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jpmist

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  • Miller Energy Resources: In The Midst Of Chaos, There Is Also Opportunity [View article]
    @ Richard L. - Are you referring to this?

    http://bit.ly/1KtumCs

    "The credits affected are for explorers or companies developing fields but not yet in production on the North Slope and in Cook Inlet."

    Correct me if I'm wrong, but didn't MILL pull back on everything not having to do with actual production of oil and gas?

    "Walker used his veto power to limit to $500 million the amount available to pay the credits, which he said is roughly the amount in the queue now. . . Walker said the state would honor its credit commitments over time. "

    I dunno, the tone of the article didn't seem that grim to me, if this was the news you were referring to. More like a political shot across the bow at the beginning of the state's fiscal year.

    Another article here: http://bit.ly/1KtuqSQ
    Jul 1, 2015. 10:25 PM | Likes Like |Link to Comment
  • ETN Showdown: Why Now Is The Time To Consider MORL [View article]
    @ James B - Thanks for your kind response!

    "The dividend pays you handsomely to wait if you don't catch the bottom."

    Let me just add the phrase - ". . . provided one has an investment horizon of 3 to 5 years" and we'll be in total agreement on that.

    My concern, and the reason I occasionally push back on any optimism in this sector, is with the many SA readers new to mREITs that might think there's easy money to be made simply because of the discounts in value these companies are trading at.

    Those discounts are there for a reason, they are a vote on the near future earnings and unless you have Scott Kennedy on retainer, I think its wise to respect what the market is saying. After all, the market was certainly correct during the Taper Tantrum.

    We're probably only a couple of quarters apart as far as getting back into the sector. Once the Fed mans up and the market reacts maybe someone will notice that spreads are widening (if they continue to) and mREITs will be a buy- surely by March 2016? But I'll sleep better at night with a slightly smaller yield knowing the sector has already started to recover than try to anticipate when it will.

    Thanks again for posting your article and the forum to letting me rant a bit. . .
    Jul 1, 2015. 05:19 PM | 1 Like Like |Link to Comment
  • ETN Showdown: Why Now Is The Time To Consider MORL [View article]
    @ James B. - "'Now is The Time to Consider MORL' By 'now,' I mean around the time of publication of this article and the subsequent few weeks."

    First off, a tip of the hat for putting in the time to make your case. I agree that there will be a time when mREITs are so beaten down that they will be a smart buy. I look forward to that day as I bailed out of all my agency mREITs some time ago, but I'm going to argue that buying now and the next few weeks is far too soon.

    I invite you to pull up a chart of TLT, (which I'll use as a MBS proxy since historical MBS price are hard to find). If you compare the Taper Tantrum from May 2013 to year end the similarity to the drop in TLT since April is disturbingly similar. My guess, investors are preparing for the Funds increase as if it already begun.

    The 2013 drop from May to it's bottom in December was a 17% drop. From this April, it's only been a 13% decline, but since the Fed hasn't announced yet, I have no reason to believe the drop in TLT won't continue since those two factors seem to be linked. (Ironically, I predict the relief rally when the Fed finally does announce will be spectacular. . .)

    You'll argue, and it's an excellent point, that the mREITs learned from the Taper Tantrum and have over the last two years been preparing for the Funds rate increase, so the actual damage to earnings and book value may be less. I in return will point out that very few mREITs had any experience in managing a shrinking yield spread since 2013 and we all see how well that's worked out. These are trying times for them where just staying solvent is a victory.

    And as you have pointed out, by decreasing their portfolio duration, they're now going to be stuck with lower yielding depreciating assets that will be a drag on their net earnings going forward as MBS rates increase.

    I would call buying "now" knife catching, ( I have fresh scars to remind me what it feels like) not smart "blood in the water" bottom fishing. Until our National Nightmare of the Fed Decision takes effect, rate volatility subsides, and the spread trend continues to rise for mREITs, you run the risk of your principal loss exceeding your dividends.
    Jul 1, 2015. 12:24 PM | 3 Likes Like |Link to Comment
  • One Way To Value Miller Energy Preferred D Shares (MILL -PD) -Potential For Up To 700% In Gains [View instapost]
    @longplayer - I wondered myself how much of the hedges were left after the second sale.

