No Bounce in the Oil Sector Stocks – Slaughter Continues
By: Tim McPartland,
What a way to start a new month–a MLP massacre as bad as the one we experienced last Friday. We still believe we may have a bounce starting anytime now–but of course that bounce comes from very much lower levels. It is noted that crude oil has bounced $2/barrel.
As we glance over the MLP list we are shocked at the prices some of the issues are at today. Upstream company LRR Energy (ticker:LRE) is off 30% TODAY showing a current yield of 22.5%. Frac sand and services company Emerge Energy (ticker:EMES) is at $53.83 DOWN from a 52 week high of $145.71. Upstream company Brietburn (ticker:BBEP) is at $10.96, down from a 52 week high of $23.15 (we are glad when we made a poor personal move a while ago in buying BBEP that we immediately turned around and sold it for a small loss).
It is not only MLP’s that have gotten hammered badly. All the e&P companies–no matter the corporate structure have tumbled hard–and unfortunately their preferreds have headed strongly south as well. Why we held a few of these issues while being so negative on crude oil is something almost unexplainable–I guess we simply didn’t understand the very strong reaction and the contagion to the better protected preferred and debt issues. We will hold the few poorly performing energy preferreds we have in our portfolios–we don’t believe they are in immediate danger beyond the recent ‘hits’–but if we determine there is a risk of suspensions or worse we will be out of them in a nanosecond.
We have gotten MANY notes from readers with opinions and indications of what they are doing in the MLP sector and will write about them later today when we are able to wade through them all.