Two prior corrections to this strong run up have dropped MSB from about 12 to 8 and from 25 to 17.
I would not be surprised if we correct here from around 40 to 32, a 20% drop. Perhaps late next week when the distribution is announced, or after the ex-div date at the end of October. Any else getting nervous about these lofty prices? (I'm a devoted long, at least until I go long term in November.) GLTA.
Mo--to your first question, in a word--yep!
Look at it this way, at the first of 2010 I held GNI
and conversing with 'brun' on those threads. 'brun' was/(is?) a 'shortie' looking to cash in when the trust terminates , but was a bit overanxious cause he was on the thread to hurry the end up.
My responces to him where "scoffed at", not without justification because I told him he would be right but would possibly pay big in the interim.
By my science of ill-logic I proposed that GNI could go to 140.
Well, here it late 2010 and GNI went to 140!
My science of
ill-logic tells me that MSB will go much higher but I compromised and am looking for the double.
Second question--no answer.
Where is 'brun' now?
There may be a downward correction some time in the future. Right now, seems to me the correction is to the upside. $0.80 to $1.00 distribution per quarter is very lucrative in this low interest rate environment (2-2.5% yield per quarter at $40/share), which is better than most short term CDs for a full year. So I'm thinking once this upward correction is completed, the floor on MSB will be around $50/share, and that any 20% downward correction won't start until it hits around $64/share (1.25% yield per quarter, 5% annual yield).
Down to 39 from the 43 high, MSB has dropped 10%. Some sort of "correction", whatever that means. Maybe this is part of a broader commodities adjustment? An MSB-specific fall? At 35 that would be a 20% drop, and might bring out the checkbooks for a still-good story and future return. I might add to my almost-long-term long position at that level.
But don't buy at the top. Remember MSB has quadrupled from around 10 in the past year.
Although the royalty return is still relatively high, the big cap gains have been taken.
Good luck (but not to shorts).
Do you have any target price for the remaining 1200?
Perhaps you might sell some November calls? I bought some MSB in my IRA for 32.20 (two weeks ago) and sold Nov40 covered calls for 0.80. If the price holds above 40 and the shares are called, then I keep the capital gain, the next distribution, and the premium, for a 25% gain in 7 weeks.
MSB at $40 with a $3 (my estimate) distribution for calendar year 2011 is a fair 7.5% yield. At some point the upward pressure on commodities will lessen.