Northern Tier Energy LP (NTI)

[jugs]

About three years ago I saw the handwriting on the wall in terms of Whiting (the trust) looking vulnerable due to diminishing reserves. I sold a fairly hefty position and encouraged friends to do the same. All but one listened and we directed funds into NTI and the other MLPs. That one, unfortunately, lost a good amount of money because he had difficulty shifting gears He is 93 yrs. young and altogether capable but tends to hold off making important changes.

The issue with this pick is that there's nothing positive to be said. Rather, investors will argue all day long that dividends outweigh other consideration. This is not true for the Trust is teetering on its very own non-existence. The same can be said of BPT although its lifeline is, arguably, considerably longer.

In the world of energy investing, there are few absolutes. About the best we can align with are those stocks whose past couple of years of history has demonstrated the ability to pay out predictably despite peculiar market conditions. Whiting is truly caught in several ways and I don't see how the company can possibly survive. More important in my mind is this:

Why bother holding onto something that appears doomed? Isn't the market telling us that oil is going to continue dropping UNTIL SOMETHING CHANGES THAT MAY REVERSE THE CURRENT NEGATIVITY?

At the moment, NTI appears to be holding its own. Or is it? I lightened my positions yesterday at $25.26 and slightly less. Given today's lower close, I've already salvaged $204. But the real capital preservation is yet to show up at the party. Understand that I hope units remain steady near $25 but I'm thinking there's a long time before May 5th when we next receive guidance. I will not be surprised to see a price collapse down to $22.

I'm still expecting we'll see a drop in oil down to $36. We may see NTI drop to $21-$22. If units drop meaningfully over the next couple of weeks, you can be sure I'll be further lightening my positions.

By the way, collapsing oil prices are not the only thing to find concerning---a geopolitical event can become suspect and then there's the possibility of a fire and/or explosion affecting throughput at the single refinery. Should the latter occur over the next six weeks, I'll be barreling my way into ALDW and CVRR.