It's been a good run for my investment in Hi-Crush Limited Partners (HCRS.Q), though a bit of a roller coaster. My Special Situations portfolio first purchased the stock in September 2012 right after its IPO. After a dispute with Baker Hughes (BHI) sent the stock reeling in November, I doubled my stake in January.
Well, both moves turned out alright. The total position is up 66% -- not bad work for about a year's investing. But now as the stock approaches my initial assessment of its intrinsic value, I've decided to sell.
Sell now?
In my second purchase in January, I noted "If business conditions return to normal, investors get 'un-spooked,' and the dividend grows as expected, then I think this stock has a very good chance to double reasonably quickly." That's nearly what has happened since that purchase.
Investors have come back to the stock, which was yielding more than 11% when I doubled down, and things have been going Hi-Crush's way recently. The company recently resolved its dispute with Baker-Hughes. Not only that, but they signed Baker up for a six-year contract.
And that's not all the good news for investors. The company on the most recent conference call mentioned its intention to increase the distribution at a double-digit rate shortly.
But the stock has approached what I think is a normalized yield, at 6.1%. The promised (and potentially ongoing) dividend increases are nice, but I just don't see extravagant gains from here and I have other excellent ideas for cash in my Special Situations portfolio. So I'm taking my 66% gains and moving on.
In the next few days I'll be adding another stock to my portfolio. If you want to know which one, follow join me on my discussion board and follow me on Twitter.
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