From a Barron's article today:
In a recent analysis, Barclays analyzed past returns for stocks with extremely high yields, ones with blazing dividend growth and ones with only healthy yields and ample payment growth. This last group scored best on both volatility and risk-adjusted returns against a wide range of macroeconomic backdrops, including rising and falling oil prices, interest rates, dollar strength and share prices. Extreme high-yielders generally fared worst.
Sarge, Yhoo is supposed to announce their tax saving plan next week. The plan could disappoint, but to hedge for that you buy puts. On the other hand, if the plan is good, then the stock goes up. The third option is that the plan disappoints, but it brings out a proxy contest and the stock goes up. That's why I have advocated using options to play yhoo. Reduce risk and capital and still participate in the upside.
Ed, I never could pull the trigger on EQM. Sometimes my procrastination actually works for me. Several of the brokerages still like it, but I think it could go lower. Will have to watch it and whether EQT brings the GP public.
kee, I love TRGP, but I sold it for a modest gain after having nearly a double. It will probably bounce back up, but many on the i.v. board think their guidance was overly optimistic and was based on much higher commodity prices -- oil at $60 and nat gas at $3.75.
I sold off all of my TRGP, ATLS and APL this week. I think TRGP is well run and will revisit it when the Saudis finally cut or the price of oil stabilizes, but TRGP's guidance in their recent presentation was based on much higher oil and nat gas prices. If prices don't rebound, I think that sets them up for a disappointment. I could see them raising their distribution this quarter and the stock might bounce up because of that, but then next quarter, they miss.
The ATLS "spinco" piece is still valued in the $1-3 range and projected by ATLS to pay about $1 in distributions, but there I expect ARP to cut their distribution in April when their new debt covenant metric kicks in. That cut by ARP should result in a reduction in spinco's IDR and LP receipts.
TRGP issued another presentation on their guidance. Also it has been straight down from $105 since the beginning of the year, so maybe time for a bounce.
I think you may be confused. The tender was for ATLS notes, not for the stock. Your shares should convert automatically to the merger consideration on the closing date.
BTW, if the yhoo's announcement next week does not spell out some way to capture the gains from BABA and the other assets that they own, you can bet the hedgies are going to mount a proxy contest and that news should also send the stock price up. I agree I wouldn't want to own their business going forward, but I think there's a good chance a pop is coming.
I disagree. I think you have to hold yhoo until they make their announcement next week. You could have bought some disaster puts in case nothing comes of their announcement.
Ed, I bought O last year around $42. Rates are going lower and that should prompt people into property REITS whereas they may get scared about mortgage refis. But you are right that everything has its turn to the upside and then they rotate out.
Just because oil and gas bounce for one or two days doesn't mean that the trend is not still lower. Many think oil doesn't stabilize until the Saudis cut. No Saudi meeting until March.
I am, but like I said before on the other board, I can't figure this stock out. Looks like it may have bounced off of its 200 dma, but I never expected this latest selloff. Someone mentioned that Wells downgraded the sector, but I couldn't find anything.
Going forward, some think they lower their dividend to between 60 and 65 cents. Still great, but sometimes a cut is viewed negatively. They should be under book value now so that puts a floor under it.
The recent selloff may just be a result of all high yield stocks getting dumped no matter what sector they are in.
I think the uncertainty is with oil and gas prices, not really with each of the company's. The uncertainty for each company is when they cut the distribution, whether they breach debt covenants and borrowing base determinations. Some companies have been suffering from their three way collars (I think some had sold put options at a much lower price that are now going against them). Pioneer announced a re-working of their hedges because of this.
In my experience, most companies don't like to get out in front and tell you that the distribution will be cut in the future for fear that it will start a run on the stock, but there already is a run on the stock. I think they don't cut until April when the new debt covenant ratio takes effect.
In times like this, it is important to remember the teachings of Green Eggs and Ham. I will not buy ARP, not before a distribution cut or after. I will not buy ARP, before the March 2015 debt covenant determination or after. I will not buy ARP until the Saudis cut.
Three reasons: 1) the merger consideration is tied to the price of TRGP stock, which has been plunging itself perhaps because there is no faith in their recent guidance, 2) all energy stocks are plunging with the decline in oil and the unwinding of all the ETFs, ETNs and funds that hold energy stocks, junk bonds and leveraged loans, and 3) they are the GP and holder of IDRs of ARP, an e&p MLP that may face a distribution cut because of plunging oil.
Why don't you read one of their reports and learn what the company does and how they make their money. They are a "gathering and processing" MLP, not an interstate pipeline MLP.
I thought many of the mREITs had shifted to nonagencies and commercial because of the shrinking spreads and the expectation that rising rates would lift nonagencies and commercials.
A few stories that said that big bets were made on rising rates and higher stock prices. There will be lots of covering when the opposite happens.
Yes, gas prices continue to drop, but I don't know if they were "a lot higher." Maybe on a percentage basis, but in total aggregate dollars, probably not that much. Again it depends on your usage.
I don't think it is a zero sum game because of the leverage.
My kid is spending $20 less per week, but that doesn't mean that she's going to go buy her own car and take on a $400 car payment. Also, diesel prices have not declined as much as gas prices.
I agree with you about time lags, but the difference is that the capex cuts, stock price declines and job layoffs are being felt now, while the buildup from gas savings will take longer to effect behavior. Most people have been around long enough that they don't trust movements in gas prices and not likely to make long term decisions based on a few dollars of savings.
This is normal and how mREITS work.
The sector may be under pressure because of a downgrade from Wells Fargo, but all risk assets are also declining.
I think this is the correct statement of where we are. The dumbest thing posters keep saying is "when there is blood in the streets." The killing has just started..