sampr01 Posted April 28, 2016 Share Posted April 28, 2016 Real money, denoted C under CPT column. Hi Picasso Is there a way for an individual investor to buy these bonds? Thanks for all the info. Link to comment Share on other sites More sharing options...
TedKord Posted April 28, 2016 Share Posted April 28, 2016 Just being Joe Compliance here. The bonds are registered under exemption 144A, for QIBs - Qualified Institutional Buyers. Roughly defined as investors who have greater than 100mm in assets under management. Link to comment Share on other sites More sharing options...
Picasso Posted April 29, 2016 Author Share Posted April 29, 2016 Another 1MM+ trade at 69.625, but this time it looks like a customer selling. So probably offered just around 70... Link to comment Share on other sites More sharing options...
Picasso Posted April 30, 2016 Author Share Posted April 30, 2016 Monthly report on Fidelity holdings are out. Fund March 31st; February 29th FNKLX 743k; 1021k FEQIX 633k; 795k FDESX 457k; 565k VIPS 459k; 566k FLMLX 110k; 155k FEIRX 160k; 211k FSESX 0; 20k So they started the year at 4.2 million shares, down to 3.3 million at end of February and down to 2.6 million at the end of March. By my calculations they've just been sitting on 10% of trading volume and it's now their smallest position and they're the only large institutional owner. They've gone from owning 22% of the float to 13% over those three months. I think any stock with a 22% owner dumping down to 13% during a period of no liquidity and possible bankruptcy would kill the market price, which it obviously had/has. We'll see where they end up at the end of April. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted April 30, 2016 Share Posted April 30, 2016 So Fidelity could be close to out of their position assuming they took advantage of the recent trading volumes. Have you looked at the calls on FELP? or SXCP? I allocate a tiny percentage to some toxic waste. Probably not worth the risk when the common could provide a nice gain. Link to comment Share on other sites More sharing options...
Picasso Posted April 30, 2016 Author Share Posted April 30, 2016 I personally don't invest in options anymore. Too much of a brain drain trying to add an extra dimension of getting the timing and path right. But generally I think the volatility on SXCP and FELP are so high (plus they pay out massive distributions) that it makes it really hard to get any value on the options even though you have a high likelihood of seeing the stock prices move upwards. Plus you could drive a truck through the bid/ask spread. In the past I felt like my best options trades (when I wasted time on that kind of thing) were a combination of low volatility and severe under/overvaluation. This is severe over/undervaluation but the options are expensive so it's not that great in my opinion... Plus in the case of FELP there might be a rights offering over the next year and I'm not sure how that can affect your options trade. A bit cleaner for SXCP. Assuming about $75 million of DCF for 2016, there are only about 75 million common units when you include the PIK warrants. So at least by owning FELP units I know that there's about $1 of DCF per common unit and it trades for $2. I don't know if the market will reprice FELP to $5 immediately but as a unitholder I know that $1 of DCF is my piece of the earnings even though some of it might go towards debt repayment in the short term. Anyway just my thoughts on that matter. If you could get better pricing on FELP/SXCP options then it might make sense but I think it adds difficulty to an already messy investment... Link to comment Share on other sites More sharing options...
Picasso Posted April 30, 2016 Author Share Posted April 30, 2016 As far as Fidelity goes, 12 million shares traded in April. I also made a mistake. Total trading volume was actually 4 million shares in March so Fidelity represented about 20% of average daily volume. If they were still selling at 20%, then they are really close to being out. Which is funny because it's coming up on the resolution fairly shortly. Hopefully the resolution is a good one because it also coincides with the end of that big seller. It will be pretty hard to buy a lot of shares without paying up at this point. For that reason it could be one of those super orphaned securities that never really attracts institutional interest until the float expands. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted April 30, 2016 Share Posted April 30, 2016 Thanks for your advice on the options. This is a naive question, but regarding your comment about the possibility of this being an orphaned stock until the float expands, do you think a good resolution would still drive up the stock much? Are there enough small buyers to drive it to $3-5? Link to comment Share on other sites More sharing options...
