Grampa,
Sure wish you could come out 'n play. Guess yer gettin' caught by fish, huh?
With NGL at $11.40, it's looking more an more like $12 is becoming more approachable. Hardly a week ago I saw $11.50 as a distinct possibility and when we hit it four days later on Thursday of last week, I was so happy for all of us on this board. I felt the rush of a family member in a way.
Now, with the second of two excellent NGL-inspired articles from Rida Morwah in less than a month if I'm correct on the temporal span, we're moving higher once again. Rida, for those who aren't in the know, is Seeking Alpha's most widely recognized newsletter publisher, along with his partner.
Rida has an analytical style not unlike my own and probably for that reason alone, I especially appreciate his contributions. You see, he doesn't get mired in numerical extremes. Instead, he adds things up this way and that, always searching for commonalities that will most probably result in widespread investor appeal. So it's no surprise to me that he'll point to the yield, distribution sustainability and also measures being taken to prevent previous quarterly disasters accounting for serious valuation issues. And especially to my liking is that he and I both see that $20 valuation not very far ahead.
So many analysts get bogged down with numbers, somehow forgetting that numbers may explain results but they aren't capable of predicting anything other than the history from whence they are derived. I know that sounds funny in a way yet it is built on a truism.
As with technical analysis, charts and projections built of not more than things historical will collapse under the pressure of things not yet seen. In the case of NGL, measures are being taken to lessen the likelihood of repeat circumstances known to have been deleterious.
It is partly for this reason that I've been so supportive of the company. We can lead a blind donkey to the well but we can't force him to drink. NGL, however, is most definitely responding to community concerns and that gives me plenty of confidence.
Regarding our ascent of the moment? The articles most assuredly are adding to the momentum side but allure of the expected 39 cent distribution is hovering closer all the time. Also, when it's officially declared by the BOD to remain in force, folks will return to the pool of believers. This will drive the valuation much higher, and quickly, at that.
Energy-based MLPs currently provide investors with a yield of 7.7%. NGL, if able to stay on track at the $1.56/annum yield point, should rise to $20.50 for the sake of parity. This is what we've been recognizing as the likely scenario on this board. And those of us here will be enjoying sizable gains soon enough.
By the way, if I had cash available, I'd be adding units today and also going forward until such time as I'm no longer underwater. My cost basis is $12.06 so we're not there yet. But we're getting there, aren't we?
Happy hunting. And remember: It's better to eat chicken than to be chicken.
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