Tory: You were smart to have been out for the last couple of years. I hope sometime soon we will find a bottom. It seems to be getting close. It was up about 20% in the last few days prior to today, but fell back 10% today. Talk about roller-coaster ride.
It was around 3 two days ago, but up 9% yesterday. Anxious to see what this cold spell in the east does to the EIA inventories in next couple of weeks. The Gas drilling rig count is down 91% from the 2008 peak., and down 55% from a year ago (from Jan 8 BHI data). I think the index is adjusted quarterly, but have no way to check your 25% estimate; so I assume that's a WAG? I assume they would get rid of the least attractive companies during the adjustments. P/E, P/B, and return on equity are some of the index selection inputs.
Mizz: I admit that bankruptcy might be a concern with NG prices this low, but I really doubt that it would be anywhere near the one-half that you said, and I think a lot of it may be baked into the FCG price at this point. The companies in this ETF are generally no lightweights of the gas world, and I think the holdings are re-balanced quarterly. And, even if some do go bankrupt, it may give the remaining firms a chance to buy in at fire-sale prices. One other thing I read about recently is that, long term, even as we convert to wind and solar, NG will still be needed as a base power provider.
Regarding the 1% dividend you estimated, & based on the latest dividend data, you are probably correct that some companies have reduced their dividend; because the December 23 distribution was about 61 percent of the December 2014 distribution (Dec 23 distribution from FCG website, Dec 2014 distribution from MStar website). But that reduction is not enough to move the yield down to only 1%. Please explain.
Week ending Dec 11 - BHI report - 346 rigs last year, 185 now -- of course, the rigs left are probably the highest producers. Still, things may look up soon. See my comment response on devalljeff"s crazy SELL post. on Dec 14, and add this: "point # 7. Winter is coming."
FCG has dropped from 24 to 4.4 in the last 2 years. Now, that is" blood in the streets", especially for a producer ETF for a commodity whose use is bound to go up to meet global warming edicts. Now if it were coal, that might be a different story.
OK then, since you say sell, then it must be time to buy. Why, you say? Because
1. Trucks and Buses are converting to natural gas
2. Power plants are converting to natural gas
3. Export of natural gas (LNG) is about to begin
4. The global warming conference has set a new goal of 1.5C maximum temperature rise, and the US is expected to lead
5. Natural gas releases only 50-60% as much CO2 as Coal so will be the bridge to green power
6. FCG is at a multi-year low, and is now yielding 4.1% while you wait for it to go up.
So whats not to like?
May be a sign that investors are concerned about the well-being of KMI's upstream customers. Probably way overdone though.