OK, so what's going on with NGL? Why the drop?
I've not got a "good" answer. I follow the reports, study earnings transcripts and am generally on top of SEC filings.
The earnings input we got this weeks justifies a far higher valuation as I see it. Barclays came out with a continuing "outperform" ranking while reducing the target valuation fro $24/unit to $20. I doubt this is a reflection of anything organically meaningful. Rather, my belief is that the analysts view the drop from $24.50 to $143 and change and realize nothing is going to bring us back up that much so they'd better save face and call it as anybody in his right mind would and will.
In short, I see lots of downward pressure on NGL. And it has opened up opportunities for me to add significantly. And I've been doing it:
Now holding 10,500 units with a cost basis of $13.88. Will most likely add more as this down-pressure continues, assuming it does. If we drop to $14 I will definitely be a buyer.
A couple of items standing out to me:
1.for the past couple of years this has been an awesome stock to hold, earning me a lot of money.
2. There will always be detractors and we see them now. But it's damned hard for me to dismiss the personal history I've enjoyed with the company via capital appreciation as well as yields. I expect more.
3. There was a loose connection between investor relations output and company management. As a former IR director of (other) companies in the same sector, I see the discrepancy here and know it to be easily fixed. So management will likely pull in its wishes and dreams and share a more acceptable reality. I think that's keeping things real enough for me.
4. The company continues to pay $1.56. It's not the wished-for dream version but I'm not a kid and I can accept some potholes ahead.
5. The current yield is more than 11% based on a unit going for $14.20. That's an incredible value. As for the Barclays target (albeit lower) of $20? That's $5.80 more than right now. Doing the math on 10,500 units I see a potential improvement of $60,900. That works for me.
6. I brung me to the dance. I've done well enough to regularly bank on my own instincts guided by deep thinking. There's nothing going on out there in the real world that has me on edge, meaning I am totally confident that this swan dive NGL is experiencing is largely a contrived manipulation designed to bring investors to poop where Pop ain't supposed to. So I keep on buying because I know better.
Find your own dance partner. Watch out for the games people will play. I hope YOU will be your primary partner in dance and not "u" as in "dunce."
Good fortunes!
