Put this one in your Pipeline
We bought units of an MLP today, averaged down on KORS
Contrarian investing is a difficult task. You need true conviction to be confident enough to buy when others see nothing of value.
Boardwalk Pipeline Partners L.P. (NYSE:BWP) made me a lot of money in 2014 after it tanked following a large dividend cut. Master Limited Partnership Units (like shares) got clobbered when quarterly distributions dropped by 81.2%.
BWP plunged from above $30 to about $12 almost overnight. Yield-oriented investors sold in disgust and were replaced by people with a different orientation. Within months the stock ran back up to north of $20. I took profits.
Our Peter Lynch Portfolio 29 was able to buy 226 BWP this morning at just $13.30. At that price we're paying only 15.5x this year's still depressed earnings while receiving a better than 3% yield.
BWP traded as high as $18.13 not long ago. Prospects for a substantial rebound in both earnings and distributions could drive BWP much higher over time.
Barring unexpected problems downside appears quite modest.
The $3,005 purchase price came out of our cash reserve fund.
After much consideration I could not resist adding an additional 50 shares of Michael Kors (KORS) @ $38.95 each to our previous, very underwater position. The extra $1,947.50 investment averages down from our original cost basis.
Disclosure: Long BWP units, Long KORS shares in my personal accounts Continue Reading »