Sell Alert: Jones Energy (JONE)

By Jim Pearce • March 10, 2017

TRADE INSTRUCTIONS
Date: March 11, 2017
Name: Jones Energy
Symbol: JONE
Type: Close
Limit: Sell at market

TRADE RATIONALE
Although this week’s quarterly earnings report for JONE came in a little better than expected, that wasn’t good enough to keep it from closing below its stop price so I have to close out this position. JONE is highly levered to spot oil prices so the 6% drop in oil prices this week is working against it. Clearly, our RPM was premature in calling the bottom for JONE, but we may go back into it later this year once oil prices start heading back up.

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Janis Bell

03/10/17 ‐ 10:07am ET March 10, 2017 at 10:07am ET

A question here on strategy. It’s up this morning with early trading. Do we just sell at market price, or put in a limit order in the hope of squeezing out a bit more upswing to cut the losses if the upward trend continues? What do you experience folks do, Black Arrow?

CJ

03/10/17 ‐ 10:28am ET March 10, 2017 at 10:28am ET

Another question on strategy; is it worth waiting until after March 15th for the special stock dividend, 0.087423 per share?
Thank you

Jim Pearce

03/10/17 ‐ 1:25pm ET March 10, 2017 at 1:25pm ET

I think so since that is already priced into the stock and is only five days away (with two of those days being the weekend). The biggest risk is either OPEC does something unexpected between now and then or Trump wakes up in a foul mood tomorrow morning and tweets out that he is going to flood the world with oil. Let’s hope he has an early tee time this weekend. 🙂

Dramatic License

03/10/17 ‐ 1:16pm ET March 10, 2017 at 1:16pm ET

I’m going to be honest, I doubled down on this. Either make this back or down with the ship.

Jim Pearce

03/10/17 ‐ 1:29pm ET March 10, 2017 at 1:29pm ET

If you bought the stock then I think it is only a matter of time until that bet pays off. If you look at the trading pattern for JONE over the past couple of years it seesaws between $3 – $6 with regularity so my guess is the same thing will happen once oil gets back closer to $55/barrel. But if you bought a call option then that depends on the strike price and expiration date, so no telling how that might turn out.

Dramatic License

03/10/17 ‐ 1:34pm ET March 10, 2017 at 1:34pm ET

I did buy the actual stock. I think eventually it will turn around. We will see, however. 🙂

Perry

12/08/17 ‐ 3:59pm ET December 8, 2017 at 3:59pm ET

Jim

If you still owned JONE today, would you hold on to it or sell it?

Perry

Jim Pearce

12/11/17 ‐ 9:49am ET December 11, 2017 at 9:49am ET

Given our outlook for oil prices in 2018 (higher), I’d hold on to JONE at this point. That said, if you have already realized big gains in other holdings this year and could use a capital loss to decrease taxation on those gains then you could sell JONE today and buy it back in 31 days to establish a new cost basis.

Dramatic License

12/11/17 ‐ 12:19pm ET December 11, 2017 at 12:19pm ET

Thanks, Jim. I’m still in this myself and feel like it will bounce back, but of course am still waiting. The jump to around $2 somewhat recently was hopeful, but now it is all the way back down.

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