Mark, all good general points. Regarding NYMT specifically though, have you taken a look at today's ER and do you have any concerns in practice?
Some of the income is indeed booking one-time gains on asset sales, though it seems like some of this is within the usual course of business for them. Though I'm hesitant to buy at these levels, I'm considering topping off the rest of my currently-partial position depending on what the price does in coming days. AI & NYMT are the only 2 mREIT's I'm in by the way (and no plans to add any others).
And after the close today, a stock many of us are familiar with.. PSEC. Given the contribution from that big one-time-gain event they announced maybe a month or so ago, I'm guessing their numbers today will allow them to get by for another quarter and a few more month-by-month div announcements (taking them towards middle of next year) before their backs could start to be up against a wall for a div reduction. But let's see what they say (cc is tomorrow at 11am EST). I just wish they were operating with more consistency and div coverage. I would love to be back in when they can show this, used to love the monthly high-yield divs.
Another BDC, HTGC, is after close today too. Ranks very well on most metrics for BDC's and I was considering an entry recently but I "made the mistake" of checking out the names of the companies they invest in. A lot of little software/tech companies that I'm familiar with from a past tech career... Companies that were typically struggling and on an eventual decline vs. the promise they had over a decade ago before their tech became less relevant. Maybe they've re-invented themselves, dunno, but it's hard to get past old dealings & prejudices.
There was a negative news item yesterday morning on CNBC concerning a North Sea oil company... I wasn't able to catch it but caught a glimpse of a slide showing some Nordic oil companies falling in sympathy.
NAO shares seemed to take a hit yesterday as part of that and are now taking an even larger hit today, but I haven't noticed any news. Does anyone know what's going on? The moves seem too large to simply be in relationship to oil prices, which have only trickled down a small amount in the past two days. Or maybe is this just a delayed reaction to the news on 11/6 about Statoil suspending a couple rig drilling contracts?
Who else here is in NAO? William? Keebon?
Overall that's my philosophy on this one too. The question is how safely is the div covered, particularly given the North Sea drilling climate. Let me ask if you're reading the numbers the same as I am:
It appears the div was set in anticipation of the money coming in from 2015 newbuilds and is not sustainable based on the current working fleet? $.45 div/qtr and 23.4 million shares outstanding = $10.5 mil in divs to pay. Quarterly cashflow (not including the 1 time IPO expense) is $7.5 mil, a $2.5 mil shortfall.
I think dayrates are around $25k-26k? At $25k, each incoming newbuild should gross $2.25 million/qtr.
So after the 2 January newbuilds arrive and begin contracts, chances are the current div will be shored up. Then, when the next 2 newbuilds arriving in mid-2015 begin contracts, there's the potential for div expansion (or, should day rates all get nailed across the board on NAO's whole PSV fleet, at the least allow NAO to continue to maintain over 1.0 div coverage...)
Do I seem to be looking at this correctly?
Agreed that LGCYO seems interesting at least on the surface. So, does anyone here know much about Legacy LGCY, such as quality of management, ability to weather 2015+ if oil prices remain low or fall a little further (how's their hedging?), etc? Looks like LGCY has dropped just as hard or maybe even more so vs. LNCO shares, which isn't exactly encouraging.
Is it just me, or is yhoo screwed up & filtering every use of "the vowel which isn't i,e,o,u"? Yes I've written this msg not to use the pre-mentioned vowel even once ;)
Insanity! Approaching 4mil shares traded and the stock price is still in the $3.20's. I think there's 241 million shares outstanding, so basically the market cap at today's prices is under $800 million. Less than the price of 1 new 6th gen drillship.
Where's JF in all this?...
Huff, when Mark mentioned $2, though I felt NADL had more downside I figured a price target that low might be a little bit of sour grapes.. But wow, it got to $2.95 at the low today.
My sympathies to everyone who is still in this one & SDRL :(. I sure hope they turn around after the upcoming ER.
I have a good sized position in NAO. I suggest you check out the Nov 11th thread on this forum entitled "OT: North Sea oil market news, NAO" for more information. Here's my basic NAO review:
Clean, debt-free balance sheet. 6 contracted ships running, 4 new-builds due in the first half of 2015. G&A costs likely to stay in-check even as the fleet size rises. The current div is not sustainable as-is (it is not covered by the revenues from the 6 ships). Instead it was set to take into account the future income that the new-builds will provide. I think if they contracted just 2 of the 4 new-builds, they could cover the div. Contracts for the remaining 2 would add notably extra coverage, possibly even allow a div raise. Prior dayrates were around 26k, so keep that in mind when contract announcements come in.
I think the stock is a good bet assuming we don't see North Sea active drilling-rig count dropping. Though these ships don't have to operate in that region, it would work out best if they did. If & when NAO starts announcing contracts for the 2 newbuilds in Jan and then the 2 newbuilds around June, the stock should hopefully climb as the great-yielding div first becomes sustainable, and then looks to be "over-covered". They could alternatively use the extra income to further expand the fleet, obviously that could increase risk though if there are any concerns that the number of active rigs in the deep sea drilling market declines and supply ships become too plentiful.
