Replies to post #294 on CVR REFINING (CVI)

[michaelmerriman]

Brent trades at discount to WTI

...and this has traders scared, hence the drop to the 15's. Probably more downward pressure to come as these drops worry stockholders.

The question is... what is it going to take to bring this back up?
Nobody wants the stock. Will that change with a good distribution? I think oil will have to bottom before it makes a serious run back up to expected valuations. Is the future income from distributions, especially at this entry price, enough to justify the lack of liquidity?

Jugs, does your experience with ALDW's past behavior mirror this current CVRR phenomenon at all?

[jugs]

CVRR gave up 10.6% today. While I don't wish more of this pain on anyone here or elsewhere, I'm having a hard time expecting tomorrow to reverse our recent misfortune. My expectation is that tomorrow will have us dropping another 3-4% if not more. We may see units of CVRR at $14.22! If this proves correct, then we stand to throw money away on speculators scarfing up our investment dollars while they take their profits and run. We wind up holding the bag, putting it simply.

We have no way of accurately predicting the future in oil, certainly not when examining the next few months. Will the MLPs rise from here? Most probably, yes. Will they match recent run-ups as we come down the homestretch approaching quarterly guidance? My bet is no, we'll be left out to rot in the gutter.

Even if guidance favors the high side, I can't imagine unit pricing to move in stride with historical norms. Why am I so severe on this now? Simple:

Everyone knows that the dynamics have been so crazy extreme of late that while an MLP unit will probably rise somewhat, it can be expected to drop like a rock immediately following the announcement. That makes further investment right now---during this extremely hi-strung time period---truly foolish in my opinion. There's a time to invest but it is hardly when there's little to no visibility. I think to do so is totally nuts. And this is coming from a guy who ordinarily operates with about $300Ks in the MLPs we're discussing. I'm now holding just a third of that, having beefed up elsewhere and invested in land, too.

I hope for the best, certainly. I'm not counting on it, however, and I hope I'm scaring a few good people here before they blow their money due to conflicting opinions.