TRADING YEAR WINDING DOWN
MLPS LOOKING UP!
Year end action continues and in that low volume selloff yesterday on the overall tape, MLPS rallied to the flat line in the last hour recovering from a point and half loss earlier. So i think the rally resumes today. We still have lots of year end distortions going on and Monday is the last day of trading for tax purposes. A few MLPS have not rallied yet such as Holly Partners (HEP), Penn Virginia Holdings (PVG) Constellation Partners (CEP) among others...and you can guess that i own all three although the PVG is one i have been buying over the last 2 days. So look for some catch up. I also bought Atlas Holdings (AHD) as this one will be yielding 6.5% going foward and is way off its high for the year which was around 46 so it has some headroom.
No news and no upgrades or downgrades. Stock futures are higher and bond yields are lower this morning. Energy is higher with oil over 97 bucks.
joseph cioffi's Source Page - Associated Content
8 comments:
After the surge on Monday, the bulk of my holdings have just gone sideways. I am adding a little here and there. I agree with you on HEP and AHD.
There is SO much negative news out there that I wonder if MLP's will be able to rise despite it. Today's report of a 9% decline in new home sales (a 12 year low) is yet another example of the steady drumbeat of news suggesting recession ahead.
Bruce (hoping for an MLP rally--but concerned)
bruce remember that during the 2000-2002 period which included recession mlps nearly doubled in price. Could be their defensive nature. Of course nothing happens the same way twice but bear that in mind. Is it different this time?
Joe,
In 2000-2002, energy prices were abnormally low. Now they are high and could easily correct--especially if we get a recession. Since, many MLP's do have varying degrees of commodity price exposure, a decline in energy prices could hurt them.
In addition, MLP's either need financing or unit sales, or both, to maintain and grow their distributions. If financing remains tight and unit prices continue to languish (as could easily happen if a recession hits) then that would also be a significant negative.
Finally, a strong enough economic slowdown could even impact the pure pipeline MLP's.
Bruce
What do people think about LP/GP trades. Does anyone put them on? Long XTEX and short XTXI and long PVR and short PVG look good to me. I recently went long AHGP and short ARLP and have made good money. What are people thoughts?
I think the macroeconomic uncertainity of recession and how that translates into MLP price performance is a real issue. We have to assume volumes will slow. A drop in crude and natgas prices will definitely slow exploration.
On the funding issue, I believe the FOMC will continue to cut rates and the Fed will continue to pump ample liquidity into the system. Funding costs may actually drop.
Correct me if I am wrong, but FERC pipelines have CPI/PPI adjustments which in the current environment will allow for increased tariff rates when renewals come up.
Allows happy to trade contructive criticism.
DS
The "tax loss" selling of MLP's never seems to end.
12/31/07...Not looking up today...Things are looking pretty grim..."Tax loss selling" never ends...Maybe MLP investors are getting a jump on their 08 returns and realing losses early ;-)
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