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td94306

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  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #51 [View instapost]
    South,

    Goodrich Petroleum has most of its acreage in the Tuscaloosa Marine Shale (TMS), which has higher break-even cost and will be problematic if oil stays low. TMS is also not as proven as other shale plays. You may want to be careful with this one.
    Dec 17, 2014. 05:12 AM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #51 [View instapost]
    Fear,

    Thanks for the links.

    I recently bought a basket of E&P MLPs … LGCY, LNCO, MEMP and VNR. LINE and BBEP survived the 2009 crash. I believe these MLPs will survive this sell-off too.

    TD
    Dec 13, 2014. 02:18 AM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #51 [View instapost]
    South,

    NOG has a non-operated (non-op) business model. This means that they don’t drill their own wells but will participate in well drills by other E&P companies. (See slide 5 of the latest NOG presentation

    http://bit.ly/1BFNR7O)

    One bad thing about the non-op model is that they have no control over drilling of new wells. They can only elect to participate or not in new wells. Their cost is determined by the cost of other E&P companies (probably what S & P meant when it said NOG has a "competitive cost structure”).

    E&P companies are hard to evaluate because you have to know (i) which shale plays they are active in and (ii) whether their acreage is in the sweet spot of the play. OAS has gone down the most because their acreage to not the best.

    http://seekingalpha.co...

    BTW - Richard Zeits, a knowledgeable oil and gas writer on SA, said this on 12/12/14. “It might be interesting to turn to the example of the previous "extreme" correction of 2008-2009. There were certainly some companies that faced challenges (I recall Kodiak trading at $0.20 per share). But I do not recall many bankruptcies or debt restructurings. I believe that overall the industry is actually in a very healthy condition at the moment, you may not see bankruptcies for some time.”

    Thanks to you and Tack, I am looking at bonds for E&P (instead of preferred and common). I like E&P MLPs (as opposed to E&P companies) better because they (i) have mostly older wells and need less cap-ex and (ii) can cut the distributions to the common to save money if things get bad enough. The bonds may actually go if the distribution to the common gets cut.

    I hope you will let us know when you pull the trigger on any of the E&P bonds.

    TD
    Dec 13, 2014. 02:17 AM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #51 [View instapost]
    South,

    NOG, OAS, WLL and CLR have their acreage in the Bakken, which has higher production cost than Eagle Ford, Permian, etc. The Bakken-based E&Ps are down more than those in lower-cost plays (due to higher fear of production cuts). You may want to limit your exposure to the Bakken.

    Here are some E&P bonds to consider.

    CUSIP price coupon maturity
    ----------------------...
    106777AD7 BBEP 80.10 7.88 4/15/22
    536022AC0 LINE 81.82 8.63 4/15/20
    586049AB4 MEMP 78.50 7.63 5/1/21
    92205CAA1 VNR 83.85 7.88 4/1/20
    085789AE5 BERRY 73.13 6.75 11/1/20

    MEMP supposedly has the best hedge for the next 2 years.
    Dec 12, 2014. 03:53 AM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #51 [View instapost]
    Tack and South Gent,

    Thank you for your thoughts.

    My thinking is that if things get bad enough, an MLP can cut distribution to the common units (like BBEP did in 2009) to conserve cash and pay down debt. They would still pay the preferred, or the interest would accumulate. If oil goes higher in 6-12 months, there may be 30% price appreciation, along with dividends.

    My gut feeling is that in 6 months, oil will be higher, once all producers had enough pain at the lower price and agree to a cut in production.

    I’ll be a little more patient per Tack’s comment.

    TD
    Dec 10, 2014. 02:35 AM | 1 Like Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #51 [View instapost]
    Tack and South Gent,

    Do you see value in the preferreds of E&P MLPs, such as ARP-D, LGCYO, and VNRBP. All are selling for around 16 with yield greater than 11%.

    TD
    Dec 9, 2014. 05:24 AM | Likes Like |Link to Comment
  • Closed End Bond Funds: Added 50 First Trust Intermediate Duration And Income Fund At $21.53 [View article]
    South Gent ,

    I also own FPF and feel better that you also like this CEF.

