This is a company I have spent a good deal of due diligence looking into, and have been pretty confident that the stock would sooner or later rise significantly towards normal "pre-oil crash" valuations. However, the combination of a tremendous lack of visibility into the next quarterly earnings results and the inherent chaos that a Mr. Market in search of ever-growing dividends could wreak upon a variable-pay MLP stock who offers up a lower than expected distribution has presently made me a more cautious investor.
Add in the extreme bottom in the $13's from $24's this previous summer or even this autumn's $21 offerings (which looked very tempting at the time might I add) Not to mention trading down from $17.46 high Jan 12th to a low of $13.37 two days later, Jan 14th, essentially dropping 25% in two days on nothing but a whisper of semi-related world-news or government reports. I've been keeping a good eye on this stock as well as the macro environment for oil and if I can't explain a drop like that in this stock, then it can be worrying. I don't like to buy what I can't understand, but that's just my approach.
The majority of people that have been buying this stock through January have not been trading for any perceivably rational reason, as the volatility demonstrates. Most investors are afraid to touch energy stocks (oil) now and I'm not sure when that fear will wear off. Until then a reduced demand for this stock will certainly drive down unit prices.
A tempting yield, however, will drive that demand up. I'm not an industry insider but everything I've read points to CVRR announcing a sizable quarterly distribution, after which I might liquidate a good amount of shares at a profit and re-assess my portfolio. I'm currently overweight energy stocks and don't require dividends for income as I'm operating in tax-free retirement accounts with a long time-horizon for growth. Minding these MLPs has been a great learning experience, though!
Always happy to read everyone's insights, and I thank everyone for sharing them.
