jugs
8 years ago
Yes, it was a brilliantly fine love affair...while it lasted. But it did motivate us to move into other picks, each with its own particular allure and promise within.
Starting the beginning of this year till Friday just past, I find I'm ahead to the tune of 42.7%. Last month I projected the year would bring a gain in the 945%-95% range. At that time the gain amounted to 40.5% as I recall. So far it's holding up well. Now, when ALDW kicks in, it'll be a cinch.
pete807
8 years ago
My guess is they won't go back to the spreads we enjoyed before Congress repealed the exporting of crude. That said the freight via tanker ship will be there so shipping off shore will be more than the pipeline from permian to gulf coast refineries like ALDW, or pipeline to CVRR refineries in mid continent.
Drilling will return in ND by lower cost producers, Rig counts will come up a bit as crude oversupply fades and demand brings about a higher level globally.
Two MLP refiners remain:
ALDW with retail 7-11 stores and geographic proximity to well heads in Permian/ Eagle Ford, and CVRR with its two refineries, will have a volume throughput advantage along with storage and piepine assets. Both have MLP structure which has investor appeal, imo. I own both with larger position in ALDW, but added CVRR today.
I like both their chances and healthy payout possibilities through EOY, then I will rethink their winter cycle which is less earnings unless crude goes above 60-70 per barrel, giving a spread on their lower cost storage inventory. Politics and Canadian XL pipeline approval could be another factor, .... GLTA!
jugs
8 years ago
That's humble of you, Pete. Much appreciated.
I wound up getting $27.35 for NTI but I had to trade very carefully---read that as "gingerly." But the real gain I measure is that the cash enabled me to move into picks like SDLP and JPEP, LADR and MDR---and all have prospered, SDLP and JPEP have since been closed out.
For me, the moral of the story isn't how much I made or lost on a pick, it's all in how the aftermath adds up. A good exit highlights the real value of the pick and related transactions.
To you, Pete, I'm thinking you're going to come out of the NTI/WNR debacle very well because you understand all this stuff and are always very careful to place your funds where the end result is most likely to become a fine one.
pete807
8 years ago
With a lot of study I decided that the 26.06 would not happen as the language in that PR said it would be pro rated, ... to be decided. A lot of lawyer speak!
I elected the mixed even though I opposed the merger. There was no vote? presumably because they had the deal locked up with their control of both boards and help from too big to fail banks, allowed to play with a monumental conflict of interest for us private unit holders. The truth is much of the 62% of units not owned by WNR was not PRIVATE investor owned but in bank directed funds.
I reasoned that WNR certainly did NOT overpay for NTI and I could sell WNR when the market sees it.
IMO there will be a huge short squeeze sometime late this year or next because 27% of WNR float is shorted. All the cash flow is bound to help WNR.
Here is what really transpired:
EL PASO, Texas, June 29, 2016 (GLOBE NEWSWIRE) -- Western Refining, Inc. (NYSE:WNR) and Northern Tier Energy LP ("NTI"), a wholly-owned subsidiary of WNR, today announced that they have received the Merger Consideration proration results from American Stock Transfer & Trust Company, LLC in connection with the previously announced merger of NTI and a subsidiary of WNR (the "Merger"), pursuant to the Agreement and Plan of Merger dated December 21, 2015 (the "Merger Agreement"), which Merger closed on June 23, 2016. Pursuant to the Merger Agreement, WNR agreed to pay a total of approximately $860 million in cash and issue a total of approximately 17.1 million shares of WNR common stock, adjusted slightly for cash paid in lieu of fractional shares. Based upon the consideration elections made by NTI common unitholders, this cash and WNR common stock was allocated among NTI common unitholders as follows:
NTI common unitholders who made a valid "Mixed Election" (as defined in the Merger Agreement), or who made no election, received $15.00 in cash and 0.2986 of a share of WNR common stock for each such NTI common unit held.
NTI common unitholders who made a valid "Cash Election" (as defined in the Merger Agreement) received $15.357 in cash and 0.28896 of a share of WNR common stock, prorated in accordance with the Merger Agreement for each such NTI common unit held.
NTI common unitholders who made a valid "Stock Election" (as defined in the Merger Agreement) received 0.7036 of a share of WNR common stock for each such NTI common unit held.
Investors with questions regarding these proration results should contact D.F. King & Co., Inc. at (866) 416-0556.
