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Hugoton Royalty Trust Message Board

  • Dean4614 Dean4614 Jan 19, 2012 10:24 AM Flag

    NG continues to stay weak thus effecting stock price

    Apparently shows continued weakness, forget dividends that was all given back if you owned for past two years. Pathetic performance

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    • Its not that they switch the plant from coal to nat gas, its that they have peaking stations next to the coal fired plant that can be switched into the main grid. These peaking stations are usually a jet engine fired by nat gas. I am not aware of any other type of nat gas power plant.

    • I still don't get it.

      "Now we have this stock HGT that I KNOW someday is going higher, but right now I can tell it is going lower."

      Agree with the prognosis.

      "why not make money while holding the bag."

      But how are you going to make money with a long and short position which cancel each other out? I assume you know that you pay the distribution when you are short. So the income you get from your long position will be balanced by an equal amount you have to pay on your short position.

      In terms of both income and capital gain/loss, your long and short together combine to make a net zero, the same as being out altogether. Am I missing something?

      The only reason I can think of where a long and short makes sense is the one I alluded to...not wanting to be exposed to downside but not being able to sell your long position (for tax reasons).

      By the way, with regards to the $8 target: I hope it doesn't go that low. Here's how I see it. By summer we can expect distributions to be pretty low. If, at that time, NG oversupply still seems a big issue and NG price is weak or going lower, then I'd expect HGT to fully adjust to the new payout level at a 7% or so yield. Thus the $8 target. On the other hand, if HGT distributions are low but NG seems to be turning around due to a hot summer or whatever, then the low distributions would be seen as a temporary lagging indicator and may be ignored resulting in the price not adjusting downwards as much.

      Unfortunately I am pessimistic regarding the outlook for NG prices over the next year, so I think the first scenario is the more likely. Hopefully I will have some cash available for the buying opportunity if it comes.

    • Liza, Maybe this will explain. In 2002 I shorted a stock, the trade was going bad, my Mother died, and I can not explain my mental state other than nothing else matters. I went into margin call and lost $10,000 because I was forced to cover. Talk about a bad time which is why you should never trade stocks if you’re under any mental distress. I have not shorted any stock since then. My biggest fear is shorting stocks. I can hold a stock for years long and not bother me as long as I feel there is hope. Now we have this stock HGT that I KNOW someday is going higher, but right now I can tell it is going lower. In my mind I feel safe having the long position covering my short position if I am wrong, and being that I am a bagholder 90% of the time I hold stocks, why not make money while holding the bag. And Ideally, I want to buy 400+ shares when I cover my short. I like your mathematics on share price. It makes sense to me. $8 is not out of the question here. Thanks for the education and sharing your knowledge. I think these message boards should be a tool to prosper together not a place that promotes division.

    • Hmm, interesting. I can see why _I_ might want to do this (to prevent capital losses while not selling my long term position which would result in high tax bill due to recapture of depletion).
      But I can't see why YOU want to do it. I think I understood you have only been in HGT for a short while, so you do not have my problem related to selling the long position. For you, the equal size long and short position just seems like a net zero position so you might as well just have sold your long position and be out till you think it has bottomed. Then instead of covering your short at the bottom, you'd just re-establish your long position. Your approach just seems like a more complicated way equivalent to not having a position.

      Now here's the thing I would really like to be able to do. There are a couple of trusts like WHX which have only a few years left till termination and they expire worthless at the end. So we know the units have to lose their entire value over that period. On the other hand they will still pay out a decent distribution (quarterly) over that period. I'd like to keep my long position to collect more distributions (and again to avoid the tax hit), but guard against the unit price fall which is coming at some point. So what I'd like to be able to do is keep my long position but take an equal short position, but just remove the short position for a day or so around ex-div dates to avoid paying the distribution which would defeat the whole purpose.
      Only two problems with this:
      -the ex-div date is the day when the price is most likely to drop, although it doesn't always work out that way.
      -the units of the trusts in this situation and very hard to borrow to short and I hear brokerages often charge very high interest to borrow them.
      If only I could come up with a sure scheme to keep the income but not be exposed to price decline. That would be like a holy grail of income investing.

    • Well, I can be your science project now. Today after the INVENTORIES news, I thought for sure this was going down 5% or more. I watch a 1 minute NG chart before I make any trade and bounce around between 1 day and 1 minute. That first leg down after news IMO triggered electronic buying at the bottom trend line. The thing is it also hit the upper trend line pointing down, when NG rallied, so I agree with you, NG is going lower. All the trading the last couple weeks has not broken the long term downtrend. It seems we are just in a pause mode. I realized this is going to be an excellent time to go short and I did @ 14.99. So now I am Long 200 @ 15.19, and short 200 @ 14.99. I wanted to short @ 15.29 (Break evan my long position) but chickened out. I think ideally I would want a gap the opposite way next time, if this works out. But for the mean time I am rooting for the experts to be right and the share price plummets. Then I will buy to cover and go long to double down. I have been trading for 11 years and 90% of the time I buy a stock it goes down, and a fairly high percentage of the time they go WAY down. So to me this is the perfect hedge. We will see……

    • ideas along those lines crossed my mind before but I never followed up and so not really sure whether the brokerage allows it or what other implications there might be (including from tax point of view). I generally don't do fancy stuff - hold and collect distributions, plus sell puts for additional income.
      Even when I think the price will probably go lower, I typically do not sell this type of holding (assuming I expect the downturn to be temporary) because selling would trigger recapture of all the depletion I claimed in previous years and so would result in a big tax bill. What you suggested might be one way to avoid that, but I haven't pursued the idea.

    • Liza, what about a "Stradle"? I wonder how it works to be short 100 shares and long 100 shares as far as the dividend? I am assuming it would cancel out. I wonder if I should stradle my hgt shares and short 200 here? There would be no possibility of a margin call.

    • Well said salzile.
      Additionally I find it humorous that people are outwitting these manipulators and betting on conspiracies and ignoring simple supply and demand.

      Its really sad to see pot shots taken at liza when she presents her logical cases in the energy field across multiple boards.

    • clowns crow about price manipulation when the price of stock doesn't go their way.

    • LIZA-
      New to Trusts...find any and all your posts quite valuable for info. Am surprised ANYONE takes a shot at you...

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