You are close in your estimations of what I expect going forward.....Oil under $100 for sure and remember these trusts are wasting assets so after each distribution the remaining value of the trust declines....Am omfortable with the $17.50 naked puts and hold the $15 naked puts for extra income as I seriously doubt the trust will decline to that level by March.
I am of the opinion that there is no 'recovery' of any significance going on and growth in the country is anemic at best.....
Good luck on any purchases here. Stock closed up today and I may close out some of my Dec $17.50 puts at 75 cents if I can.
Your points listed above are for the risks of an unproven land trust not the share price over priced @ $20 yet a buy at $15. The trust has stated they CANNOT hedge after the current one expires. It doesn't matter if its priced at $5 or $100. Liquidity..WHZ has the same amount of shares traded as do other trusts and is independent of $15 vs $20 price.
WHZ currently follows the price of oil as compared with USO. If you are saying that WHZ only has the a top of $22 then you are saying oil only has a top of $95. The fact that WHZ is still highly correlated with oil tells me the clueless retail investors who wants to back up the truck and chase yield hasn't come in yet.
It wont match oil movements forever. It will either go down to $15 which means you believe a trust yielding 26% is reasonable and a fair value or it will rise as more yield chasers who do not know what they are investing in jump at a high yield to push it higher.
I do not own WHZ. I was initially wanted to wait until next earning report which should be in the next week or two but I may buy this week. Distribution is quarterly and seems to go ex-div the same time they release earnings. It seems undervalued to me based on its high yield, it being new that retail doesn't seem to have piled on yet, and given commodity prices as compared to its future potential distributions.
Why "Unproven track record."
I consider management have managed the company pretty well in the almost 5 years since the LLC IPO'd. Yes, they took some risks with lack of hedges, but otherwise they have a good track record, imo.
you seem to agree that $22 is close to the top for this stock....I just feel comfortable with selling puts...In the past week I sold some Mar $17.50 puts (first ones for $1.90 and today a few for $1.65)....That is 7months out for average of about 25 cents per month.....$only $3 per year if you annualize this, but on a $17.50 risk I am okay with the return....
From the first time I posted my price of WHZ was and is $22.00. The fact that some peole paid more than that was hype about dividend. My average is $18.60 and I will sell if it gets to high 21s,if not I will hold.
in the past6 or8 weeks and listed many times the reason I think it is still over-price, but here goes again ----
1. little or no hedging....only some hedges if the price of oil goes below 75per barrel
2. Very small illiquid fund, which does not concern me, but many investors avoid such things in favor of stocks like VNR.
3. Unproven track record.
4. No one is chasing the shares higher
5. Few people know how to evaluate the cash flows and discount them to present value to determing proper share price range.
6. Almost all seasoned investors in energy stock recognize that they are wasting assets.
Therefor, given my risk aversion temperment, I am not interested at any price higher than $18...
.......NOW perhaps you can explain to me (after all an intelligent conversation which you wish to have, requires INPUT FROM BOTH PARTIES.....I am waiting to here what you paid, if you sold calls against your shares, when you purchaed, and where you think this is headed....
I say upside potential from here is about $1.25 at most to a level of 'perhaps' $22 this time around.
Have a nice week-end and am eager to hear your input.
"you believe it is the best thing since sliced bread!!!"
Oh come on now. Here I thought we could have an intelligent conversation and you have to make ridiculous assumptions. Me asking why you think it is overvalued does not mean I think this is the best thing.