PATHETIC MLP PERFORMANCE YESTERDAY
BUT LETS SEE IF BUYERS COME TODAY
BUT LETS SEE IF BUYERS COME TODAY
I saw the debate that ensued yesterday on the comments and its nice to see that you folks are actively arguing about the action. But make no mistake. Yesterday's MLP performance was terrible as measured by the weighted MLP index. Now there was a drag yesterday from Oneok LP (OKS) as it dropped nearly 2 points on its stock offering. But still we had a nearly 4% move on the S&P vs a .5 percent up move on the mlp index. In fact during the midday swoon the index went negative and 280 was in jeopardy before the afternoon buyers came in.
The charts look terrible both on the daily and weekly perspective. That all said i think we should be willing to see if MLPS play catch up today which is quite possible. They don't exactly buy our shares first in a rally and i have often noticed in these short term spike moves that it takes a day or 2 for MLPS to wake up.We have another offering of stock as DCP Midstream is selling 4 million plus shares so look for that one to be down 1 point or more today. Also this morning Eagle Rock Partners (EROC) posts earnigns which when you adjust for mark to market stuff look pretty good. But these days it doesn't matter does it?
Nothing on the upgrade downgrade list so far this morning and no other headlines.
joseph cioffi's Source Page - Associated Content
3 comments:
from Businessweek. Is why AMZ way below 21/50/200 DMA??
Since November at least 24 hedge funds have barred or limited investors from taking their money out, tying up tens of billions of dollars for an indefinite period. Among them: GPS Partners, a $1 billion fund that bets mainly on natural gas pipelines; Pursuit Capital Partners, a $650 million portfolio with troubled debt; and Alcentra European Credit, a $500 million fund that owns slumping loans used to finance private equity buyouts. The new rules affect not only the pension funds, endowments, and well-to-do families that buy the funds directly but also smaller individual investors exposed through diversified portfolios of hedge funds, known as funds of funds. Some hedge funds have broad powers under their contracts with investors to make such changes at their discretion. "It's the largest period of redemption suspensions in the industry's history," says Jonathan Kanterman, a managing director with Stillwater Capital Partners, a money manager.
It's understandable why hedge funds would want to keep investors from pulling out their money en masse. In this market, any sales would almost certainly be at cut-rate prices, guaranteeing big losses in portfolios. And once managers start dumping assets, there's also the danger that big banks, which provided the funds with credit lines to amp up returns through what's known as leverage, will demand their money back as collateral shrinks. Those margin calls would prompt further sales, setting off a vicious cycle that could ensure a fund's demise. "If you are an investor, you are upset," says one well-heeled investor in a fund that has stopped redemptions. "But if every fund has to sell at once, it's terrible."
Mad Scramble
In such fire-sale situations, the results can be ugly. The $2 billion Peloton Partners ran into trouble in February when Wall Street banks began tightening their lending requirements. The fund's managers scrambled to pay back the banks by quickly selling off assets. Peloton is now in the process of liquidating all its investments and closing the fund. Sailfish Capital Partners, a onetime $2 billion fund, got hit by investor withdrawals following a bad bet on mortgages. Instead of navigating the murky market, Sailfish shuttered last month to return as much money as possible to investors.
To prevent such scenarios, managers are trying to buy time until there's a recovery. It's a big gamble since many of the funds blocking withdrawals specialize in asset-backed securities, such as bonds made up of risky mortgages or debt for private equity buyouts. That quadrant has been the hardest hit in the $1.6 trillion hedge fund universe. In some cases, there are simply no buyers for the securities sitting in these funds' portfolios. If the turmoil continues for too long, other types of hedge funds, such as big multi-strategy portfolios that hold billions in stocks and corporate loans, may follow the trend and lock in investors.
It's not just troubled funds that are bolting the exit. Pursuit Capital, which invests mainly in debt backed by mortgages, corporate loans, and aircraft leases, earned 12% in 2007 and is up 1% since January. But early this year, nervous investors started asking for their money back. Rather than selling assets into a falling market, the managers decided to block redemptions to prevent a run on the bank. "They are doing it to protect investors," says Michael Burg, a lawyer for Pursuit.
Of course, funds that ban investor redemptions don't exactly have a good history. They sometimes end up like the two infamous Bear Stearns (BSC) hedge funds that helped touch off the credit crisis. The funds, which owned mainly subprime debt, blocked withdrawals in June. By August they had both filed for bankruptcy.
GPS Partners is a LARGE holder of MLP's. Check out its 13HF and see for yourself.
thanks for the post. Makes total sense. In fact over the last few days drops in some mlps look like someone unwinding positions.
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