Yep. Real risk it goes under $5 and then they have to do another reverse split, which only invites more shorting.
Stagg, you are the only poster that I have made sarcastic remarks about. Most of this thread is about responding to your attacks on me, with facts.
This whole dispute started when I (and others) challenged you on SDRL, your ceaseless pumping of your holdings and bragging about your finances which can't be verified on a message board.
Bob, another example of why you can't take every article or mention on TV as gospel. This guy is obviously talking his book so that has to be considered in the overall evaluation. But sometimes these stories can move a stock (and create an opportunity)
kee, the hard part when someone challenges one of your holdings is that the normal reaction is to get defensive and let your ego take over, making you impervious to the risks that are being pointed out. Sometimes your decision can be the right one, but your timing is off, or sometimes your timing is on, and you get fooled into thinking that the stock is a good pick when really it was a general market increase that was the reason for the increase in the stock.
Stagg, now who is making things up. For the record, I followed many of the posters on this and other boards into LINE, and PSEC. Keebon is the first one who mentioned SDLP and Bob was high on NADL. But that's the risk that I keep pointing out -- its called confirmation basis and keeps investors from making the scrutiny that is needed because they feel the safety of others and yes I have fallen into that trap too many times because so much of investing can be emotional. Everyone has some stock that has not worked out and most readily admit it. As for the royalty trusts, I was an early investor in PER, CHKR and SDT, but then I realized these high yield vehicles were destined to go lower. Luckily I got out at much higher levels and bought puts several times. Ask Rogers how many posts I have made on the CHKR warning about that and not to be enticed by the high yield.
Stagg, I was the general counsel for a publicly traded company so don't tell me about working in high levels of finance. That doesn't make me a better investor than anyone and I have never claimed otherwise, but it has exposed me to some things that a farmer may not know.
And here you go again with the inconsistencies. Now you are defending SDRL? The stock is down 75% from where you were pumping it. Now who doesn't know the difference between profit and loss. The only energy stock that I think Sarge owns is KMI and I have never owned that or recommended it so where do you get off saying he followed me into it?
And you are guilty of injecting poiitics into these boards with your constant talk about ethanol subsidies (or mandates as you like to pretend there is a difference) and your tirades against companies for moving jobs overseas, for not paying what you think are high enough taxes and for not paying enough in wages (unless it's a company you own).
And then you claim that you don't name call or attack me personally. Holier than thou.
Kee, I first heard of APL on the old Fording Canadian Coal board where a poster named Sport first mentioned it after they had mentioned they were going to restart their distribution after having eliminated it due to a hedge disaster. I think Vin, DH and Bob all owned it in the low teens. We enjoyed several years of rising distributions and at least a double if not a triple in share price. Someone on the APL board mentioned ATLS and the leverage they had as the gp and owner of the IDRs. ATLS then spun off ARP and retained the gp and IDRs in ARP.. ATLS had a great run from $11 to the mid $50's with rising distributions, but there were some investors who remembered how it came to be that APL had to eliminate their distribution in the first place and expressed their concerns with ATLS management. But because MLPs were hot and paying high yields, the operational underperformance at both APL and ARP got buried in the euphoria. I think Wells stopped covering them because they were conflicted out as an adviser and underwriter.
It goes to show you that when things are going well with a stock, that is the time to be more vigilant and heighten the scrutiny.
A Neuberger Berman Fund: Adding Gains, Curbing Pains
Relevant portion below:
“We’re shorting things that look more expensive than their peers and face competitive threats,” says Kantor.
One such stock is Consolidated Edison (ED), which Kantor began shorting last March, following a fatal natural-gas explosion in New York City’s East Harlem. The stock, which was trading at about $55 a share prior to the explosion, didn’t suffer after the event and recently was trading above $60. But Kantor doesn’t think Con Ed is out of the woods. “If they’re found responsible, that will put them in the penalty box with regulators,” he says, noting that similar tragedies have resulted in years of repercussions for other utilities, such as PG&E (PCG) in California.
Exactly Bob. One just doesn't know what they will say, as oppose to what they will do. Either way, there is potential for an overreaction and an opportunity.
Stagg, there is a fine difference between pumping and recommending a stock and I am sorry that you don't understand the difference. Let me explain it to you as I see it. I would define pumping a stock as continually posting about a stock without offering any new information about the company's fundamentals or technicals, operations or valuations or other reason for why someone is buying or continuing to hold the stock. For example, many investors like to post that a stock is going to pay out a dividend, but it is a common reaction for a stock to decline after the ex-date, usually by more than the dividend paid. Many mREITs issue spo's when their stock prices get above a certain amount over their book value. Some novice investors don't know this and could make the mistake of following someone into a stock only to see it decline. I hate to keep coming back to it, but you insisted that SDRL had "good color" and I criticized you because that term is amorphous. A reader might have thought that you had analyzed SDRL's balance sheet and their book of business, but you missed entirely the violent change in the energy sector and it turned out that SDRL had very "bad color." Gambler made similar comments to you all during SDRL's decline. Just recently you criticized managements who are paid too much, but when I offered that many holders of PSEC criticize that management, you had no response to that specific issue.. Further, how many people followed you into that Brazilian fertilizer company because you are a farmer and they thought you understood it, You yourself later confessed you thought it might be a scam.
I have said it over and over, the mistakes many investors make is falling in love with a stock and not seeing the risks that others may see and appreciate. No one can become an expert in every stock, so that's why it takes others to point out POSSIBLE risks.
Bob, in case you didn't see it, Barrons had a piece on Charles Kantor who runs a long/short fund. He is shorting ED because of some accident they had with one of their plants. He thinks if they are held liable that that would be a big negative.
