Stagg, I can't figure FRO other than to think the market is overly concerned about their debt and/or relationship with SFL. But that creates an opportunity if the market is misunderstanding it. I think you are correct on NYMT, but because they did not cut the divy last quarter, investors are ignoring the risk. As I have said many times, most investors don't understand mREITs and NYMT is complicated. Many investors just chase yield, which is why when NYMT was trading over $8, many did not see the last divy cut coming. I think ETN's like CEFL and BDCL are just momentum plays. When it's "risk on" people chase them and pick up a nice monthly yield. When it switches to "risk off" people start to peel out of them, with some staying longer than others to pick up an extra divy or two. With such high yields, you would think that people would be content to buy and hold, but the movement suggests that people are trading them, probably on margin to boost returns even higher.
stagg, I don't think it is "mispricing" as much as it is price adjusting for what seems like a more hawkish Fed. If and when the Fed returns to its doveishness, all stocks will bounce. The question is how far must stocks fall before the Fed is forced to resume their doveishness.
FRO has held the 7.50 level 5 times in the past, but it did dip to $6 split adjusted last Fall. They say support is only good if it holds (which is why many people disdain technical analysis).
BDCL also probably continues to go south until the Fed flips. Looks like that one topped out at $16.5. That is the problem with stocks with such high yields when the sentiment flips as you have to decide whether to hold and keep getting the divy or how much the stock will fall and when you can safely reenter. By my calculation, BDCL has given back 6 months of divies in the last 3 weeks.
I have to hand it to you though, you played it very well buying the dip in Feb and riding it up.
Now that the 50 dma is busted in the S&P, next up is the 200 dma at 2011. There might be support somewhere between 1975 and 2000, but it's hard to see. The Russell 2000 has already snapped its 200 dma and failed a retest, and the next support level there is at 1075 which is only 1.5% away. The NYSE bounced off of its 200 dma and looks to have further support at 10000, or about 1.5% away. So it looks like 1.5% is the magic number to hold. If the averages don't hold after that decline, the next support level could be some 8% away. In truth, that doesn't appear to be too bad of a correction. By that time, the Fed will have stopped talking about raising rates and there will be some slight references to "being ready with additional monetary support" if things deteriorate further.
I'm not a professional technician, but I bet many of the technicians will be out in force over the next few days, so it will be interesting to see what levels they point to. Of course, we also have to watch the RSI levels to see whether the market gets to oversold levels quickly during a decline or whether it grinds lower.
They are first in line. They get a lower interest rate on their loans because of that. Why would they allow a junior creditor to get paid first even if it benefits the debtor? The banks view is likely to be let the junior unsecured creditors write down their loans and lower their interest rates if they want to improve the prospects of the debtor. The junior creditors are most at risk in a bk so let them negotiate down.
So here we go again with the Fed talking tough on raising rates and the market predictably dropping. With all the headlines reading that June is back in play for a rate hike, none of the media outlets reported what the actual Fed minutes said -- they left themselves so many outs to not raise rates that it would be equivalent to rolling snake eyes 100 times before the conditions were such that they raised rates. Today, unemployment claims rose for the third week in a row, plus the Philadelphia Fed outlook dropped again. Who really thinks US economic conditions are going to be stronger, nevermind global conditions. But the computer algorithms will take the market down to the "next level" whatever that is, or at least until the programs start reading the headlines that the Fed is starting to change their mind again.
Now who was it that said that the market is tethered to corporate earnings and not the chatter out of the Fed?
tom, if you have been following along, you would know that ARP continued to pay their distribution in part to support their parent, ATLS, who owned the GP interest and about 20% of the LP units in ARP. The majority of the Cohens ownership was in ATLS units, not ARP units.
As to the so-called "purchase" of ATLS units by the Cohens, you were fooled again by one of the pumpers on this board because if you reviewed the actual filings, you would have seen that that wasn't a real purchase, but a mandatory conversion of preferred units into common, and no additional consideration was paid by the Cohens. So it wasn't the same as shelling out fresh money.
As I stated more than once, the Cohens holdings are already sunk, but since they are management and since ATLS owns the GP interest in ARP, in a restructuring of either or both of ATLS or ARP, they will most like stay in the driver seat and benefit from an award of new equity as other comp to help ARP and ATLS navigate through the restructuring. The banks don't care as long as they get repaid, and they don't care that the unsecured creditors are going to get shafted. The banks will no doubt get more comp from a new DIP line plus the underwriting fees for new debt and new equity when the companies come out of bk.
As to your comment that management did not know oil and gas would tank, while no one knew what the Saudis were going to do, these companies had all of the best info on market supply and how many wells were being drilled and all the production numbers, plus all the analysts in the world at their disposal. They were pigs and they got slaughtered.
There was a motley fool article out about BAC and the possibility of them raising the divy over the next few years. Looks like there is resistance at the 50 dma at $15.23. If it broke that level, it could run all the way back to $17. Sets up for a nice race between whether the Fed keeps talking about a rate hike, whether that causes the market to tank and whether that causes the Fed to reverse course yet again.