    BTW - I counted 5 occurrences of "FBF". This is probably a typo that you might want to correct.
    Nov 18, 2014. 06:01 PM | Likes Like |Link to Comment
  • Why Am I Confident Seadrill Limited Will Cut The Dividend? [View article]
    The key assumption here is that John will get 5 dividends before his stock gets called away by the CALL. This is erroneous. Stocks with high dividend often get called earlier. The market is NOT pricing in a dividend cut. It is pricing in the likelihood of the stock being called away early.

    Look at any stock with high dividend. The CALL will have very little premium whereas the PUT will have high premium. The expectation is that the stock will get called away early.

    For example, AGNC is at $22.74 today 10/31/14. The Jan-16 22 CALL is 1.05 and the Jan-16 22 PUT is 3.12 (mid of bid-ask). The market is pricing in the stock being called away after one dividend.

    John's trade is risky. Imagine the stock being called away before the first dividend and the stock price is above 20 on 1/15/16. John will be out 3.09 for his trouble.
    Nov 1, 2014. 02:09 AM | 3 Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #40 [View instapost]
    Tack,

    Thanks for the reply. I held (AWLCF) briefly earlier this year for a modest gain. I will buy some shares tomorrow. BTW - many on SA believes that AWLCF management is shareholder friendly and fairly transparent.
    Sep 5, 2014. 01:28 AM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #40 [View instapost]
    Tack,

    (AWLCF) has dropped from $25.50 to $19.46 over the last two weeks. I believe this may be due to a major shareholder selling 2M shares (taking his stake down to 43%). At today's price, the yield is over 20%. Are you buying/adding at this price?
    Sep 4, 2014. 07:49 PM | 1 Like Like |Link to Comment
  • Benefits Of Short Selling Inverse Leveraged ETFs [View article]
    There are two different things being mixed together here, which adds to the confusion.

    Margin interest - interest paid to borrow money.
    Short interest - interest paid to borrow shares being shorted.

    When you short shares, you end up with more money in your account from the sale of the shorted share. Hence, you should not have to pay margin interest from short selling. On hard to borrow shares (because they are popular for short sale), you may pay short interest on these shares.
    Aug 24, 2014. 11:33 AM | 2 Likes Like |Link to Comment
  • Benefits Of Short Selling Inverse Leveraged ETFs [View article]
    Cliff,

    "At the end of the month, the position is closed out and if it has been profitable, a new larger (i.e. more shares because now you have more money available) short position in SDS would be taken."

    In practice, you would not want to buy back all your shorted shares (at the bid price) and sell new shorted shares (at the ask price). You would lose out due to the difference between bid and ask. You would just compute the new number of shares to be shorted and either buy or sell the difference between the new and existing number of shorted shares.
    Aug 24, 2014. 11:25 AM | Likes Like |Link to Comment
  • Benefits Of Short Selling Inverse Leveraged ETFs [View article]
    To short TMV at Schwab, you have to call 800-355-2448 and talk to a broker. He/she will ask you how much of TMV you want to short. Then, he/she will reserve a sufficient number of shares of TMV for you to short in your account. I believe at this point you can short TMV online, although I do not know for sure since I decided not to short TMV after being authorized.
    Aug 24, 2014. 12:05 AM | Likes Like |Link to Comment
  • Benefits Of Short Selling Inverse Leveraged ETFs [View article]
    I spoke with Schwab last Thursday 8/21/2014 regarding shorting TMV. They said that I have to call in to get authorization to short TMV and they charge 2% per year to short TMV. So short interest on TMV is only 2% / year at Schwab.
    Aug 23, 2014. 08:25 PM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #37 [View instapost]
    Fear,

    Seth Klarman initiated a position in EBAY in Q2 2014. It's 3.6% of his US Portfolio. You are in good company!
    Aug 22, 2014. 03:03 AM | Likes Like |Link to Comment
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