While it's been relatively quiet around here lately, volumetric trading signals seem to be gently telling me there's life in SDLP.
Light trading supposedly indicates low interest in a particular offering yet it tells me the opposite may be true---that things may be setting up for a broad advance albeit without divulging much in the early going. Time marches on, ex-D day draws nearer.
At this point in time we are close to a month and a half into the quarter. This means there's roughly a month and a half to go before we go ex-distribution. At what point would it be reasonable to expect to find investors piling on, even if only for the fat distribution? Personally I think it's a wee bit early for that but my guess is not worth more than anyone else's. So let's assume I'm wrong.
Oil is reviving, quite handily if we accept massive verbiage on the subject over the past week or two. Given that I'm essentially an energy trader/investor, I've been buying into the recovery, myself.
The rig count is down, we all know this. And rigs are being warm stacked, rarely cold stacked. This reflects a broadly accepted need to conserve non-productive cash assets while there's a refusal to mothball or damagingly mortgage the future of a company.
It all boils down to opportunity for well moneyed companies to purchase rigs on the cheap cheap. And while the other side of the coin can be seen as immanent failure to survive without cannibalizing a company's self by divesting itself of critical resources, it begs the question: Just how critical is a rig to a driller if there's no opportunity to harvest acceptable day rates?
When I add this all up I'm smelling strong opportunity. Sure, the unit price has been beaten down 70-odd cents over the past month or so, but this hardly reflects the whole story. In fact, I'm of the belief that more rigs will be utilized shortly (three-four months out) although day rates are likely to be lower than YOY numbers will indicate.
We've all seen how it is that drivers pay whatever the pump demands. We've come to accept that terms are not always to our liking. And I personally am grateful for having had an opportunity to share in America's abundance. After all, I've been enjoying fat profits across my portfolios largely energy based---and I got gas barely above $2 this morning. I live in South Texas.
Soooooo.............I added 500 units of SDLP today, paying $5.37. I'm leaning towards trying to pick up another 500 units but my personal trading rules require that I improve upon the day's earlier purchase. So I'm watching for an opportunity to add at $5.30 but especially below that figure.
In keeping with full disclosure which is my custom:
My total position is now 5,500 units of SDLP with a CB of $2.84.