    The March 2015 presentation stated that they had $44 million worth of oil hedges priced at $96. $10 million worth of 2016 hedges sold off a month or so ago, then another last-half-of-2015 chunk worth $10 million a few weeks ago. Leaving $24 million?

    Maybe a bit less. Brent crude is up nearly 10% since March, so I suppose the hedges remaining have dropped in value.
    Jun 13, 2015. 01:41 PM | Likes Like |Link to Comment
  • Round 2 - Miller Energy Resources Is Down, But Not Out Yet [View article]
    Read today's 8-K. Miller closed out more hedges to pay Key $10 million. If I read this right, these are 2015 hedges, in addition to the $10 million of 2016 hedges paid to Key not long ago.
    Jun 4, 2015. 04:54 PM | 1 Like Like |Link to Comment
  • CEFL: Attractive 18.6% Yield And Discount To Book Value [View article]
    @ LB – I must have missed that one, thanks for the link and the refresher.

    I'd always assumed that UBS simply bought MORT and 2X'ed it with repo. That would be the easiest thing to do. I didn't realize that was a work around of 1940's regulation to offer MORL as a ETN.
    May 14, 2015. 10:06 AM | Likes Like |Link to Comment
  • This Is What You Need To Know About Annaly Capital [View article]
    "While I like to buy quality at a discount, with all key metrics worsening and the dividend not being covered once again, you have to be careful. The Street has no confidence. I'm in for the long haul, but do own larger positions in better names. Be careful and pick your spots when buying more. I am holding at this point."

    But why even hold? This is simply the wrong time to be in an investment that relies on the yield spread which has been contracting for a year now. Sell now, take your tax loss and buy back after the upcoming taper nonsense starts to fade and spreads widen. You might miss a few quarters worth of declining dividend income, but you should be in something a lot safer now anyway.

    What's happening to mREITs now can be seen as an opportunity. You have the opportunity to lower your basis in the shares by more than what you might lose in dividend income.
    May 11, 2015. 10:44 AM | 2 Likes Like |Link to Comment
  • Fishing In The Oil Patch [View instapost]
    I'm surprised it's as high as $4!

    Next time I read "The Company’s board has engaged Global Hunter to help the Company execute a capital repositioning." I'll know to expect a dividend deferral. Seems obvious in retrospect. Selling the 2016 hedges seemed a tad desperate to me, like selling the family silver.

    On the bright side, Crude has rebounded to a 4 month high.
    May 6, 2015. 11:34 AM | Likes Like |Link to Comment
  • Let's Not Overreact To Miller Energy Resources' News [View article]
    "The Company’s board has engaged Global Hunter to help the Company execute a capital repositioning. The effort is focused on raising credit-enhancing capital and ensuring adequate liquidity in order to maximize the value of the Company’s asset base for all stakeholders. Related to that effort, the Company is pursuing credit-enhancing institutional capital." 4/29/15 8-K

    Just curious what anyone makes of that. Can Global Hunter pull a rabbit out of their hat and find some private money in time to satisfy Keybank and Apollo? Can something like that happen in a mere weeks time or is it way too late?

    And while I appreciate you guys trying to be accurate on the preferred situation, I can't even find the 8-K's describing the original loan terms if there are any, and if I could, the terms have been amended and restated so many times I imagine only the parties attorneys know exactly what they agreed to. But thanks for trying. . .
    May 5, 2015. 11:03 PM | Likes Like |Link to Comment
  • Trading At Discount To Book Value Means Strong Entry Point Into American Capital Agency Corp. [View article]
    I like a bargain as much as anybody (MILLpD anyone?) but if your thesis for buying AGNC is based on your prediction that the Fed won't raise rates until later this year, aren't there better ways to play that than buying a mortgage REIT?

