I think it was. It was screaming distribution cut. And last night Calumet Specialty Products (CLMT) did just that going from 63 to 46 cents. The company has been under tremendous pressure as rising oil prices have just squeezed this one to death.
Now there just may be a trade here as if the distribution cut has been priced in...and thats a big if....we could see this one at least stop going down especially if the oil price ever breaks...which we know that is just something that will never happen!Meanwhile here is the Eagle Rock Energy Partners chart which is doing better although the moving averages are still in negative mode. The 34 day is beginning to slope positively so at least the repair job continues.
Linn Energy (LINE) has actually formed a pretty nice "W" bottom in here so maybe we can remove this one from the most hated mlp list. 24 has been a wall in here so we need to get through it on volume to put the bottom behind us.
Of course there is Constellation Partners (CEP) aka miserable piece of shit...according to some posters. I'm inclined to agree. 50 to 15..a bounce to 21 and now back to 17 so we are in some sort of bottoming process. I would hate to have to go back down to the 15 area. I thought there was some sort of head and shoulders bottom forming in here but that neckline is looking pretty dicey so it needs to turn higher and get back above 19 and stay there.
The company has already announced no distribution increase for the quarter...but at least they are not cutting. Very agonizing.
Hey here is some good news from Legacy Partners (LGCY) which is doing a nice 4 cent boost in the distribution.
BTW even with distribution increases we are not seeing yields spreads not dropping very much. The majors in the group continue to average a 7% yield while some of the newer growers have now gravitated to a 9-11% yield. This seems like the new norm with 300-400 basis point spreads to the 10 year.
Headlines as they break this morning. At this early hour stock futures are softer. Crude is off a few ticks. Gold is trying to hold 900. One by one commodities seem to be breaking a bit in here so i would not be surprised if we see a big drop in oil very soon. BTW if a sell off in oil is coming and oil stocks get sold; a good way to play it might be with the Power shares short oil and gas (DUG). Not a recommendation here but it is among the many tools out there where one can hedge with when times get a little volitile.
And now...a little wake up music
joseph cioffi's Source Page - Associated Content
2 comments:
I don't know maybe I'm on drugs but, TA only tell 1/2 the story at best.
IMHO, I purchased CEP on the basis it has the lowest D/E in the MLP universe, 12.6% tax deferred yield and it has a projected 2008 EBITDA of $100M. EBITDA/shares gives it about a factor of 5 which is inline with KMP. A low D/E means more cash flows to the bottom line. Perhaps hedge fund/PIPE selling is not over but, it'll be eventually. I think its a screaming buy here. What am I missing
Reading-tee-leaves
Everything you say makes complete sense but someone continues to sell shares into every bid.
Calumet went from 50 to 15. They cut the distribution. Okay i get that. Makes sense. Constellation not only goes from 50 to 15; they maintain the distribution, made no indication of cutting it, and sells for a higher yield. i also don't get it.
Either there is something out there in the unknown. If there is then we'll know there was a reason to sell...if its pipes then one day the last share will be sold and CEP will jump in a hurry. In the meantime we just sit here and continue to be tortured!
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