Comparing Returns....

Since the March 6th bottom:

PVG: +32%
PVR: +55% !!!
AMZ Index: +32%
SP500: +33%


A few days later, a big seller decided to slam the brakes on PVG. It's since been dead money, hanging out at $12. Since March 12:

PVG: +2% !!!
PVR: +28%
AMZ Index: 19%
SP500: +21%


PVG now has the same exact yield as PVR. These are for the same assets, only PVG reaps increasing leverage on the future cash flow growth. In other words, there is no spread or premium valuation being awarded to PVG for future growth potential.

It is like saying that PVR's assets are dead money from now until eternity. It's also like saying that PVR will never again need to access the equity markets. -- That's not the case!... especially with the Oil / Gas ratio now at the 18x handle!!


Bottom line: There is a huge seller in PVG and he won't budge from $12.00. It’s a big mistake. With PVR near $15, he could easily be unloading $3+ higher. When he moves, it’ll jam.


For reference, PVG / PVR have historically traded around a 2% yield spread. Based on the current distributions, that would put PVG in the $14.50-15 range.

Given the stable operations at PVR, spread opportunities like this don’t come around often, and they don’t last for long.

Long PVG / Short PVR.