Lost 2% Today, YTD Gains Back Under 10%

Less you think we’re just back here making all this stuff up…no, I definitely was not up today. The perma-winning crowds and perma-bears joined forces on Twitter, prancing and gallivanting, declaring super ultimate winship, because the stock market is up 8% from last August. But lesser men lost money today, and damn it, that’s what matters.

I took about 2% in losses personally, which put me back below 10% gains year to date. I’m just resting comfortably at a little over +8% for the year.

But if this gets out of hand, I’ll also know where to slam on the breaks – somewhere before slipping below that +5% mark.

HCLP was routed, down over 7%. I added to the position above $39 but the margin clerks took it at the knees, now down in the $38’s.

Everything was red, save some minor hedging from puts in PGJ and TSLA which, given the execution prices…well, I’m long off from celebrating, how about we keep it at that? And silver held up, but will it retest $30?

Generally, the only thing that’s exceptional about this selloff so far is how long it’s been since we had the last one.

Data out of Europe is awful…(laughter) data out of Europe has been awful every single year since 2009. What do you want?

The major threat is the deflation data; deflation will be combatted to the death. Yellen didn’t get a unanimous board to throw out all former forward looking language just to sit back and do nothing. The big question is, “We all know the global economy is secretly horrible. But can they keep the game afloat?”

Personally I’m not sure what the answer here is. My experience with mathematics tells me what these fools are trying to do is impossible; the unexpected will always triumph. But the other side of me that gets this is all just a numbers game with tie dye pieces of cloth thinks, “why not gamble, what is there to lose, really?”

In summary: suck it up. The market isn’t dead yet. But get your affairs in order and you’d better have some rainy day funds.

I added to HCLP for $39.42.

I also nibbled on some more UEC for $1.13 (WARNING: if you are following at home, this position is to be kept LIGHT. I’m at less than 3% of assets, with a 1.5% unrealized loss on this. It’s down almost 40% YTD – my worst call this year so far – but precisely because I’ve been keeping it small, that’s not a problem. This is a true investment, not a trade. Big cash flow losses are expected in early years of a young company, but bad luck could easily snuff out any holders to $0.00)

My cash position is still right around 20%, thanks to capital losses. *hurray*

HCLP just amended another supply agreement to jack up the amount of sand one of their customers is obligated to buy every month. This is the third one this year.

Per MarketWatch:

Houston, Texas – April 8, 2014 – Hi-Crush Partners LP (NYSE: HCLP), or Hi-Crush, today announced the entry into of an amendment to the supply agreement between Hi-Crush Operating LLC, a subsidiary of Hi-Crush, and FTS International, LLC, or FTSI, a leading provider of well completion services. The amendment significantly increases the number of committed volumes under the agreement, extends the term of the supply agreement and requires FTSI to pay a specified price for a specified minimum volume of frac sand each month. “Hi-Crush is excited to further extend and strengthen our relationship with FTSI by entering into this amendment,” said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. “We consider FTSI a valuable partner as we continue to expand our market presence, and fulfilling our customers’ needs is a top priority for Hi-Crush.”

And when they say “requires FTSI to pay a specified price for a specified minimum volume of frac sand each month.”…question? Do you suppose that would mean a higher “specified price”?

I would suppose it would.

This follows the news yesterday that HCLP was going to have themselves an offering to completely buy out any competing interests in their Augusta facility.

Read here:

Houston, Texas – April 8, 2014 – Hi-Crush Partners LP HCLP +2.31% (“Hi-Crush” or the “Partnership”) announced today that it has entered into a contribution agreement with Hi-Crush Proppants LLC (the “Sponsor”) to acquire certain equity interests in Hi-Crush Augusta LLC (“Augusta”), the entity that owns the Sponsor’s raw frac sand processing facility located in Augusta, Wisconsin. As previously announced, Hi-Crush acquired a preferred interest in Augusta on January 31, 2013.

“We are delighted to announce this acquisition, which we expect to be immediately accretive,” said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush. “With this transaction, we will double the Partnership’s production capacity to 3.2 million tons per year. The Augusta plant has a current capacity of 1.6 million tons of coarse Northern White frac sand per year. Beyond that, we have the capability to expand the Augusta plant by an additional 800,000 tons per year and have started the process to obtain the permits required for this expansion. The expansion will bring total rated capacity at the Partnership to 4 million tons per year. We expect the expanded capacity to come on-line in the second half of 2014.”

Under the terms of the transaction, the Partnership will pay cash consideration of $224.25 million. At the closing of the acquisition, the Partnership’s preferred equity interest in Augusta (currently providing $3.75 million in distributions per quarter) will be converted into common equity interests in Augusta, and the Partnership will own 98% of Augusta’s common equity interests. “We expect that the acquisition of common equity interests in Augusta will contribute more than $30 million of incremental annual EBITDA to the Partnership, before any expansion to the Augusta plant,” said Mr. Rasmus. The acquisition is expected to close by mid-May 2014, subject to regulatory approvals and other closing conditions. In connection with the acquisition, Hi-Crush expects to refinance its existing revolving credit facility.

We need to follow the sand. Where the sand goes, the profits will go also. No buyouts – if these guys enter into a cash offer for my units on my behalf, I’m going to blow a gasket.

These moves are going to double HCLP’s revenue immediately. That will play into the hand of existing investors as bigger operations allow the executives of HCLP to leverage their logistics operations and gain market share.

I’m not even going to look to see if HCLP is paying top dollar premium on this deal – I’ll spare you the time, the answer is “I don’t care.”

This trend in the economy is only growing. These guys survived Aubrey McClendon blowing up the natural gas sector, and together with targeted well services like BAS, they’re going to dominate.

The shares aren’t even phased at the announced dilution yesterday to pay for the acquisition. Have a look.

Here’s the tagline:

HCLP – This Shit Is Going Higher

I told you Yellen was a dove.

Carry on.

I’m seeing stocks nosedive across my screen, where once positive positions are flipping to losses rather abruptly.

My opinion, with a 20% cash position and still greater than +10% gains for the year, is likely much different from yours. I am going to wait this out, because I can afford to try, having shunned the tech space basically indiscriminately.

I’ve known enough programmers to know better than to invest money with them…

If I start getting into the +6% range for the year or if I get scared, well then I’ll change up and raise cash. In the back of my mind, I have to believe that Yellen is at least as dovish as Ben. She will exert her influence eventually, and then this sweet elderly woman will go Scarface on short sellers.

*Kerchunk-unk-unk-unk* The squeal of machinery wakens Cain Thaler with a sudden shock that knocks the half finished glass of Cabernet (the seventh or eighth one, if he recalls) to the ground. Despite his own vow to the contrary, he succumbed to the temptations and now finds himself in quite a fluster.

Where are they?

The scraping and shaking of the boat tells him all he needs to know. They have run aground.

The jungle is close now – much too close. And is that a pair of eyes staring at him from the darkness?

One of his drunken cohorts is wandering off the boat to shore. The warning is barely out of Cain’s mouth when *snap*; the young man is snagged abruptly by an unseen appendage, hidden from Cain’s view. The cry of surprise is cut short, as the body disappears from sight – followed swiftly by the sickening crunch of bones and moaning whimpers of pain.

Before silence.

“What have you gotten yourself into now, ‘ol Khana”, Cain thinks to himself.