Picasso Posted April 30, 2016 Author Share Posted April 30, 2016 I would think so, but that's going to be fairly unpredictable. We've already seen two 50% upswings on a rumor and the senior lender agreement so I'd think getting the notes closer to par and 67% approval would provide further upside. But I can't imagine working at a mutual fund and pitching the idea to go long FELP, even after the resolution. It doesn't seem worth the reputational risk especially when you can't build up a large liquid stake. I'm sure other participants in the market will start to price in the value of their cash flows. It doesn't make a ton of sense for a stock to trade for $2 when it's earning $1. At some point earnings get split into the subordinated shares but by then you've made more than your cost basis in distributions. Maybe the market will miss that, who knows... Link to comment Share on other sites More sharing options...
awindenberger Posted April 30, 2016 Share Posted April 30, 2016 I would think so, but that's going to be fairly unpredictable. We've already seen two 50% upswings on a rumor and the senior lender agreement so I'd think getting the notes closer to par and 67% approval would provide further upside. But I can't imagine working at a mutual fund and pitching the idea to go long FELP, even after the resolution. It doesn't seem worth the reputational risk especially when you can't build up a large liquid stake. I'm sure other participants in the market will start to price in the value of their cash flows. It doesn't make a ton of sense for a stock to trade for $2 when it's earning $1. At some point earnings get split into the subordinated shares but by then you've made more than your cost basis in distributions. Maybe the market will miss that, who knows... The question for me is how long it will take for those distributions to kick in again. People may wait to really bid up the shares until once there is more clarity on that point. Link to comment Share on other sites More sharing options...
Picasso Posted May 1, 2016 Author Share Posted May 1, 2016 ARLP reacted well to a distribution cut and it only yields about 11%. So I don't think the market will completely ignore total DCF even if it isn't being fully paid out. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted May 2, 2016 Share Posted May 2, 2016 Picasso, Do you know when Fidelity will update it's April month end holdings? Link to comment Share on other sites More sharing options...
Picasso Posted May 2, 2016 Author Share Posted May 2, 2016 At the end of this month. Link to comment Share on other sites More sharing options...
Picasso Posted May 2, 2016 Author Share Posted May 2, 2016 I had to calculate the Fidelity reduction by hand this weekend, but Bloomberg just updated it on their holders page as well. Link to comment Share on other sites More sharing options...
PullTheTrigger Posted May 2, 2016 Share Posted May 2, 2016 Maybe I'm reading it wrong, but this looks like through the end of March? Link to comment Share on other sites More sharing options...
Picasso Posted May 2, 2016 Author Share Posted May 2, 2016 Yeah we get the end of April holdings at the end of May. It's delayed by 30 days. Link to comment Share on other sites More sharing options...
bigbadwolf Posted May 5, 2016 Share Posted May 5, 2016 I am trying to find the scheduled earnings release. I see it was on 5/8 last year but can't find any release for Q1 2016. Any ideas on expected date for results? Also, the daily trading volume from 7/1/2014 - 5/4/2016 averaged around 173k shares. If you exclude 7 trading days from 4/13/16 - 4/21/16 when Fidelity was likely liquidating, it drops to 149k as there were several >1MM days in that 7 day period. So far, this week we are dropping back closer to average daily trading volumes for last two years. I personally hope that Fidelity is close to finished. Link to comment Share on other sites More sharing options...
Picasso Posted May 5, 2016 Author Share Posted May 5, 2016 I think they will announce earnings after the note holder negotiations are done this Friday. So sometime next week? Link to comment Share on other sites More sharing options...
Elah_Cix Posted May 6, 2016 Share Posted May 6, 2016 Shouldn't earnings be fairly easy to triangulate around? Link to comment Share on other sites More sharing options...
PullTheTrigger Posted May 6, 2016 Share Posted May 6, 2016 Always down to the wire with this company. Picasso - Are you concerned about the partnership failing to get the 67% of the note holders by today? Link to comment Share on other sites More sharing options...
Picasso Posted May 6, 2016 Author Share Posted May 6, 2016 My understanding is that the actual note holder transaction agreement needs to be done by today, so they very likely already had the 67% but you need to create the legal agreement and such. So going down to the wire doesn't surprise me too much. Also if you look at the jpegs from the support agreement, they were dated weeks before. I don't think this is something where they didn't know they had 67% (i.e. slapped together last minute without negotiating with noteholders) especially when the last forebearance was for two weeks instead of one. Link to comment Share on other sites More sharing options...
Picasso Posted May 6, 2016 Author Share Posted May 6, 2016 Link to comment Share on other sites More sharing options...
sampr01 Posted May 6, 2016 Share Posted May 6, 2016 But we can't jump. did you hear any news? Link to comment Share on other sites More sharing options...
Picasso Posted May 6, 2016 Author Share Posted May 6, 2016 I'm probably dating myself with the corny jokes :) Sorry no news yet. I was hoping they would announce it tonight so I can dig through it over the weekend. Link to comment Share on other sites More sharing options...
sampr01 Posted May 7, 2016 Share Posted May 7, 2016 I'm probably dating myself with the corny jokes :) Sorry no news yet. I was hoping they would announce it tonight so I can dig through it over the weekend. No worries. Thanks for all info. Sri Link to comment Share on other sites More sharing options...
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