Nymex Crude Oil Futures are currently showing roughtly the following... 2003 $30.00 2004 $27.50 2005 $24.80 2006 $24.30 2007+ $24.00
When I put that up against chargeable costs, total remaining distributions are $5.38. A short seller also gets the use of short proceeds to invest otherwise or collect interest, and over time pay out this $5.38. Based on the oil price futures, the trust should be trading in the $4-7 range, depending on market mood. $19 was ridiculous and $16 is just the beginning of the tumble. Like I have said all along, it doesn't matter if this trust falls to $4 today, tommorrow, or a year from now. If you sell short at anything above $8 or $9, you are virtually guaranteed to realize a >50% rate of return.
BTW, I recently shared the model with a large private equity fund manager. I would not be surprised if this tumble is their doing. Knowing that they have over $10 billion in available capital, I would not be surprised at all if they relentlessly push BPT to single digits over the next few months. While I am simply a pauper picking up scraps, I sure will enjoy their short money at work!
We talked long ago about BPT. It would be highly desirable if you had simular knowledge about Viking and Ultima energy trust. I have been getting 21% pay out on those with incresing reserve life. Way to go management.I also beleived BPT was way overvalued as well.I did not short the stock but probably would be a good move.People see the present distribution being nearly18% and think that is for all year long. Cost are a major consideration the way BPT is set up. Know one knows where this will settle but as I said before $14 is perhaps resonable on the high end for me to be confortable. Cheers ProTicker