CCJ Going Full Hamster Wheel To The Upside

The 9th floor is cloaked in excellence as we revel in 1.3% gains for the day. CCJ leads the charge, plus 3.21%, with loyal BAS and HCLP marching lockstep behind her, up 2.16% and 1.99% respectively. That’s 45% of my portfolio right there.

Everything else is being rather well behaved, and I’m making a good showing of the afternoon for it. Any give back from early January is now gone and I’m up 1% for the year.

This shall be the year of uranium. Cower before the terribleness of it all.

I usually am a little skeptical about the usefulness of guidance. Executive guidance can be some of the worst – people who are intimately wrapped up in a business tend to have a hard time knowing when to say “yeah, this ship is going down.” In fact, business school strictly forbids it.

But the most recent guidance from BAS, for whatever it’s worth, beat expectations. December was supposed to be a heinous month. Instead, it was merely a horrid month. Take that with a grain of salt.

Well rig service hours were unchanged, at about 61%. My long term thesis involves that number catapulting back to 80%+ eventually, which is why I own the name.

Fluid service truck count is up to 1,003 units. Fluid service truck hours are up 8% this year.

The company saw surprise strength in December (which is really just less flaccid weakness, pretending). Instead of the forecasted 7-8% drop in revenues that were expected, they anticipate they only saw a 6-7% drop.

This is all good and well and hearsay. What caught my eye was that they are also reporting their customers are reporting increases in 2014 spending. Now that’s useful to me.

The natural gas/well servicing industry was more or less crushed in 2011 thanks to generally bad dealings by one Aubrey McClendon. That and a half dozen other idiotic moves saddled CHK investors with 60% equity losses, taking the company to par with the lows set in 2009 (which is saying something).

This left most small well servicing firms in quite a predicament. You see, as a group they were pretty much a “no cash on hand” industry. There were only a few, like BAS, that had adequate financing to weather the storm.

A sea of mergers and acquisitions later (not to mention a few major bankruptcies; looking your way PSN.TO) and we may be ready to get back to fair weather. The natural gas spot price has largely recovered. And now BAS is reporting that client spending is looking up.

We haven’t had a real equity pullback since 2012. There were fake ones in 2013, but let’s be honest; 5% broad moves in the indices in this day and age are just white noise. It hardly counts as a real pullback.

If we get a real move lower, it needs to be good for 10% or so. That’s a string of 300 point DOW days, red as blood.

I welcome an equity pullback. If we got a real scare, I have just enough cash to make a good show of it. And TSLA would probably catch a stick to the eye, filling my losses from the remaining puts as fast as my portfolio could otherwise correct.

Still, no need to get ahead of ourselves. Let’s just see what happens here.

My NRP coal partnership got blasted to the tune of 17% after announcing the coal market continued to weaken in 2013, against their expectation. In response to the weak sales of power production and metallurgical coal, NRP’s board announced a 36% reduction in distributions.

This hurts, as I guessed that $20 would average the low mark in the name. Clearly, I was wrong.

I am not selling NRP, though (not yet, at least). My primary reason for buying into NRP was more predicated on coal being a very inexpensive sector to get exposure to and the medium term unlikelihood that the US or global economies will be able to pivot away from coal quickly.

I’ll ride this out for a little bit and see where it goes. There’s been long speculation that NRP may have to cut its distribution, because their debt level is high and their board has ambitious goals to diversify their royalty stream into a variety of commodities, such as raw materials for glass or gas and oil.

The board has reaffirmed they don’t think the partnership is at risk of violating bond covenants, and I think the five year forecast distribution is more likely to contain upside surprises.

NRP is sinking me ~1.5%, which is actually being generously offset by gains elsewhere. NRP was a smaller position than, say, CCJ or BAS. For the day, I am down just ~.5% so far. But we’ll see if NRP doesn’t bleed out hard into the close

I sold out the entire BALT position for $6.22, a 15.6% gain. I followed the Fly into the position in December.

However, I have learned over the years not to get attached to positions that didn’t originate from my own ideas. This was the Fly’s grunt work, and while I liked the position when I did my own inspection of it, and am quite pleased with the gains, it doesn’t necessarily fit into the larger picture I’m painting here. There are bound to be blind spots I have to its intimate nature, and the variance it exhibits probably won’t mesh well with my other holdings.

With the market slowing down here, this adds 12% to my cash position, and is generally the right move.

I hope those of you still in BALT make a killing. Let it run to $10.

The north is frozen solid. Between ice storms that knocked us out for a week, encasing our properties in liquid glass, then below zero temperatures and three foot snow banks encasing our doorways, I’m having the most difficult problem of figuring out why I should get up in the morning.

My account is back up today, but it doesn’t feel like a run yet. Maybe that’s how you know it’s going to turn into one? I don’t know, this market is less trustworthy than a Russian laundromat owner who just bought out his cousin – cash.

And like the mob, I’m putting my chips behind this pony until I get the first “courtesy shoot up”. Then I’ll split, but why jump the gun?

Maybe because I won’t have time to split, that’s why. So really this post was just to confuse this market…shake it off my tail a bit. Maybe, I grab my bags the second before I walk out the door tomorrow and hit the first flight to Brazil to hide out.

I don’t know yet, and I’m not telling you either. Sheisty cheats will give me up in exchange for leniency at the first sign of trouble. You can pay your own debts, thank you very much.

Now, I’m going to return to the roaring fire, cleanly out of the view of any major windows, and get back to my paranoia…in peace.