The big question with this stock is obviously about the likelihood that the distribution is sustainable. Due to the dramatic rise in oil supplies coupled with at least some downside resulting from idled rigs and associated oil patch layoffs, I'm thinking this is simply evidence of oversupply and weaker demand. Certainly, we're constantly hearing of the oil glut that speaks to the imbalance. But is it really an imbalance?
I'd argue that it's NOT! After all, what or who establishes norms? Imbalances result from temporary readjusting. They define those transitional times when it's not possible to establish norms, so we resort to saying that something is out of kilter aka imbalance. Yet it is not the oil sector that's out of balance! No, it's those of us expecting and waiting for old oil "norms" to miraculously reappear and soothingly comfort us. After all, aren't we the ones who put hard won cash into formerly thriving oil sector picks we'd expected to make it to the moon and back according to our expectations?
Something I coined last year explains my position:
Disappointments are born in the lap of expectations.
Those days, or should I say, "In those good old days....?"---those days are not these days, certainly. And as a trader focused largely on energy picks, I see no need to go back to those earlier days. No, there's a better way to capitalize on things...
Firstly, we looks for plays that appear to be surviving in this leanest of all climates during which time the entire energy sector has not only suffered mightily, it's been eviscerated and now is buzzard bait in the eyes of many.
Next, we try to define those picks capable of maintaining their earlier practice of paying out hi-yield distributions to their "partners." Locating candidates is easy enough. Determining some that have a chance of continuing their history of payouts is another matter.
Where to begin? Believe it or not, I start with picks that state clearly they intend to pay their usual or revised distribution in the next few weeks or less. Boards of directors addressing the question may pledge distribution continuation when, in fact, things can and sometimes do happen, forcing the cancellation of those payouts. However, good intentions are at least a start, one that I'm willing to live with until I find such trust no longer tenable.
JPEP is such a stock pick & I find suitable for my purposes. In effect, I am "trying it out." By that I mean I've put a small amount of money into units---picking up 500 units at $4.5479 and now have a gain of just under $100. My initial purchase was made this morning (Thursday, 1-28-16). I offer these numbers as I do on many picks so that friends and followers can decide for themselves whether or not one of my picks might become one of theirs. I tend to build my most promising picks into positions of more than 5,000 shares/units as the case may be. This is, after all, my livelihood.
By trying out a pick, I get to study intimately how the market views the company. I get to see corporate moves and observe first-hand SEC filings which I study carefully and find indispensable. And I scour message boards to gain a sense of public sentiment.
So there you have it for starters. Should I make position changes, I will publish such moves as they are executed or just before.
Happy investing!
AI
