Strange trading today for sure. Trading volume is average while the price per unit is rising.....now at +25 cents @ $10.58 for the high of the day thus far.
To buy NOw or not to buy? That is the question as I see it.
Ordinarily, an MLP will give significant ground very soon after a quarterly distribution. There's a period of unrest lasting around six weeks which happens to be a midpoint in the quarterly payout cycle (12 weeks in all).
Our distribution is on its way and will be transacted on the 24th which falls on Thursday of this week. Those jumping on this stock will have to wait until the next scheduled payout occurs to lock up Q3's distribution. That means a wait of about two and a half months.
However, a glance at Yahoo! data information reveals some very strong points in ALDW's favor. It can make a lot of sense for investors to at least launch positions today if not previously having done so. For those of us with substantial positions already in tow, we might wish to look more deeply into things. I won't go into details in this missive as everything has already been mapped out in previously published posts here.
If I had a nice stash of cash available, I'd be adding today, of course. If a friend asked me what I think he should do at this juncture, I'd say what I always do myself---spend a third or so of available cash and then wait and see if I could add but only at a lower price. This sets me up to take advantage of down days, the effect being that of lowering my cost basis which I see as of paramount importance.
Because I added many units on margin (using borrowed money by arrangement with Ameritrade (brokerage of my choice) before units began their more recent rise, I'm pleased that I hold the units I currently do despite paying interest monthly.
Also, my present cost basis is $8.40, about to drop down to $8.05 on Thursday which is payday. I'm unwilling to pay today's price being as units may drop meaningfully following this week's distribution.
So I need to wait and watch and see what actually transpires. One thing for sure:
If units drop over the next three months to something at or below $10, I will most definitely be a buyer because I know this company can surge right up to the $20 range quick as a wink and I want a taste of that resounding success. ALDW is strongly underpriced at this time. With the year's stronger quarters now in progress, we may receive higher distributions going forward. Even at the 35 cents being paid this week, we're receiving a yield of greater than 7% at the current valuation---but only if units rise to $20!!! We are dramatically underpriced and this, alone, justifies the $20 price tag as well as buying units.
Again---if you have no position, I don't believe you could do better than pay today's price and at least get things going. There's thousands of stocks out there, some of which are truly worthwhile. ALDW, on the other hand, has figured out how to reward unitholders quarter after quarter without complaints over taxes and government intervention resulting in a bottom line diminishment. There's been just one distribution missed since 2015 and that's remarkable. I see even better odds favoring this year's remaining distributions.
I'm currently holding 25,500 units of ALDW with a gain of $56,000 set to rise to $65,000 on Thursday when Q2 comes in.
Your feedback is always welcome!
