounced back up. My speculation was that money was rotating out of mREITs and into BDCs because of the expectation of higher interest rates and the belief that higher rates meant greater lending opportunities (i.e. from a growing economy). But what happens if we don't get higher rates or a stronger economy? Will money rotate out of BDCs and back into agency mREITs or somewhere else? I always get a little jaundice when multiple investors "discover" a new sector and proclaim it the new-new thing with no downside risk.
Vin, my thoughts exactly. Although to be fair, it is probably still somewhat early in the LNG game (maybe 3rd inning). But the sector is not exactly unrecognized. So the stocks will go up just because the money will follow their % increase weighting in the indices. Subspecialties will develop just like we used to think of MLPs as mostly pipelines and then upstreams and midstreams grew.
There is a lot going on with energy as a result of all of the shale activity that has been going on for several years now. Today there was news about the exportation of condensate and there will be companies who will benefit from that (initially PXD and EPD, but maybe APL as a beneficiary of PXD's drilling).
I don't see how you get there. ACMP is carrying their 49% at about 500mm (from 2013 10k). That makes the whole thing worth $1b. Say they pay a 20% premium. That's $1.2b. EVEP's share is 252mm. ACMP would have to pay almost triple for EVEP's % to be worth $600mm.
$252mm would not be a bad price for EVEP (I'm not counting what Cardinal is worth). In previous presentations/conferences, they said it would be worth about $5 per share a few years down the road. Nice, but I still wish they could sell some acres. Then you would see a real pop.