RE:RE:RE:RE:RE:The leverage factorPileOfShit wrote: Experienced wrote: So who cares what the NAV is or how it is calculated since we are trading the SP of ENS not the NAV?
The NAV is useful only for calculating the premium to NAV, which indicates relative value. Rationally, investors would not pay more than 4% premium if the yield advantage over ENB is only 4%. Incredibly, investors were fine with a 20% premium, and accepting 3% yield advantage, until the Dec offering; then they got wise and sold the premium down to 3.7%, taking the price down 10% from Dec 13 to Dec 23.
Historically, the premium to NAV has no effect on price, except forcibly through offerings, but price can become sensitive to the premium unexpectedly. (That is a polite way of saying the market for ENS isn't smart enough to pay attention to the premium, but it can get smart without warning.)
BTW, one does not need to calculate the NAV at all, since the prior day's NAV is published each business day around noon ET. Nonetheless, knowing the current NAV is always better than knowing only yesterday's NAV.
Thanks
So the takeaway is that when there is a small premium to NAV, historically, this is a good time to buy.