On Thursday evening, EMES withdrew distribution guidance. On Friday, shareholders were treated to a one day ~30% drawdown. HCLP and SLCA fell ~10% each, in sympathy pains. The whole sector was flayed.
The weekend has offered no respite, as HCLP and SLCA are both down another ~8% and EMES is off another ~12% on Monday.
Here’s a preview of what’s to come.
All three are going to slash their distributions. Of course they are…they’re yielding like 20% and it’s an industry freeze. They’ll walk it back to ~10% yield, those of us who’ve been here from the start will be back to what we were making two or three years ago, and all three companies will be better off for it.
Now things are getting out of hand. I cannot speak for SLCA or EMES, because I don’t own either. I never wanted to own either. But I do speak for HCLP when I say a great company is going for peanuts.
Now, I am not adding to my position. I restructured back in December, I ended up with about 1/2 my account in cash (after factoring in losses into this year) and it has been single handedly responsible for keeping me alive. My losses have been horrific; without that restructuring they would have ended me (and that is not an exaggeration).
So I’m not buying until the recovery is already well underway. If I had been so fortunate to be outside this fire, looking in, then I would be nibbling incrementally, every couple of weeks. But that is not a luxury I personally get to enjoy.
So far for the year, I’m down about 15% – that’s about 40% peak to trough if I’m counting from when this process all started a little over 12 months ago. I guess if I’m looking big picture, I’m fortunate that’s all that’s happened. There are people out there who have lost 70% because of this oil catastrophe.
For the moment, I am more than content to sit on lots of cash and wait this thing out. I’ve dug into my companies and am very confident they’re going to make it. But not everyone gets to say that.
There are vast expanses of the oil and gas industry that are about to be swallowed whole. We have a backwater culture that still crucifies people to thank for this.
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Cain What’s your take on OAS they are still profitable even in this mess yet are down -60%. I got a ton of cash and want to buy but maybe it’s prudent to just wait a bit longer. HCLP also looks tasty
I haven’t had time to dig into the numbers but first thing that catches my eye: they’re trying to sell a subsidiary in the middle of this mess. That’s not a good sign.
Sorry about your losses Cain
Those Saudies have to fold soon.
I’m down
about 10% and counting.but I’m not
on margin so I will live to fight another day.First year in three that I’t hasn’t worked but the year is not over yet.
Raising more than 50% cash. HCLP was an easy jettison after the decline, waiting for them to show me a reason to re enter
great article Cain, i’m thinking we get massive tax loss selling, and better prices,