The bounce looks to be short lived. Not sure why anyone is buying this stock right now, but I am short again @ 14.74. NG is heading back down, and this technical rally in HGT will take a hit soon.
I'm a buyer. I do keep an eye on natural gas prices but not on a consistent basis.
It seems awfully risky to be shorting after 30% drop. The low price and low distributions have been priced in.
To make money on your short you will need it to drop further. Whats the current price, $2.2? How much further do you expect it to drop? You mentioned that you look to the past lows as a guide. If you are referring to 2009 keep in mind that was NG prices this low AND mass hysteria of the financial markets.
I do understand there is a 3 week difference between my post and yours so things might have changed.
I didn't mean to insinuate that I think HGT is actually going to $10. That is the price at which there is very little risk whatsoever. Most producers will defer drilling new wells, but since the bulk of the cost is upfront, it usually is not very economical to shut in a well, because it does generate some revenue relative to the cost of operating the well.
This is what I like to refer to as coast down. Kind of like riding a bicycle and instead of hitting the brakes, you just stop pedding and coast.
Prices will remain depressed for an extended period of time.
Baker Hughes rig count was just released today (it is released every Friday).
Rig count dropped by 7 this past week, which was disappointing. Last week it dropped by 17. We need to drop another 100 rigs to put in a bottom. It will take 12 months for the oversupply to work off, perhaps even longer. Gas produced as a result of drilling for oil will continue to keep the market well supplied.
I think HGT will reach a bottom soon, as people will take a longer term view. Distributions will actually lag the market a little bit, but I expect them to reach the bottom soon. There is probably some money to be made shorting HGT at these prices, but the risk reward is very thin. Probably a lot better options to short than a monthly distribution paying royalty trust.
The 12 month NG price high was:
5.067 on 06/09/2011
Todays quote is:
That is about 50% decline in NG price.
This summer it may be $1.80 or even $1.50.
Because the warm winter has caused a huge surplus of 2,433 BCF up 43.6% from last years 1,694 BCF
This dividends direction is down.
I don't understand buying here.
I am at evan now with HGT short/long at same cost basis. Doesn't matter if it runs to $100 I can not lose a dime now. I am still betteing a lower share price soon. April can be bad.