Over the last week and a half or so I'd loaded up on NGL and ALDW in anticipation of severe market turbulence. My goal was that of using margin (borrowed money from the brokerage) to temporarily facilitate about $42,000 in purchases of both the aforementioned stock picks. My expectation was that of reaping any available windfall, using the proceeds to help offset margin repayment obligations.
Today has brought opportunity to capitalize on the above transactions.
Addressing only NGL for the moment:
Newly acquired units over the past ten days or so cost $17.15 AFTER backing out the distribution now forthcoming. In simple language, my cost basis for the very recent 1,8590 units of NGL cost me a net $17.15.
Today I sold 500 units at prices ranging from $17.76, $17.81 and $17.85 each. Gains amount to $305, $327.50 and $3.50.
In a nutshell, I've gained about $1,000 on 1,500 units of NGL held about a week. And the distributions are yet to come home.
Most importantly, what had been margin debt of about $42,000 has now been reduced to $13,542.
I'm uncertain as to whether or not I should reduce my NGL position further as I have no way of predicting how things will play tomorrow. One thing I'm confident about: NGL is now moving into a hibernation oriented period as is typical of MLPs following declarations of forthcoming distributions. Things will be slower for a couple of months---UNLESS:
My expectation is that something big is going to occur that will affect us unitholders meaningfully. It is for this reason that I'm reluctant to divest myself of more units. At the same time, I see this moment as the perfect time to liquefy units so as to unwind margin obligations while also taking profits off the table of risk---unnecessary risk, at that
So, I will probably unwind the last of the margin debt.
Note: I'm totally unwilling to sell ALDW. I'm convinced it's going to move strongly in the days ahead. Not only is this to be expected for obvious reasons but, also, because it's a cheap stock! People love to place their bets on less expensive plays for they feel safer knowing they can unwind their bets with ease, thanks to a broader market.
I hope all you guys and gals and friends are pleased with your day!
