Questions for the RT analysts here...
I am planning to make an investment into a portfolio of RTs during the next few months as a long-term investment for income. I realize I am very late to the party but I believe we will see more stability in energy prices going forward than we have had in the past. While I don't believe $10 natural gas or $35 oil is in the cards, I also don't believe we'll see natural gas under $2.00 or oil priced in the low teens again during the next few years. My present thinking is $3-$4 gas and $20-$25 oil.
That said, IMO, while RTs are not my area of expertise by any means, I believe the US RTs are currently way overpriced. I believe as O&G prices drop along with RT distributions and along with perhaps a tech stock rally, I think much better near-term buying opportunities lie ahead for US RTs.
I don't expect to buy HGT for under $9.00 or any other RT at less than 50% of current prices and congratulate those of you with the foresight that did so. Thus, my question is... at what price for each of the RTs below would you consider a good price for you to buy more shares or take an initial position?
Here are the ones I'm considering after a very quick analysis: BPT, HGT, LRT, PBT, SBR, SFF, SJT, and TIRTZ.
I currently only own NCN. I bought and sold NET last year and sold my TIRTZ this year (very lightly traded). I am still shaking my head at the price of TRU after looking at that a year ago at under $5.00 and rejecting it. Must be a lot of people buying solely based on distribution yields with no consideration of quantity or quality of the reserves.
Please reply with an opinion as to price to pay and your reasoning or comments on reserves on one or more RTs, the more the better. Are there any other good U.S. RTs I've missed that might likely drop to a good price or any you would reject? This might provide a good discussion for everyone. Remember, base your answers on RTs you would like to own at a reasonable price, not based on today's valuations. For example, with HGt, I personally would have no interest at $16 0r $17 but where above, say $12.00 would be a good entry price?
what's not to like? trailing 12 month yield g.t. 12%, monthly cash flow, increasing reserves, strong market appreciation, bull market, managed by xto who's been around the block for a while. canadian trusts look ok too but harder to understand the canadian production for a dumb texan. do an overlay curve of perfomance of these trusts. sjt and hgt are pretty good then look again at % gain after dividends. did i mention tax credits?
depletion, intangible drilling costs, ...
someone said like hgt better than crt. crt is mostly nonoperated by xto where hgt is mostly operated by xto. xto not the only good producer out there rising commodity prices will help everyone. so far, my favs are sjt and hgt.
"what's not to like?... increasing reserves,..."
Are the quantity of HGT's reserves ACTUALLY increasing or just the value of those reserves determined at year end 2000 based on O&G prices were extraordinarily high. That is, If gas was $3.00 at the end of 1999 and $10.00 at the end of 2000, your reserves are likely to triple in value even if there are less in the ground.
The report I'd read about HGT said twelve +
years life of the fields in use now!
Here's the Henry HUB. In case anyone hasn't
I'm green in this sector and like this board
" If I did not think that they were worth their current price I would imediately sell them."
However, my belief, right or wrong is that there are many people parking funds in RTs for the yield and have run the prices up above a reasonable price, much as they were undervalued six-months ago. The distributions will be declining as a result of the seasonality of O&G prices. When that happens, I believe many will sell as the prices drop.
Need High Yield: I don't really consider myself a "pro" when it comes to analyzing NG trusts but I have bought and sold a few and done quite a bit of research on them. I only own HGT now but I used to own SBR and SGU. SBR is worth a look and they are relatively cheaper than many of the others and have something like 36BCF of proven gas reserves last I heard. I consolidated my NG trust holdings into HGT due to their growth in reserves (hence, longer life expectancy), solid mgt. of their parent, and high daily trading volume (shows a lot of investor interest and easier to liquidate or buy if you want to.)
By the way, I follow NG prices very closely including the commodities people who trade futures in NG. I think your projection of $3.50 or so for NG is going to be way off. April and May are typically the weak months of the year for NG prices so we possibly could go down to the $3.50 level in the next few weeks although I doubt it. As far as an average for the year I don't see how NG can average below $5.00 for the year.....and yes, we could see price spikes up to the $10 level if the weather doesn't cooperate and things get too tight again. Anyway, it's your money. Good luck.
Thanks for replying to my inquiry.
I really wasn't looking for RT pros but rather RT investors who were more familiar with them than what the current yield was.
HGT is one of the U.S. RT's on the top of my list.
As to O&G prices, I agree with you about gas for this year. I was talking longer term. However, my projections are not very good. If you wanted to bet me a few years ago that we'd see $10.00 oil within 5 years, I'd have given you odds and lost big time. :-)
What I don't want to do is to buy RT's that require $5+ gas and/or $27.50+ oil to get a half decent dividend.
TIRTZ which is AKA "Energizer Bunny" (is it 15+ years so far?) looks best to me off your list. What was your reasoning to sell it this year just when investor interest was burgeoning? ----- And bear in mind, XTO implies that they see HGT as a grower and that CRT is not.
Thanks for your reply, Bottomfisher1.
I sold my TIRTZ because of lack of receiving information and its illiquidity.
I never received quarterly or annual reports, no notices of dividends until they showed up in my account and the MM's for TIRTZ have huge spreads. I had a limit sell order in for months before I got liquidated in a relatively small position. Finally my broker doesn't handle BB stocks much and their trader didn't even show my offer at times and my 1099 didn't reflect the information I needed for my taxes so sold because of the hassle.
I hHold too many positions to order quarterly and annual reports. Prefer press releases for earnings and dividends and then I can see what I want to check out further in the online 10K or 10Q.