02-17-2014, 10:07 AM
(This post was last modified: 02-17-2014, 10:18 AM by hendi_alex.)
I recently dumped my only major which was RDS-B. I think that the prolific drilling in the U.S. will put a damper on prices for the next several years. Also think that majors are in a bad spot. They have huge reserves which are eroding at an increasing rate, while new oil is harder and harder to find, and has an ever increasing cost of production. I would consider CVX, but only with greater than 4% yield at purchase.
I love EDP, but IMO the yield chasers have pushed valuations way too high. I held both EPD and ETP for several years but sold them when prices and yields dipped too low for my tastes. A second reason that I sold ETP is because of tax implications. I had held the shares for a couple of years inside an IRA, and didn't like the possible UBTI issues. I'm sure the mlp's will correct at some point, and I'll be waiting to buy shares of both, perhaps under $40 for ETP and under $50 for EDP. If those are rebought, the shares will go into my cash account as long term positions.
I held KMR and KMP for a while last year, but the company seems to have some issues. I didn't like the price action or the pressure that seems to be directed toward the company and its shares, so dumped them. Perhaps will consider revisiting KMP this fall when prices should be seasonally weak.
In general, I will not buy shares of an MLP if they are yielding much less than 7% nor if the share price is under pressure for what may be a valid concern. My biggest worry right now is the immediate effect that any rate increases will have on share price, especially for those MLPs that have gotten stretched so far in valuations. So am mostly just watching this investment class, patiently waiting on a much better entry point.
BTW, SPH is just a seasonal play on the propane shortage and very high prices this winter. Added shares at $44.48 before the ex. dividend date. Sold March $45 calls for $1.35 and sold May $45 calls for $1.65. Plan on netting around 10% through May, and will likely sell at expiration if the shares don't get called. Will sell May $45 calls if the March calls expire.
TGP is a long term play. IMO as huge NGL projects come on line in a couple of years, demand on the NGL fleets will increase dramatically. IMO there will be a significant shipping shortage at that time. TGP has fixed rate long term charters, many of which expire about the time that the increased production comes on line. They should be in a great position to renegotiate very high charter rates, and are in a good position to expand the fleet.
I love EDP, but IMO the yield chasers have pushed valuations way too high. I held both EPD and ETP for several years but sold them when prices and yields dipped too low for my tastes. A second reason that I sold ETP is because of tax implications. I had held the shares for a couple of years inside an IRA, and didn't like the possible UBTI issues. I'm sure the mlp's will correct at some point, and I'll be waiting to buy shares of both, perhaps under $40 for ETP and under $50 for EDP. If those are rebought, the shares will go into my cash account as long term positions.
I held KMR and KMP for a while last year, but the company seems to have some issues. I didn't like the price action or the pressure that seems to be directed toward the company and its shares, so dumped them. Perhaps will consider revisiting KMP this fall when prices should be seasonally weak.
In general, I will not buy shares of an MLP if they are yielding much less than 7% nor if the share price is under pressure for what may be a valid concern. My biggest worry right now is the immediate effect that any rate increases will have on share price, especially for those MLPs that have gotten stretched so far in valuations. So am mostly just watching this investment class, patiently waiting on a much better entry point.
BTW, SPH is just a seasonal play on the propane shortage and very high prices this winter. Added shares at $44.48 before the ex. dividend date. Sold March $45 calls for $1.35 and sold May $45 calls for $1.65. Plan on netting around 10% through May, and will likely sell at expiration if the shares don't get called. Will sell May $45 calls if the March calls expire.
TGP is a long term play. IMO as huge NGL projects come on line in a couple of years, demand on the NGL fleets will increase dramatically. IMO there will be a significant shipping shortage at that time. TGP has fixed rate long term charters, many of which expire about the time that the increased production comes on line. They should be in a great position to renegotiate very high charter rates, and are in a good position to expand the fleet.
Alex
