Lizahang: Someone is going to have to explain the xdate distribution opening subtraction.
1. This transaction is not shown on the “account detail of StreetSmart Edge”
2. My case, NTI is not a US Royal Trust. The value of the MLP did not change. The MLP pays a distribution, like any other bill.
3. NTI value is not diminished by taxes. The taxes are passed on to the unit holder.
4. On “pay day” the, NTI will pay distribution on May 30th, the distribution will be shown in “account detail of StreetSmart Edge”
In accounting, the premise is that all credits and debits must be accounted for. In this case the credit is shown and taxable; the debit is not shown and cannot be accounted as a loss.
The case with a US Royal Trust is different. The distribution reflects the sale of the commodity. Therefore there will be less commodity for sale. The worth of the US Royal Trust is devalued by the amount of the distribution. The Xdate lower opening makes sense.
This is not the case with MLP, NIT, is a refiner, it buy crude oil refined it and sell it. The MLP include some or all the refinery equipment, The MLP could show a capital loss equal to the amortization of this equipment. This is accounted in the EBITDA “Earnings Before Interest Taxes Depreciation and Amortization”, which is part of the distribution.
My question is simple, where the opening loss has gone to? My guess is that someone is cashing in?
The price of all securities is reduced by the amount of the dividend/distribution on ex-div date.
It makes sense to me - the company/trust/MLP/whatever had that amount of cash the day before and today no longer has it. Therefore the value of the company is lower by that amount. I don't see that this changes just because a trust is a depleting asset while an MLP or corporation is not necessarily so. It still has that much less cash than it did the day before.
The point is well taken. But, on tax day the same thing happen and the price does not reflect the subtraction of the tax payment by the number of outstanding units or shares etc. My guess is this is a customary event that no one challenges. The true value of any company changes every day. The price reflects not the value but the speculative projection sentiment of investors.
A difference swiped under the rug. But thank you for your honest answer as usual.
You're totally wrong. The price is not automatically reduced by the amount of the distribution. When deciding how well the trust has done on the day it's ex distribution you have to include the amount of the distribution.