Hope that helped.
I'll be keeping an eye on this as well now. I've never been a NAT investor and didn't know they like to do a lot of equity sales. Hopefully this does not translate over to NAO. It seems like there are 3 key things to watch next year, then. 1) how contracting goes for the 4 total newbuilds arriving Jan & June, 2) if NAO decides next year to continue expanding its fleet, or stays pat during this period of oil uncertainty, and 3) if they continue expanding, how they plan to pay for it including if they issue shares.
I am hoping they do not try to expand next year and just demonstrate good profitablility with what they'll have (10 ships). I'd rather they be a little behind the curve and not order new ships until after it's clear that the deep sea rig market is recovering.
Since some of us have been talking about NAO recently.. Thought I'd mention that after dropping down a little over a dollar today and touching $11's, NAO saw a bunch of orders come in which have driven the price back up to $13, where it's currently holding. Not even down 1.25% now.
While I sold my remaining shares before the market opened (the last step in cutting my oil exposure down to zero), I'm watching this one closely for re-entry when oil shows a little less volatility...
Correct, it's back to the price I sold for. Higher volume than usual and it held up on this horrible oil day, a good sign IMO. I have no idea what will happen next week but I figure NAO is not going to suddenly run away from me.. Sure, I could see a reasonable scenario of it going back to $14's quickly. Ultimately I may find myself re-entering $1 - $1.5 higher than where I sold it, but that wouldn't bother me if I re-entered with confidence. I'd rather stay on the sidelines for now.
I wonder a little about tax-loss selling across the coming weeks, with NAO at its lows and having been as high as $20 earlier. But generally speaking I wouldn't worry too much, especially at a $13.79 entry. Won't have to wait too long to know how it's going to go, 2 newbuilds should arrive in January. If decent contracts get announced for them, NAO should be looking good.
I don't remember which US oil co said it today (wasn't a name I follow) but apparently when asked how they planned to navigate through lower oil prices, part of their plan is to renegotiate their pipeline prices down...
I'd hope no one was surprised by this, it's been called out for a while and only the timing was in question. Though I'm actually a little surprised they did it this month, I figured they would keep dragging things out until early next year and then weave it into part of the spin-out plan. I think today's timing wasn't bad though, with the share price already in the high $8's, a lot of the cut was factored in so the pain from the announcement is lessened.
My sympathies to those who have been holding shares, and certainly today only added to the pain.. But hopefully this is the final round of the stock taking its lumps and in the coming months it can start a true healing process. As a prior shareholder and one who wanted to get back in once they got their act together, frankly I'm happy they went to $.0833c rather than a more shallow cut, though I woulda been better yet with .08c. If a higher div was kept, I think everyone would have been nervously holding their breath on every earnings report, knowing PSEC was walking the razor's edge on covering the div. Confidence needs to be restored to the stock and part of that means seeing quarter after quarter of sustainable earnings (essentially, NII) covering the div w/o relying on one-off transactions.
For all the complexities of PSEC's business, I continue to consider the stock itself as simple to price. As both a result of the non-qualified divs they pay as well as the risks of their business, PSEC investors traditionally tend to require an 11.5% to 13% return. That puts it into a new range of 7.7 to 8.7. Average that out to avoid the extremes and you come to a 12.25% yield and a $8.16 stock price. Not far from where it's trading now...
The stock still has a big question to answer around Feb, which is what's happening with all these spinoffs. But there's nothing inherently bad with such a practice (unlike a div cut) so hopefully it will eventually be upside to the stock price.
I like Carter & most of the folks on Options Action & Fast Money.. But that said I see very little correlation to C.B.W.'s technical predictions and what actually happens.
Frankly there's a small part of me that would be happy to see the S&P stay weak through end of December, if just to confirm some basic fundamental philosophies...
It seemed like every talking head, Cramer, etc all unanimously agreed that the market would run up through the rest of December, with all the under-performing hedge funds trying to "catch up" plus get into names that did well this year to make it look like they were smart money managers... It rubbed me as really wrong that everyone took a Dec rally as a foregone conclusion, and seemed to violate the rule that we tend to get pullbacks when everyone is bullish and thinks nothing can go wrong...
Yesterday in AH it looked like the Linn stocks might finally catch a break and maybe get some shorts to cover today given these deals going through and Linn being able to pay down a lot of debt... But sadly, no dice so far today.. Perhaps the morning's Baird downgrades (with $10 price targets) are responsible.
Agreed, the price action has been horrid. In the case of this morning, interestingly enough both stocks have quickly reversed since market open and swung $.75c+, both in the green now. I'll keep my fingers crossed for those still in 'em.