I think it is really important to understand why someone is selling my stock and why I am still comfortable owning it. If I can't figure it out it usually is because I am missing something big.
Yes, one of my efforts to understand why others are selling CPLP is the questions posed here. As I've said, the weak performance of CPLP shares versus the strong performance of the company's fundamentals leaves me perplexed.
You don't think CPLP is down because of fear of dividends cuts?
No. If that's a main reason for the share price decline, it just seems wrong.
Each quarterly report this year by CPLP has been about how their business is doing great and they plan to modestly increase the distribution by 2% to 3% per year for the foreseeable future.
The consensus view (I think) is that investors are a bit upset with the slow rate of increase. In other words, business is strong enough that CPLP could increase it at a faster rate. But CPLP is instead keeping more cash for themselves, presumably to be used to buy ships to expand their fleet. Rather than distribute a larger amount of cash, CPLP is being more conservative and keeping the available cash for future usage.
Rates for their ships are at the highest levels of the past 5-6 years. For the past 5-6 years, when rates were lower, they paid 93 cents/year. Now with the modest increases put on in 2015 they're on about ~95 cents per year run rate.
So....how does that translate into expectations for a dividend reduction in the upcoming announcement?
I'd like to place a wager that they don't cut the dividend, if possible. How can I do that?
What about all the shippers suspending dividends.
I'm also no shipping expert. But there are a variety of segments in the shipping industry, and shipping oil is a great area at the moment for obvious reasons, cheap oil = more demand for shipped oil. CPLP has decent exposure to oil shipping. So....that's why their total business is strong as I understand things.
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The only explanations for CPLP's 50% decline over the past 9 months that make sense to me are macro stuff. Sell MLPs. Sell shippers (I guess). Sell high yield. Sell debt laden companies. All those trends are ongoing and bad for CPLP stock. But the CPLP company specific stuff that I understand is not bad at all, and is in fact an improvement over the previous 2-3 years when CPLP traded up to $10.
So yes, I'm perplexed, and yes, I would love to hear a good explanation as to why CPLP was worth $10.00 last Feb and today is worth $5.00. CPLP's business, as far as I can tell, is about the same today as it was in Feb 2015. I think that will come out in the Q4 2015 quarterly report. But I doubt it will do much to change the share price trend, since that news will be the same as the Q1 2015, Q2 2015 and Q3 2015 news.
If those earlier good reports didn't do anything good for the shares, why will a good Q4 2015 report? |