    You wrote a well reasoned article as far as it goes, but nowhere was there the observation that the yield spread that AGNC makes money from has been in decline for over a year. http://bit.ly/WIMX5H

    When the spread starts widening, a quarter or two later would be the time to buy.

    Finally, I wish everyone who writes articles on SA would delineate their time horizon for their buy or sell call. I'd agree with you if your time frame was 5 years or more and you re-invested along the way, but shorter than that is gonna be tough.
    May 5, 2015. 03:39 PM | 4 Likes Like |Link to Comment
  • Let's Not Overreact To Miller Energy Resources' News [View article]
    Thanks for the overview of MILL's issues.

    As jraskib points out, I think the plunge last week was due to the statement that "the board has not decided" to pay out the prefs this quarter. That it was still an open question was disconcerting. A source I've read stated that the board has until close Tuesday to announce.

    The Alaska tax credits, while great to have, isn't all that a reason for optimism. From my admittedly inexperienced readings of the SEC statements, all those tax credits go straight to Apollo and Keybank.

    The biggest question for me that's been raised is the requirement that Miller had to raise $10 million worth of Preferred shares by April 30th for them to pay dividends else they're breaking their Apollo and Keybank covenants once again. The news about bringing in an investment bank may relate to that.

    Miller's bankers are calling all the shots here and I doubt they have Miller shareholders at the top of their lists of concerns.
    May 4, 2015. 12:39 PM | 1 Like Like |Link to Comment
  • Miller Energy gets Wells Notice from SEC, continued listing notice from NYSE [View news story]
    Left out the part about retiring it's 2016 hedge with Keybank for $11.5 mill.

    As well as of 4/29, the board hasn't decided on paying out the preferred dividends yet. . .
    Apr 29, 2015. 07:11 PM | 1 Like Like |Link to Comment
  • Fishing In The Oil Patch [View instapost]
    And another 8-K today . . .

    This one might explain MILL-D's pop at the end of trading today, maybe. The 8-K announced that Miller cashed in a 2016 hedge for $11.5 million. $10.5 of that went pay off debt. Since tomorrow is the deadline for Miller to have sold $10 million of preferred stocks, I wonder if that's related.

    "Item 1.02 Termination of a Material Definitive Agreement
    On April 27, 2015, Miller Energy Resources, Inc. (the “Company”) terminated the 2016 portion of its oil hedges with KeyBank National Association (“KeyBank”). The liquidation yielded $11.5 million in net proceeds to the Company. The Company has applied $10.5 million of these proceeds to pay down amounts outstanding under our Credit Agreement, dated as of June 2, 2014, among the Company, as borrower, KeyBank, as administrative agent, and the lenders party thereto. The remaining $1.0 million in proceeds was used to pay certain of the Company’s accounts payable."

    In any event, tomorrow is the deadline on those Prefs sales and Miller announced it's last dividend Jan 30th, so I'll be holding my breath all day.

    Another announcement is a Wells letter from the SEC related to accounting disclosures done in 2010. It never ends with these guys. . . ~sigh~
    Apr 29, 2015. 05:47 PM | Likes Like |Link to Comment
  • ETN Showdown: BDCL Vs. MORL [View article]
    Thanks, Darren, every little bit helps!

    From what you write then, BDCL ought to correlate with commercial mREITs like RSO as the business models are similar. Starting 2011 they track pretty tightly, 0.94, although they diverged quite a bit starting this January.

    http://bit.ly/1GF9hCr
    Apr 29, 2015. 09:29 AM | 3 Likes Like |Link to Comment
  • ETN Showdown: BDCL Vs. MORL [View article]
    Thanks for the article. Was surprised how well BDCL held up during the Taper Tantrum- so much more than the mREIT sector.

    Does anyone care to paint a picture why it did? Is it that the various BDCL components are less vulnerable to the rate volatility that damaged the mREITs?

    And then, why has BDCL declined 30% since Jan 2014 when MORL held relatively steady? Would the decline in the energy sector account for that?
    Apr 28, 2015. 11:05 PM | 1 Like Like |Link to Comment
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