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Monday, November 10, 2008


The broader market is reacting to the China stimulus plan of 500+billion dollars and that has gotten commodities off their backs this morning. Nice gains in the pre-market in anything materials related and of course the entire energy complex is getting a lift as well. Crude is up 3 dollars and nat gas is up nearly 40 cents. Stock futures pointing to at least a 200 point up open. Whether it carries through until the end of the day remains to be seen.

The MLP index seems to have put a floor around 200 or so and the top of the range is 225. We are right in the middle of that range as we start the day at 211.94 and while the chart remains in sorrow and pity...we should at least take a run to the top of the range today.

We are entering the period where the earnings news and distribution announcements are pretty much done. So now we wait for the checks to come in the mail. No corporate developements and no upgrades or downgrades. I think the action lately in many mlps has been surrounding distribution cuts in future quarters and the market is taking what it views as the more vunerable among those companies down in the abyss. Astronomical yields are signs of trouble but if those companies are being tarred and feathered with the same brush, then there are buys out there. The hard part is figuring out which ones.

Headlines as they break this morning.


Anonymous said...

From everything I can gather, MWE is the proverbial baby being thrown out with the G&P bathwater. Of course,since I own MWE(and have been adding recently) I really want to believe that!

I have also been adding some DPM, but the case for DPM is weaker.


Anonymous said...

All the gathering companies seem like value traps. They have been "cheap" for over a year and get "cheaper" by the day. If liquids prices keep falling, the G&Ps will have a hard time. The only one that makes sense is WES as its a fee only operator.

Anonymous said...

Agreed. Look at APL, people have been saying that one is cheap since $30...It's been a nightmare...

The forced liquidations never seem to cease for the gathering mlps...

Anonymous said...

Certainly the G&Ps, as a group, have been under pressure. IMO, it is mistake to lump them all together. First, MWE and CPNO (to use two examples that I own and have been adding to) are vastly superior companies to APL. Second, people seem to believe that commodity prices will go down and stay down forever. That is just as silly as the notion that energy prices would keep going up forever.

The time to buy quality companies is when their prices are down--not when they are moving ever higher.

Is there risk? Absolutely.But there is also reward.


Anonymous said...

At the current rate of decline: APL will be at zero in 15 days and AHD will be at zero in 10 days!

These two stocks are the 2 biggest pieces of shit I have ever owned.

The companies are run by a guy who is big on talk and small on execution. The mid-continent purchase from Anadarko have been an unmitigated disaster. They reached too far and now they are f*cked. But not to worry, they'll hold another investor conference and tell us "all is well"

Are there any guys running MLPs that are worth their pay right now?

Anonymous said...

APL has been a known risk for well over a year. People who invested in it were either informed and willing to take a large gamble or were uninformed and lured by the large yield.

Which category did you fall in?

Either way, you should have no complaints and no one to blame but yourself.