Something had to be done.

It is December, so I cleared my head and made some tough choices. I sold completely out of AEC, ETP, and BTU. AEC and ETP are the only two positions I have that have held up (made money, really). I don’t want to part with them, but it’s the best move.

There will be immediate cries about selling winners and doubling down on losers. This is nonsense. I’m not doubling down on anything.

The sheer magnitude of this calamity has left me with an enormous, outstanding loss for the year. It’s December – no way in hell I can absorb that loss in less than 30 days.

The only way I can view this is as a window of opportunity to cash out my winners tax free.

Cash now stands at 25%.

I’m sitting on the cash. My preference, obviously, would be to deploy into a sector not at all tied to oil and gas. But if my worst fears come to fruition, that may not be a real thing.

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I deployed 5% of my cash position, buying up shares of ETP for $60.15. This raises ETP back to a full 10% position on my book.

Why shouldn’t I? ETP is a winner. It’s going on a stealth September run, when everyone is afraid.

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Energy Transfer Partners has an outstanding offer of merger/acquisition with Susser Holdings Corporation. The good shareholders of Susser were each given voting opportunity to elect their method of being bought out. They could receive a) an all cash offer, b) a mixture of cash and ETP shares, or c) all ETP shares. The results were published yesterday upon closure of the window.

85% of all outstanding shareholders said “give me the ETP stock”.

That’s not even a contest. Only 1% of Susser’s shareholders took the cash buyout offer. 7% took the mixed bag. How’s that for a vote of confidence?

Obviously I had hoped more would get bought out – because I expect good things here. But still, I can’t blame them for refusing to leave.

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One of my newest positions, ETP, co-reported earnings (alongside ETE, a familial body) that rose 50% year over year, soundly crushing estimates. The partnership is putting out almost 7% in distributions annually and distributable cash flow lifted 11%.

The partnership is modestly priced and more than a fair buy here. The only conceivable issue in the report I saw was that they’re paying out a little more in distributions than they take it, at the moment (and not for long if this kind of growth keeps up). And a little over a month ago ETP announced plans to build a new pipeline from the figurative gold mines in the Bakken region in North Dakota to their existing distribution network in Illinois…and the new capacity is allegedly already filled.

So following what can only be described as a stunning performance, the market is roundly bidding up units of ETP, correct?

WRONG

ETP has given back all the morning ramp following the exciting earnings beat, and ETP is now struggling to hold just half a percent gain on the day.

That’s just the kind of market we have right now. You can hear the oxygen rushing out of the trading floor. I have a couple similar positions that have all left analyst estimates in the dust (mostly after having already been revised higher), and yet they just can’t catch a bid.

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Well, the hubris post did it, and pointing out that when I crossed 20% YTD gains timed the top with almost cruel exactness. Just as we all knew it would.

BAS is taking the session the hardest for me, down almost 7%. They started a correction after earnings, and it looks to be picking up speed. My guess is a retest of the 200 day, putting them just over $20 a share, at which time I will be a buyer.

MAA is second worst, down over 5% on a disappointing…Core FFO number? FFO is very important in the real estate market, because it prices out depreciation of construction (which so long as your structure is sound is irrelevant). But they also just doubled their operation by acquiring my old position CLP, and seem to be continuing the spirit of development and expansion. They have sound debt levels making the process easier, with plenty of room to add leverage. And a strong wind at their backs in the form of a rising rent environment. I’m holding here because a 4% dividend and steady growth make MAA a sound enough investment once this passes.

Following next is a roughly four way tie between BTU, NRP, HCLP, and ETP. There seems to be a theme today of energy names being punished a little worse than the indices. Then again, people have hated coal for years and half the energy sector has huge gains unrealized with ample volume to round about escape losses elsewhere, so maybe this makes perfect sense.

CCJ had a good earnings report, continuing to kick the uranium market doldrums by personally doing just fine. Their long term contracts persist in rewarding them with a price well above the dismal spot market, and sales volumes have increased. So the market has rewarded them by only selling off 1.5%.

(Actually, I need to be honest. I am concerned that CCJ has managed to perform this well in this environment. Particularly because despite the better sales and earnings, they continued to lose cash – the only thing that really matters – and in light of the recent revelations of overseas corporations acting to enable financial games with their taxes. I’m going to be sniffing around very closely here, because I will not become prey to some corporate Enron nonsense)

AEC and silver are my “best” positions, each down “only” less than 1%.

Okay, so the market is getting clubbed. What do we do about it?

Well, if you’re in my position – and if you’ve been following me, that is quite possible – up still over 15% for the year, then the answer is pretty clear. You do nothing.

I can afford to do nothing here, to see if this hard drop doesn’t stabilize quickly and lead us higher through August. We should hit a bottom pretty quick. I don’t yet see a good catalyst for a major drop, outside of the regular bank failings and global “World War” heckling that usually bogs us down. For the moment, that’s no excuse to panic.

China, Europe, and most the rest of the world haven’t exactly been doing awesome before now. This isn’t news.

So there’s no rush here. 13% YTD gains is my floor. When I hit that point, I go to cash fast, because my year will be at least +13%. 13% because I was stuck between 10% and 15%, so let’s take the black prime number in the middle (scientific, right?).

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I redeployed some cash from yesterday’s sale of BAS, bidding up ETP for $57.64.

They announced today that they’re building a new pipeline connecting the Bakken oil reserves being built out in North Dakota to Illinois. More importantly, they announced they already have commitments from shippers in the form of long term agreements.

I like this partnership a lot. It pays almost 7% in distributions to unit holders annually, and their operation has a lot going for it.

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