Mother6H makes a great case for buying HGT now, and long term I think it is a good trust. But in the near term there are some potential negatives:
1. Oil is currently at/near all time high. If oil falls 10%, it will drag the NG stocks down with it, however irrational that may be. NG "shouldn't" be at a BTU discount, but it is; and it "should" not fall with oil, but it will. (IF oil falls, that is)
2. There is still a historic glut of NG in US storage, and this winter is relatively mild.
3. Based on current yield, HGT does not compare well to a number of other good US trusts. I understand that HGT will likely distribute more some time in the not too distant future, but between now and then, investors may shift out of HGT into similar trusts that today yield better.
I am not negative on HGT, but I think it is possible it trades significantly lower before recovering. And I would want to be able to buy if it did get down to 15-ish.
from eia " Natural gas in storage was 3,173 billion cubic feet (Bcf) as of December 14, which is 9 percent above the 5-year average (2002-2006)."
bird--I left my number with Ron Hooper head of trust dept. to get the reserve live pattern and current numbers for DOM. You may be interested in the followiw I invested in the past 4 months since Aug. 16--that was my big invest day when we went into the abyss---Anyway I am ahead on all these and I bot 1000s of each--EAD EDF EMD EAD ESD GHI HIX HTR JGG JGT KMM PGP PHK PTY RCS SBW SGL---------------------------------Better to be lucky than swmart.------MO
I have to disagree on the DOM reserves. I do not use stated reserve life to evaluate the declines rate of production. Historical decline is however quite useful. If production declines every year for 10 years and is 60% lower at the end of that period, you know you will continue to have sharp decline rates in the future. In contrast, if production declines for two or three years and then returns to historical levels after drilling in previously undeveloped acreage or infill drilling, then you can disregard the previous sharp decline and assume a longer reserve life. For that reason I only own trusts where I can check annual production figures back 8 or 10 years.
from last report on WTU it has tripled the reserve. DOM was over 50 two years ago. The reserves are very misleading in these areas so you must take some chances. Take SFF whose death and sell off this year should have collaped the proce with a $20 closing bond. SFF is now 26 after falling to 21 antiicipating liquidation.
What i am trying to tell some of you whiz kids with all the data is it's a bunch of crap in this artful business. I know what they do in these estimates they know as much as Mickey Mouse for there are many archane things to know ans this is an art. --------Sure you need reliabble info but don't follow the gospel too cloisely or you may miss a good time by being shrewd and conservative on your bets.------------------------Bet you when DOM nears the x date this baby moves.-------------MO
About WTU. Does anybody remember an article in Barrons that questioned WTU's reserves and stated that the trust might run out of gas in about 2 years? The next day WTU price collapsed about 30%. That was almost exactly our gain, not including the distributions. Honestly, we've paniced, as many others probably did too, and sold on the small uptick. We just looked at it as a matured CD with a pretty nice yield. Pretty soon the unit price recovered... Trust is still producing and in business...
As holder of several different trusts I will chime in here. I checked out DOM and found that the decline in reserves is so rapid that the yield will not be sustainable. Look at the production decline from 1998 to 2006. It is more than 60%! HGT, SJT, SBR, PBT and MTR in contrast keep on replacing proven reserves with new development every few years and the production stays pretty flat over the long term. WTU is too complicated to take the risk on what will happen in the future.
Thank you for your response. I have been watching DOM and DMLP; I can't figure our why DOM is so very low right now,but that is for a different board. I will check out SBT. I don't care for WTU much.
You and others here appear to be correct, and the future distribution inceases are starting to be priced into the unit price. Too bad. I was really hoping the comparitively low disti would drive the unit price of this very attractive trust lower. Those who saw what appears to have been a bottom at 22 are indeed vindicated.
I very much like buying these trusts at low prices, and holding for long periods. They add a lot of stability to counter some of the other things I do.
rain--Nat gas is money in the bank for you something like store of value with intrinsic value. You ask me for some ideas besides HGt. I give you bargains galore bypassed by the markets misapproprioating of resources. They are DMLP DOM WTU SBR--there arev others but these are the low hanging fruit. You can collect a nice divee while the market slowly grinds and sifts in its allowcating mill wheel.----------Good Luck. MO
You bought HGT at 8; you are my hero. I stumbled across it a couple years after you, at 17, but did not buy enough, and have regretted it ever since. I was dearly hoping this reduced distribution would push it down into the teens, but it looks like I was wrong. 22 may have been the buying opportunity. I bought some, but was holding back for the teens, to amend for my past mistake.
So, Mr. Mo, holding your increasingly valuable HGT, what other opportunities do you see?
you are very wrong and short-sighted in your assessment of nat gas. Eventually nat gas will be used in transportation as it is used in forklifts,giant turbines for 3rd world countrires etc. Also liquification will be used more important. We are on the verge of global substitutions for oil in transportation as fossil fuels are more scarce,
Also, the substitutes as per wind and solar are infitestimal and given the shortsightedness of a comprimised energy policy(example look at the idiots in environmental that got us into gas fired plants)---we are payoying dearly for the fools in government bending to the idiots and our future.
One more thing friend how long do you think we will be able to produce cheap nuclear energy-maybe 10 years if we get off our duffs. You realize France has had safe nuclear and dispsal methods for years and they are 80% nuclear with safe cheap mass produced interchangeable plant capacity.
rcdt---------You have a very naive view of the energy needs , capacities, and vision of the energy future. Surev you must be abreast of changes and realistic of potentials.-----------------rcdt--I have been in HGT for 6 years since it was 8 and XTO for 10 years since it was 6 in 1997. I have watched this charade in the energy market since oil was $12 a barrel. I had a vision for a long time and I "see" very far into the future.--------Good Luck, MO