I know ED is a long-term holding of yours and you are not likely to sell, but thought I would mention it just in case you wanted to add some protection.
Have you tried to look at the charts to get a better feel for where the stock could go? Luckily, I got out of SDLP early on and only lost a bit after having averaged down a bit. I was way overexposed in the energy sector. Some I dumped early with only small losses. I dumped some midstreams a bit too late and missed some bounces, but there I was trying to book profits before they evaporated completely. The problem of hoping for a bounce is that then you start to think that the fundamentals are turning when it really is only a bounce. The 50 dma can sometime be where the resistance level is, so if the stock approaches that line, that could mark a good point to get out.
It also helps to start thinking about your loss (if you have one) as a tax asset that is going to offset some capital gains or income next year.
Gambler, I appreciate your willingness to stick your head out with your opinions and welcome that you accept when I debate your views. In my view, we can only learn from others who are willing to point out the other side of the argument. I do think you are right that the Fed's statement has the possibility to roll both the stock and bond markets, but we have also seen them walk back some of their statements when the market has started to plunge, like it did last October. There is the old adage describing the effect of Fed policy on the markets of "three steps and a stumble" indicating that the market doesn't flip into a bear market until there are 3 interest rate increases. One would have to check out the history to see if that rule always worked. The problem is that that may have been the general rule when "normal" conditions were at play, not when we have had 6 years of ZIRP and QE. They say history doesn't repeat but it rhymes. That statement in itself doesn't give one any comfort in determining what the rhymes are going to be.
Best of luck to you.
Stagg, I am just pointing out a risk that others have complained about PSEC. I owned it before and sold it when it appeared that they would be cutting the dividend (which they did). I have read the Wells reports on PSEC and it is not anywhere close to a top pick in the BDC space. So is Wells wrong too?
Correct me if I am wrong, but your chief defense of PSEC was that it paid a high yield and that these spinoffs were coming.
Spin offs can be very successful, but why? Usually, the most successful spinoffs are when a very large company spins off a much smaller division that is getting obscured because it is so much smaller than the rest of the company. Did PSEC offer any facts about why the proposed spinoff is being undervalued by the market?
As for research, any one can parrot what some brokerage firm says about a particular stock, but unless you can analyze how the brokerage came to those conclusions and what assumptions they based them on, you are just letting someone else drive your portfolio. Some brokerage firms have better track records than others, and I'm not saying I believe everything that Wells says about BDCs. They make errors too. But I frequently post their recommendations in this space because (1) unless you have an account at Wells, you can't get their research, and (2) they seem to do a thorough analysis. I don't invest a lot in the BDC space but it is a frequent subject of these boards.
As for my closet, I frequently have mentioned my holdings, both my mistakes and my successes, and the areas that puzzle me. You just aren't interested in many of the stocks that interest me, but others are. But since this is a public forum, I have the right to comment on anything I want including responding to your posts. If you and Sarge, don't like it and can't debate because you are too afraid that the errors in your assumptions are being exposed, then go rent a room where you can listen to each other.
Sarge, I thought I was on ignore. If you are afraid to debate a contrary view, then you are the coward. Why are you threatened by an opposing view? Maybe if there was more balance to your views instead of always pumping your own holdings, you would see that sometimes we can be wrong in choosing to hold a particular stock. By far the biggest mistake investors make, including myself, is holding something too long based on hope instead of analysis. Now you are resorting to name calling. Look in the mirror and see who the bully is.
Jim, the problem when trying to explain why anything costs the consumer what it costs is that you have to understand all of the costs that make up the cost of a product once it reaches the shelf. We live in a market economy, but not every market is perfect. Why does an Apple iphone cost over $300 when the parts cost about $10? Because that's what the market is willing to pay. Once the NY Times did a piece on the different costs that go into a gallon of gas. There's the price of oil, then the transportation costs to get it to the refinery, the refinery costs to turn it into gas, the cost to get it to the gas station, Federal, state and local taxes at the pump and the retailer's profit. At each stage of production, there is a profit part because no one is in business just to break even. Finally, I read that gasoline prices correlate to the Brent price of oil instead of the WTI price.
If you think there is too much profit in the price of gasoline, consider the price of natural gas from well to the consumer. NYMEX price of gas is barely over $2, yet people in the NE are paying in the teens. Why? Because that's what the market can charge because there is not enough infrastructure to deliver all of the cheap gas out of the Marcellus to the markets in NE.
From this weekend's Barrons interview with the head of the T Rowe Price Dividend Growth fund:
Don’t ignore interest rates, but other factors can also impact dividend stocks. For instance, dividend stocks tend to lag in high-return market environments and do well in tough, low-growth environments where the yield provides protection. Granted, rate hikes are generally not good for dividend payers. But separate the stocks into two categories -- the high-yield, bottom-proxy-type dividend-paying stocks and the lower-yielding companies able to increase dividends at an attractive pace over time. Rising interest rates have a bigger impact on high-yield, bond-type investments.
Q: What’s the biggest mistake investors are making with regard to dividend stocks?
A: Don’t overstay your welcome in some of the very high-yield sectors. The biggest potential mistake right now is to underestimate the impact of higher interest rates on high-yield areas of the dividend-paying world.
And there you have it. BTW, he likes financials, health care, technology including Apple. He likes Visa too.
I haven't been following AGNC for a while and didn't realize they were selling over 15% below book, so there seems room to rally. But I don't see the dividend hike that you see. Looks like their core earnings are 0.45 per quarter, or 15 cents per month. Also, their spreads are around 2% if not below.
In the past, mREITs could run up to 125% of book, but I don't think that is going to happen any more. The spreads are just there unless they are in nonagencies or commercial and there you can't run 7-8 times leverage.