Read more: http://www.nasdaq.com/press-release/western-refining-and-northern-tier-announce-proration-results-in-connection-with-merger-20160629-01022#ixzz4DAG81ohT
jugs
8 years ago
WNR is not a buy candidate for me at this time and perhaps not even in the foreseeable future. My picks need to be movers and shakers for me to get excited and hopeful for rewards proving to be disproportionate to the general market. While WNR has done well in its space, it will soon be carrying more debt than prior to the NTI swallow-fest now taking place. It will be larger and that spells a potential for trouble as it will be more unwieldy.
When I look at CEQP, NGL, SDLP, LADR, JPEP, HLX and MDR to name some picks, I also see unusually strong gains. The only exception is MDR but I continue to add in the expectation that this will rise sharply from current levels.
WNR pays a dividend. Its tax structure bears no resemblance to the income producers mentioned above. It pays a small dividend when it's convenient and not threatening to the company's finances. MLPs are a completely different animal and being a hobby rancher, I love my petting zoo. lol
And I am not intentionally leaving ALDW out of the mix, it's just too early to be part of the income production scheme. But I'm in the hunt, believe me! I've got 1,900 units thus far and will probably be adding today or tomorrow, although in smallish amounts of 200 units or so as I think we'll be seeing sub-$9 soon.
There's no way at this juncture to determine what effect, if any, a BOD declaration of no quarterly distribution might pose. I don't discount it entirely but doubt it will shock anybody.
I hope this helps you.
jugs
8 years ago
You're right, of course. However, regulars on this board and the boards for CVRR, NGL, SDLP, ALDW and CEQP have pointed towards the zero-distribution likelihood for a long time now. The aforementioned boards might help prepare you for journeys down paths as yet untraveled. It does that for the rest of us.
I hope you'll join us! Most everyone I know saw fit to unload NTI shortly after the WNR swallowing process was first announced. One of us pulled out entirely upon the WNR announcement---but it wasn't me. It took me longer to get smart. lol
jugs
8 years ago
Haven't looked into the link yet but thank you in advance.
As for your question---how does debt stack up in such great abundance?
Simple: Because it can.
It's a manipulative ride we, the nation, are on. It started with "futures" and whammo!---Bartering on credit was born. There's not many ways available to control its aggressiveness and nobody wants to see the fall guy take the hit because a bloodbath always results in the end of an agreed-upon solution with the spoils truly spoiling things actually serving everyone.
We owe, the other guys owe, nobody's calling in the markers so that means we're all in this together and while there isn't a remedy, so long as we all shut up, there'll be no rupture in the dam, either.
Nation upon nation recognizes this codependence and doesn't push buttons so hard as to force a collapse.
Business isn't for the faint of heart whether we're talking about a Mom & Pop or a nation. The idea is to push for all you can get without destroying the golden goose, else we all suffer.
jugs
8 years ago
Getting out of WNR's clutches was possibly the smartest move I could have made. I made my move very early in the process and put a lot of cash into NGL, SDLP, LADR, MDR and NRZ. Each of these has done rather well while NTI has given up much ground, what with my having received more than $27 for most of my units. More interesting for me is that by selling NTI I was able to force a profitable compounding of cash suddenly made available by selling in one and gaining greater distribution levels with all of the preceding except for MDR, of course. Topping things off is that I'm not suffering as NTI loses ground.
Can you add some color regarding the Barron's piece you mention? I hadn't heard of this.
Thanks!
jugs
8 years ago
?Absolutely mind-boggling!
On a day that has me up whoppingly, I just noticed that NTI and WNR are both down just a tad. But that they are down anything is beyond my understanding. These are, after all, top tier companies in their respective arenas.
That has me thinking a lot of folks are upset with the proposed vacuuming process in play although yet to be finalized as WNR bids to take NTI into its gullet instead of seeing those juiciest of all MLP profits distributed to mere humanoids.
I can't believe WNR's business is at risk, far too well managed for that, at least in my mind. Sure, debt-load issues will play into things but even GE carries debt. This is the way of the market's universe. And NTI has been spectacular and I know this to be the case as I was in it from its earliest beginnings. While I'm now out of it, I gained immeasurably while a unit holder and refuse to let my feelings get in the way of personal business management. If the government refuses to honor the WNR proposal, I'll jump right back into NTI, no doubt about it. Incredible stock.
jugs
9 years ago
Hindsight being what it is--- if you could re-format your management of NTI units over the past several months, would you do anything differently?
I'm not comfortable with WNR. I don't trust the GP to hold to previously committed plans as they've laid out. Squirming has already occurred and I expect more of the same from a lack of visibility.
