The street is saying the MLP fad is over. Dead. Finished. Kaput. Oil and gas will be replaced by wind and solar. Cars and buses will run on electric. A CHK bankruptcy will bring down the whole group with a colossal thud.
Very, very, very doubtful. It could take many years for the MLP sector to recover. I wouldn't hold out any hope that a bailout by a big money investor might happen. As I see it, the only hope is that patience will eventually be rewarded (if you live long enough.) That said, I wouldn't be a buyer for the foreseeable future. I would also discontinue participation in the DRIP. Just make sure you keep your money in the strongest members of the group such as EPD and MMP.
Morningstar just came out with an excellent, objective article that is well worth reading. The title is: Should You Invest in MLPs? John Waggoner gives some good tax information that dispels some of the misconceptions I've seen on this and other message boards.
MMP just can't hold a gain. $70 has become an impenetrable barrier. What we need is a really big war in the Middle East that destroys all the oil fields.
I had to have a talk with my psychiatrist to try to get my mind around why this schizophrenic stock (MLP) does what it does. She told me to stop taking my meds and take more laxatives to clear my head. I'm more confused than ever, but it looks like a screaming buy anywhere near $60 and a sell at $70. A breakout above about $73 would allow me to get the sleep I need.
The fundamental argument has become moot in the present environment. I totally agree that MMP is being pummeled along with the rest of the group for no good reason. Today is Friday, the thirteenth, so anything can happen. That fact has about the same relevance as the great earnings that were announced last week. None.
Weak oil prices following the IEA prediction that oil will remain depressed for at least the next 4 to 5 years. The OPEC goal is to break the back of the U.S. shale oil industry which they blame for the over-supply problems worldwide. Also, the MLP fad has turned into a fiasco of biblical proportions. Weak or strong, they're all vulnerable.
I'm long. VERY long! Don't get me wrong.... I'd love to see a short squeeze. Unfortunately, it's not likely to happen. Don't get your hopes up. In today's markets, short squeezes are much less likely because there are so many ways to hedge against a "full blown" short squeeze. If OPK soars to $20, I'll be thrilled. But, I'm not counting on it. Just sit back, relax, and let nature take its course.
If you believe.....
The entire petroleum industry is going belly up. MLPs are all going out of business. No more need to move anything through pipelines. The unit prices will plunge to low single-digits or zero. Distributions will be slashed or eliminated.
If you believe all that, then the current price makes perfect sense. If the MLP model made sense a year ago, a month ago, or yesterday, then the MLPs are a screaming buy.
I worked for Goodbody until they went belly-up in the very early 70's and were taken over by MLPFS. I never used CEFs because of the disconnect between market price and NAV.
MMP had a spill of ~1000bbls somewhere near Billings, from a pipe that runs between Enid and Ponca City. The company says no injuries or evacuations were ordered and no water was contaminated. The pipeline was quickly shut down and the oil has been contained. The company plans to recover the oil and clean up any affected soil. Apparently, damage to the pipeline involved excavation by another party. This appears to be minor compared to the PAA spill a few months ago off the California coast.
I'm wondering whether the distributions on the group can be maintained in the present environment of increasing inventories and declining prices that appear to have no end. Presently, FGL yields ~9.15%, SPH ~9.49%, NGL ~10.5%, and APU ~8.37%. Looks to me as if it's too way late to sell but too soon to buy.
The whole MLP/LP model is in shambles. The whole group has gotten crushed. It might be many years before they recover, but in the meantime we're likely to see major consolidation leading to far fewer players in the sector. The pain could continue for a lot longer than you think.
People like you should not be allowed off a leash in public. If there's a Dummies book on investing, it was written for Dummies like you. Do yourself a favor and learn the fundamentals of investing before you plop down your money on something you know nothing about.
You're living in yesteryear, my friend. Companies don't split the way they used to. The stock will go up if earnings and revenues go up to justify it. The price of the shares means absolutely nothing. In the current environment, there are far more reverse splits than conventional splits. (That's what happens when a company has to force the price higher. Look at C (CitiGroup) as an example of a reverse split.) Making the share price cheaper does not mean that the price will go higher. Take a look at what happened to EPD (Enterprise Products Partners) after their last split. Biggest mistake the company ever made. I very much doubt that you'll ever see APU split the shares. The whole MLP and LP sector is coming unraveled. Half the publicly traded MLPs will likely be gone in the next 5 years after mergers, takeovers, consolidations, etc.
I'll gladly make myself look like an idiot every day if I can get results like today.
I predict MMP will drop at least $4 tomorrow.
Sentiment: Strong Buy
The surprise earnings and revenue announced today show why MMP continues to be one of the best MLPs. While EPD disappointed, MMP blew away the anticipated numbers. While MMP might not hold all of today's intra-day 7% gain, I think this could be the beginning of a long-overdue recovery. Energy looks like one of the most undervalued segments of the overall market. I also like SLB and XOM (both of which I bought recently at $70), but MMP is still - by far - my biggest holding at 8000 units.