I'm not playing NUGT now, but did you see the action in it today, down 24%. Yikes. NUGT follows 3 times the NYSE Gold miners arca index, symbol $GDM on stock charts and it's much better to follow the chart of the underlying index instead of the 3 times ETF. $GDM dropped 6.8% today or 48 points. Despite the drop, $GDM is still in an upward channel, although the MACD lines are turning down. It looks like the first line of support is around $650 (11 points or 2% away) and the 50 dma is at 614. $GDM hasn't come close to its 50dma since it broke through that line in January.
That index had a 60 point decline (which was 15%) back in January, probably in response to the Fed hike in December. I think today's drop must be connected to the tough talk in the Fed minutes that were released today. Let's see if that continues. I bet if the market starts to decline, the Fed will ease off.
There are others with a far far better handle on the names in this sector. I have looked at some of the names regularly discussed on these boards, but they all seemed to have way too much debt and I really didn't think this rally in oil prices was going to go this far, nevermind hold, so I am not playing. Sometimes it's better to just wait until the storm blows over rather than trying to play the hero. Years from now, I'm sure some poster will claim that they made a 100 bagger by buying such and such e&p MLP, but they won't tell you how many of their other picks went completely broke. I know that I'm not skilled or lucky enough for that.
Thanks Bruce. I spent an inordinate amount of time trying to convince the bulls (science on his mind, chegerar and the guy who said he would buy all the way down) that this was a sinking ship and the Cohens were not to be trusted. I had no insight into the dynamics of the oil and nat gas markets but I could see that the debt was rising and they weren't being candid about the hole they dug themselves into. Plus, their lying about the projected ATLS dividend was the icing on the cake. Unfortunately, it took me a little while before I saw that this was a disaster so I had losses too, but it could have been a lot worse (and it was a lot worse on my EVEP position).
I once replied to that guy who said he made money on the banks coming out of the 2008 crisis, that this was not the same situation and that people had gotten overconfident in the ability of the market to come back and that's why I think a bunch of people rode these e&p's down. There's always a lesson to be learned and sometimes there are posters who have already learned the lesson.
You obviously don't understand IR-speak. Whenever do you hear any CEO tell investors they are going down the tubes? It doesn't happen, just as Cohen kept promising that they were going to pull a rabbit out of the hat last year.
But I doubt a buyout occurs because this is run by Western Asset which is a division of Legg Mason. Buyouts generally occur when there is no sponsor that is a mutual fund company. I could see them rolling it into another one of their funds.
Now, I'm really starting to worry about DH's memory. In another sign of his revisionist history, he says that "REITS were killing it when money markets were at 5-6%." Although he mentioned REITS when Gambler was talking about mREITS, one can look at the chart of AGNC which was trading at $5 per share in 2008, so I doubt that qualifies as "killing it." Of course some mREITS (like Thornburg and Anthracite) didn't make it through the financial crisis, but the agency mREITs like AGNC took off when the Fed started to reduce the Fed funds rate from 5% to 1%, which lowered their borrowing costs and also positively impacted the price of the MBS securities that they owned. As I remember, DH used to brag about his AGNC holdings and how they would never peak, even as the Fed cuts eventually led to a decline in their spreads and a cut in their divies.
Does DH read the stuff he posts?
1. The p/e on the S&P is over 20.
2. Corporate earnings have declined over 3 quarters in a row and yet the market has gone up debunking his theory that the market is tethered to earnings.
3. Corporate earnings have been sustained by the greatest level of stock buybacks in history. DH "warned" us about financial engineering two weeks ago to "explain" why Apple was declining.
4. DH must live in a bubble, because he apparently didn't see the unemployment rate after the 2007-9 financial crisis or the level of foreclosures.
Maybe, but we have seen this movie so many times before (in fact I was going to post another Charlie Brown analogy): the Fed warns of a rate hike, the market tanks, the Fed then postpones the rate hike because of the market decline, and then the market goes up again.
Don't get me wrong, a rate hike could happen, as it did in December after months of deliberation. But the market knows this game, and the computer algos will likely take the market down a few points just to give the Fed some pause.
Apart from the Fed chatter, some of these mREITs have had nice runs and are now overbought, so it makes sense to book some profits now and wait to see if the rate hike does occur and then reload the position if it declines.
I don't know about others, but the weather has absolutely stunk in the Wash DC area for over 20+ days and this has to be having some effect on the economy.
It looks like the S&P fell below the 50 dma after surpassing it on yesterday's rally. Let's see if that is viewed as a failed retest. The 200 dma is at 2011 or only about 1.5% away.
I don't know if people follow other posters on other boards, but in the energy space there are two that I recommend: professorwilliamdyer and justanoilguy are on many of the e&p MLP boards. Professor has used different aliases in the past (he once explained the reasoning for it having to do with his frequent travels) and has run cashflows posted to an external site for many of the MLPs to help determine whether they can survive at different commodity price scenarios. As his name implies, justanoilguy has a real knowledge of the different properties in the different basins. Since some of you are interested in playing lottery picks with different preferreds, you may want to check both of these posters out.
Ok Bruce, what have you done with chegerar? I'm not going to say I told you so, oh wait, I am going to say I told you so. I really am sorry if you lost money with these crooks, that's why I was warning last year and why I spent so much time on this board warning others.