Lumber down 2% today. With all of the rebuilding to do because of the tornadoes, that tells you something else is at play. It is true that Home Depot is doing well, but that may be at the expense of Lowe's. If housing was truly turning up, then they all would be going up.
Housing prices have gone up and sales are occurring within one day of listing. The markets that blew up in the crisis have come back. Every single commentator on TV mentions the rally in housing stocks, and they have had a great rally. But then I read the following: If housing is hot, why are lumber prices going down? Today there was a report on architectural billings plunging. Caterpillar also had a negative report on US sales. Then I was at a meeting in which it was mentioned how many REO (that's real estate owned) to Rent companies are coming public in the next few months. It was joked how these companies were backed by private equity shops that bought up all of the vacant housing in certain cities squeezing out the mom and pop buyers, but how they haven't been able to fix up these properties and get them rented. Hmm.
Sarge, I love MLPs and have several positions in many that we have discussed on this board. They have been red-hot over the past few months and it is important to understand what could be driving this outperformance so that one can be ready for when those factors change. Besides the chase for yield, which has been occuring since 2009, something else must be working on MLPs. I understand that there are several MLP funds, ETFs and ETNs, that have come to market and that are forced to buy the MLP companies. This is likely a reason why the MLPs have been going up. Before I bought an MLP fund, I would want to know if there are any other MLP funds in the pipeline to maintain that buying demand.
The 3 year chart on MLPL is great. It has gone from $20 to $55, but during this time, it has had periods of large declines, including last year when it fell from $40 to $30. The fund appears to have exceeded the top end of its upward channel. At least 3 times in this 3 year period, this fund declined to the bottom of its channel. Is it different this time?
There is a difference between taking acceptable risk and taking blind risk. While the Fed-induced liquidity craze may continue to push up all yield plays, we have seen how rotation works and how some high-yield stocks can suffer declines (remember ARR and AGNC).
Well then I guess you are short MWE and WMB and WPZ and Shell and all the other companies spending a fortune on building infrastructure, crackers etc. Are all of these companies wrong including your favorite Gulfport? Will Gulfport be the only company to have good well results in this area?
I think you missed jad's point. The problem is with the differentials. The hedging issue is if they don't produce as much gas as they hedged and the price moves up over the hedge price, then they have to make good on the hedge and come out of pocket. Their actual selling price is much less than the NYMEX price you keep quoting. This is also spelled out in the prospectus. The differential was expected to grow over time to $1.93 as I recall.
But I bet not many investors in this understand all of the mechanics and if nat gas prices rise like you expect, retail investors may play this as a way to participate, along with all of the other nat gas royalty trusts, the nat gas ETF and the nat gas e&p stocks, which are even more levered to the price of nat gas.
"Interest" is not the same thing as "offers" and "bids" are not the same thing as executed definitive agreements.
grgsvll, the poster who posted about pressure issues meant lack of pressure. Yes, the Trust has a high "current" yield, but unless the production and/or nat gas sales prices pick up, it could fall short of the targeted amount they projected to pay. When that happened to a similar trust, ECT, the bottom dropped out of the stock price.
I don't have the statistics on how much CHK owns, but they own the subordinated interest, and they wouldn't hesistate to dump it if they could, a la SD did with their trusts, but probably not until they convert to regular units. I sincerely doubt that CHK is buying anymore of this since their focus seems to be on shedding assets. If CHK employees own most of it, they can't be happy that it is down since it was offered.
Stagg, I tried to post this reply but it didn't post. The reasons I have hesistated on the Japan theme are two-fold: First, nothing goes up forever and a 45% move is huge. Second, and more importantly, there was an article about Japanese bond rates which noted that they increased recently from 0.45 to 0.85%. At first that doesn' t look like much, but that is a near doubling. The article mentioned what the extent of loss that Japanese banks (and probably Japanese insurance companies) suffer, but does not mention the effect of hedges. Something to keep an eye on. I still may decide to play EWJ in case I am wrong.
Another example of the importance of paying attention to the charts, difficult as it is. At $75, it appears that the market did not have faith in Baird's $100 estimates. Wall Street leaks like a sieve and the big players knew that the chances of a deal were fading fast. It's quite possible that bidders knew that the original deal for all of the acreage was in trouble and the back-up plan was to go to the county-by-county plan. Why there were no back-up bids that could have been hit quickly shows that Jefferies botched this deal.
I agree with you that if we should be fortunate to have any partial deal announced, that news will be sold, hopefully after an iniitial short-covering rally. Few are going to stick around for the spo and to see whether they announce a j.v. to drill the oil window or whether new acquired production leads to a distribution increase.
Sorry to be snarky. My point is that this vehicle may not be the best way to play the bullish NG theory, at least at this level. There seems to be production issues (one poster has mentioned the issue of pressure in gettng the gas out) and price issues (the trust's gas sales prices are below the going NYMEX level).
Vin, its done through leverage. They are at 26%. From the CEF website, it looks like the income yield is around 4% as I recall. Doesn't mean that it can't continue up, but as with everything, I would keep the chart handy to try to detect any inflection points. However, when we get a change, it is not likely to be a gradual one.
I looked at the recent 10Q and focused on distributable cash flow instead of net income. The distributable cash flow has gone up and down over the last year. There could be accounting differences that result in the DCF not tracking with the net income (i.e. certain of the trust expenses are deducted from income evenly over the course of the year for purposes of calculating the net income, but for DCF purposes they pull them out of the reserve or add to the reserve during a particular quarter.
Clearly prices have been lower and one factor could be that they have hedged specific amounts at higher prices but have not produced that amount, thus they have to pay out for the amount not produced. Needless to say, this trust is turning out to be a little more complicated than the simple theory that production would rise as more wells were drilled and the hedges made sure that they would not be effected by declining prices.
Grgsvll, you do know this is not an MLP (it just sends a K-1 for tax info). Looks like you are going to need good luck.
Fundamental buyers? Those disappeared with the arrival of the HFT's and computer driven algos and QE forever. I suppose a few of us try to analyze "fundamentals" but in a 0% interest rate world, with junk bonds trading at 5% yields, only a purist would still believe in fundamentals and their historical relevance.
I suspect that CHKR would never have run back up to the $17 level if fundamentals were the main driving force.
50 dma is the 50 day moving average and is a technical milestone if you will that traders sometimes use. It can halt a decline, as traders may put buy-stops just below it, but also many stop-loss orders are right at the 50 dma or below.
Well, today was ex-date for CHKR and check out the decline. Of course, this was aided by another negative Seeking Alpha articlie coincidently published on the night after the last day of trading before the ex-date. After marketing down for the div, the stock broke through the uptrend line, broke support and broke through the 50 dma. Tradeable pattern or just random action? You be the judge.
Looks to have gone slightly parabolic with RSI over 74 and I think the ex-date is approaching. This did have a pretty violent selloff last Nov when it dropped about $1 with the corresponding drop of its RSI to oversold levels. I would be inclined to wait on it, but do some research on the CEF webstie.