4 replies to this topic

[PorkLoin]

Nasty-looking chart, like those of crude oil and natural gas, but this thing is yielding 17.4% as of the open, and the last figures I have show it paying out only a little over 50% of distributable cash from income in dividends.

Since NG and Oil have kept coming down, that 50% will almost surely go higher, but looks to me like the market has already priced in a hefty dividend cut, and I'm not at all sure that's coming. Even if it is, I feel that once again the share price is overdone on the downside. If we're in a major, long-term bear market in energy now, then this is a bad trade, but otherwise times like these are when you want to buy.

NAV Energy trust and Clear Energy merged to form Sound. About a half million acres of land to be drilled on if things look good. Production is around 60% NG and 40% oil.


Best,

Doug

[Cirrus]

Doug, I like this trust. The chart looks ugly but this has been a buy support and sell resistance stock market for a while. It should find a bottom soon unless crude is heading into the low 50's or lower and NG drops below 4. I don't know where the bottom is on energy but given world supply/demand dynamics and the Chinese waiting to buy 1/2 billion barrels or so to fill there reserve I think we're getting close. Also, don't forget we're in the middle of the shoulder season which is the lowest yearly worl demand period and we're about to enter the Dec to Feb period which is the highest yearly world demand period.

[PorkLoin]

Yes Sir, and ever since the April 2005 dividend cut I've liked it too, and feel that management has pursued a more conservative course.

Still, I look at that weekly chart and say, "I bought more of this..?

The dividend makes up for a lot, but still....

Best,
Doug

[dasein]

I just looked at this at the TSX:
http://www.tsx.com/H...amp;Language=en

as per their numbers (trailing) the div is roughly 2xearnings w/yild of c. 18.6 - bringing yield down to 17 doesnt make the div less than earnings per these stats - what am I missing (limit 3;)?

some of these trusts are starting to look very good here - any others you particularly like?

tx,

klh

[PorkLoin]

Dasein: as per their numbers (trailing) the div is roughly 2xearnings w/yild of c. 18.6 - bringing yield down to 17 doesnt make the div less than earnings per these stats - what am I missing (limit 3;)?

Karen,

Last I saw Sound was paying out about 60% of the distributable cash it gets from operations. I don't know what those "earnings" are exactly, though perhaps it's the money left over after the dividends are paid out?

60% isn't bad -- the rest is free for drilling and buying/leasing more land (replacing production and reserves). Nevertheless, Sound closed at 6.24 today, and it was briefly below 6 last week. In fact, at last week's low of 5.94 the dividend was over 20%.

I see this as just another shake-out in the trust sector, though obviously a severe one. The public panics like a mad bugger at some times, and we are there right now. These are the times to buy.


Best,

Doug