There's much to question regarding liquidity issues to say nothing regarding the handling of all-cash vs the combo offer on the table yet to be consummated.
I think the most troubling of all matters specific to the tender---for me, at least, has to do largely with finding my cash tied up by the above issues. As I've stated, I no longer hold NTI units. I've redeployed the cash by placing same in SDLP, MDR, LADR, ALDW and NGL. I believe I was able to take advantage of terrific prices This re-positioning is far more pleasing to me than would have been the case had I held my NTI positions. I'm quite hopeful Ms. Mercy will shine on me whereas I get a sense of foreboding from NTI's concept of anything I'd be calling fair play.
At the same time I must admit I came close to buying NTI this week when it dipped down into the $22's. I hadn't expected to see that and sensed it might be worth a short term fling. But ALDW began to move interestingly as did NGL and I succumbed to both in lieu of NTI.
For the record, I think you display amazing courage, sticking to your guns on NTI. I don't think I know of anybody else who would trust his intellect and guts as you do.
pete807
9 years ago
If they don't complete the deal by the end of March another and likely higher payout could be paid to unit holders hanging on for the option of $15 + .2986 WNR. My reasoning is based on the inventory adjustment they used to lower the payout for Q4. I was happy to get nearly $900 this month in spite of the dramatic drop from Q3... That said, I suspect they will work to keep as much cash funneled toward WNR as legally possible within MLP rules and company stated policy.
The share price has been buoyed heavily by the deal as both the other two MLP refiners are at 10 bucks with investors running for the exits and all refining margins down. However the high cost of shipping have made the export of crude at current levels not so attractive and the spread of WTI/Brent reflects the shipping.... maybe $3/bbl. We are not seeing a lot of crude exporting yet
I correctly guessed the impending deal holds NTI in the range it has been in since January and while I don't want to hold WNR for long, If I can't get all cash, it too could surprise investors when they see what the cash flow does to the new combined company.
Retail profits will continue to rise, crude could come up at least $10 and the new company key statistics could take WNR back to $40 later this year. Regardless I do not have to make any hasty decision on the last of my units, but will surely see them gone in 2016. I suspect if I hold through the deal I will realize $27 or better. I may have to accept a dividend from WNR!
bzusa
9 years ago
Current value: $22.76 and rising (.29 WNR+$15, guaranteed)
Here's my reading on the prorated deal using a hypothetical situation: (much too long)
Imagine
WNR has ONLY $1000 and 1000 shares that they will pay for NTI.
When the deal was signed, each WNR share is worth $1
Theyβre paying $1000+$1000 (share value) for NTI
Paying $2000
There are 1000 shares of NTI outstanding
When the deal was signed each NTI unit was worth $2
NTI was worth $2000 on the date of the deal signing.
For each NTI unit WNR will pay (guaranteed)
$1 and + 1 share =
$2 (on the date of the signing)
You can also elect to get $2
Or elect to get 2 shares.
BUT THEY ONLY HAVE $1000 AND 1000 SHARES.
If every NTI unit elected $2 and no WNR, every unit would get $1 + 1 share.
If only 1 NTI unit elected $2 and every other unit elected shares, that 1 unit would get $2, and all the others would get $0.999 and 1.001 shares (more or less).
If half wanted $2 and half wanted all shares, then the ones that wanted $ would get $2 and 0 shares, and those that wanted shares would get 2 shares and $0 bucks.
How many NTI shareholders are going to want to be paid in all WNR shares (hypothetically now worth $.60)?
jugs
9 years ago
Positive attitudes are always welcome and yours is certainly that.
Our MLPs have been sticky of late---with high valuations lasting longer than I expected. We've long grown accustomed to seeing prices drop immediately following their going ex yet we're witnessing the reverse of that, time and again. I saw it in CVRR, ALDW, NTI and now---SDLP ,and JPEP. I did hold JPEP through to going ex and selling on the ex-morning but have no positions in any of this group. I'm sitting on enough cash, ready to play but now await a dynamic change in valuations. Nevertheless, I can see it would have been better had I not sold so quickly.
Then again, I got high dollars when selling my NTI, considerably more than I'd have gotten over the past few weeks, had I delayed selling. I don't subtract the effect of distributions received as it would feel like I'd be financing losses sustained after the pick goes ex. What's done is done where I'm concerned and mark-to-market rules.
Still, we don't know how your NTI units will fare as we recognize adjustments may have to be made due to the unpredictability of this market. I'm hoping you come out well as you've long accepted risks with the exception of the tender which we couldn't have foreseen.