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ECA Marcellus Trust I Message Board

  • sourdough27a sourdough27a Mar 19, 2013 3:50 PM Flag

    Cash flow discounted to present value!

    I wouldn't worry too much. Someone was pushing down as hard as they could! And it worked!

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    • you bother to read tha SA article? If so, and IF that author is even close to correct, ECT has much farther to fall

      • 1 Reply to pc4me58
      • Yes, I read it. Go to the recent annual report. There are $150,000,000 in estimated reserves. They used a 10% DCF to arrive at a discounted value of about $75,000.000. A 10% discount rate is required by law, but a more realistic rate is 6%, given the alternative rates of return on money. In any case, even using the 10% DCF, you are buying $1.50 in income for each $1.00 of trust units you buy. The 6% rate is more realistic and that ups the return significantly. Yes, the return will go down on the conversion, toabout $.50 cents, but it is still a decent deal at this price and I think the reserves are greater than estimated and you are buying $2.00 of annual cash flow for $12.00.

        The stock may fall further. If it does, I buy more income even cheaper!

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