Forgive my blunt style, please, I'm speaking out because I think your approach could benefit from some tweaking.
You hold NGL and express gratitude for not being the sole believer here. That's important as it reflects a capacity to grow. But when you bring up CVRR in the same breath, I can't help thinking that you may not fully grasp what happened with NGL yesterday; that CVRR doesn't belong within smelling distance of your portfolio.
The key points are:
1. NGL announced the sale of an asset plus possible follow-on asset sales down the road---in the form of trust units.
2. This move guarantees NGL can continue its pursuit of previously stated goals without having to go begging for capital market assistance. This is similar to self-financing. A few of these goals demonstrated:
a. continuation of the Board's stated aim of continuing distributions.
b. less burdensome credit rating offsetting Fitch's negative one this week.
c. ability to continue the Grand Mesa plan without hat in hand help.
d. a willingness to divest itself of certain assets not central to core operations.
e. determination to establish overriding respect for the unit-holder.
f. readiness to execute successfully and profitably even in this worst of all energy-related environments.
Adding things up, what we have is a remarkable turn-around company yet the underlying rhythm stems from two primary drivers:
1. NGL will NOT be beaten down in this or any other environment!
2. NGL is reclaiming its earlier price point EVEN IN THIS WORST OF TIMES!!
Those who happen to be new to this company will see these two points just above and pile on. Of course they'll be thinking about that juicy 64 cents/unit around the corner and they know it is the first of many just ahead. And 64 cents for a cheap stock is terrific, no? Even at current valuation it's a 20% yield!
There's more I could add but I think that's enough. So let's move on to CVRR.
CVRR is controlled by Icahn. That's not necessarily bad although I personally do not trust him to put unitholder interest before his own.
CVRR is admittedly facing a severely damaging blow to throughput due to the usual safety program commenced every six years in the refinery biz. That future is now.
Analysts are calling for crack spread devastation to be reflected by distribution cuts in the MLPs---about a third if not more. So if we're thinking NTI may drop back to between 70-80 cents, then I could believe CVRR will pay 55-65 cents. And that may be overstating things.
NGL may present yet another buying opportunity prior to the final push towards the next quarterly payout. After all, who doesn't want an annualized 20%? I lean towards $16-$17 in the final days before the day of record slams shut on the quarter. That means we might see another 25% gain in appreciation by then. Monday will probably find value investors moving in but as lust subsides I could see prices dropping back. People forget quickly and that can work to our advantage. I'll be a buyer at under $12, myself.
CVRR is a fine company, great business model and executes well. And with the pending implosion of NTI, the company stands to be at least a partial offset in the refining MLP arena.
But my questions are these:
Can CVRR offer the same level of upside we see in NGL or ALDW?
When oil begins to return to an upside bias, how will that shine favorably on CVRR unitholders?
And then compare the above with how a market reversal in energy might impact on NGL. And also ALDW, by the way.
Caveat: I'm all for ownership in CVRR. Just not now! I think it's a bad call.
Lastly, I've watched your actions for some time now and I know you will understand everything I've said herein. I'm hoping you won't be offended by my treatise. lol What I want is to urge you to reorganize your thoughts as you examine key issues critical to stock management.
ALDW is moving beautifully, surely you see it as well. And NGL will probably show some serious reclamation moves over the next month. NTI may or may not hold onto support but one thing I'm absolutely certain of is that I have no wish or need to be part of the legal garbage now ensuing. I'm in the market for fun and profit. Court battles are not for fun or profit unless you're a dreamer or an attorney. And this is the wrong time for piling onto CVRR.
Finally, for the sake of diversification and allocation in one fell swoop---take a look at LADR. It's not a short term swing trade candidate. It is a high yielding REIT with conspicuously highest tiered renters on long term contracts. I began two positions yesterday...200 units per trade. I'm hoping to study this one over the weekend. Meanwhile, go to the LADR board here at IHUB for a preliminary grounding.
I hope you find this helpful.
Len
AI
