It's Saturday morning and I thought I'd share a bit of information I compile daily.
ALDW prices per unit as of September 1st---a Friday followed by consecutive Fridays through last night's close:
Sept.1 $12.15
11.42
11.35
11.23
11.53
11.73
On the surface it would appear that there's been a negative advantage favoring holders over the past month. There are other surfaces we might ponder, though. Case in point---my own cost basis is $8.06. Multiply this by the 23 units I own and it demonstrates the value of accumulation. Now, that's not to say that accumulation is always good for it depends upon other factors, price being the most important. But the prudent investor will usually watch for weakness in valuation and jump on it.
Another surface item we need to start looking at smartly has to do with upcoming guidance for the quarterly distribution pending. Whether you're in the camp that expects a repeat of the last distribution which was 35 cents---or my camp thinking it will be 60 cents and possibly 70 cents? Either way, even the lower part of the range yields a robust 12% which far exceeds the market's mathematical basis for MLP valuations which are currently set at just beneath 7%. Thus, if we use only facts in evidence---IF 35 cents remains the quarterly payout, then the unit price SHOULD eventually move to $20.00! This would then represent the 7% yield. In short, it is easily defensible as realistic.
It won't happen over night and this has nothing to do with the company itself and its success operationally. Rather, it's about investors splitting away from their emotions. It's not easy accepting a new paradigm. And it's still harder to act on our new and improved views.
If ALDW drops back to anything close to $11, I will probably add a few units, myself. It's important investors understand that we've been slow-dancing in the slow couple of months following the last quarterly distribution. The basis on which this cyclicality is built is about to change demonstrably as we're going to move into a higher gear. It's the first surge prior to actual distribution day. Following this leg of the uptrend comes guidance itself. If it's just the same-old-same-old 35 cents? I believe we move quickly to at least $14 if not $15. This works out to a yield of 14% to 15%---still well above the other MLPs (think double plus!!!). And this is why I will likely be adding on any dip over the next week to two weeks. The closer we are to the day of guidance, the costlier will be these units. The time to pounce starts now.
These are my views only. Please understand how important it is that you steer your own investment vehicle.
Happy hunting!
