Hugoton Royalty Trust Message Board

LINE investors seem to have a victim culture. So many of them want to apologize for being ripped off.
LINE deliberately witholds one distribution and obscures it with the transition and almost every body here want to apologize and be grateful for being ripped off.

Of course the price is not cut in half or the company going bankrupt. They confiscated one of your distributions is what, and that shows unscrupulous management. Some of these people seem like if they got mugged on the street they would apologize to the mugger for not having much cash on them.

I have already been through it with my broker - that is how I know their policy.
The above suggestions are not practical and prevent you from being able to sell your shares in a timely manner.
The best way to prevent shares being loaned is to not keep a margin balance.
They are legally only allowed to loan out shares up to the value of your margin balance, so a margin balance of zero means they cannot lend out any shares. You don't need to switch to a cash account or any of those impractical steps of getting stock certificates - simply do not maintain a margin balance.
Setting a GTC sell order will do nothing as I already confirmed when I went through this in detail with Etrade a year or so ago.

so now you believe random internet discussion over what Etrade and Fidelity say are their policies?
We have already established that Etrade and Fidelity will lend out shares even with sell order in effect.
I can't speak for other brokerages.

Amazing that, isn't it.
The people who have been consistently wrong for years think they know better than the ones who have been proven correct over a period of years. The same thing happens on the UNG board where people have called me a perma-bear over the past few years even while they were all losing their shirts with the bullish trades.

I get the impression that most of the frequent posters here do not have any financial interest either way. Fred (fp) does make small trades (sometime bullish, sometimes bearish - he trades the trading range and probably has lost as much as he won doing it over the years) - it is his version of playing the slot machines. I don't invest directly in oil or gas however my investments are mostly high yielding, tax deferred oil and gas partnerships and trusts. By reinvesting the income tax deferred I get exponential compounding of both account value and portfolio income. I can say that I have made big money over the last 5 or so years.

Yet the ones who keep repeating the same failed predictions over years and years think they are the smart ones and the people who are actually making a fortune on energy investments have no idea what they are doing. Well, I don't care as I can laugh all the way to the brokerage.

And I heard it direct from Etrade and the other poster heard it direct from Fidelity. They both said that for those broakerages at least a GTC does not prevent shares being loaned.
Maybe your broker is different. but Etrade and Fidelity have DIRECTLY said the opposite of what you claim.
And I am an important customer at Etrade (platinum account with high total account value - they give me special rates on commissions and margin interest and my own individual representative who follows up all my questions with thorough answers). He followed up, researched it with the people in the margin desk and told me that GTC does nothing.

Another poster said Fidelity told him the same. So your 'some guy told me' doesn't carry much weight when Etrade and Fidelity explicity state the opposite.

and if you do a simple google search, you find lots of articles stating this is a myth...for example I just googled it and here is a quote from the first on the list:

"Many retail investors think by placing a Good Till Canceled order (GTC) they can prevent their shares from being lent. A quick survey of some brokers indicated this to be more of a myth than reality. While some brokers may act as such, most don't recognize an open order as prohibitive of lending shares. "

Well my broker (E*trade) told me directly that GTC sell does not prevent loaning of shares. And donedealer in his post above says that Fidelity told him the same thing. In my case, I asked the E*trade platinum representative not to guess the answer but to properly research it with the people on the margin desk before giving me an answer. In due time he got back to me with the answer that GTC does nothing.

So you are saying that Etrade and Fidelity don't know what they are talking about?

And again, it is all defined in the brokerage margin agreement (which is pretty standard across brokerages). See if you can find anything in that margin agreement about GTC preventing hyporthecation.

very commendable however it's not that simple. Any UBTI obligation is reported via form 990-T which has to be completed by your custodian (the IRA) and is entirely separate from your individual tax return. However some brokerages don't want to get involved and refuse to file the paperwork.
The whole situation is a mess and some knowledge accountants who know partnership tax law say that different sections of the tax code are contradictory on the subject.

My approach is simply to hold all MLPs in a taxable account which is better anyway since you lose the special tax deferral benefits of MLPs if you put them in a tax deferred account.

Most regular tax accountants would not have a clue about UBTI recapture in a retirement account.

I don't get into the UBTI discussions as all my MLPs are in taxable accounts.
However rlp has the correct understanding according to more than one very knowledgable partnership tax accountants. The IRS is currently not enforcing the UBTI recapture on sale rule for individual retirement accounts although they are enforcing it on larger tax exempt organizations (charities, etc).
They may also be preparing to enforce it on individual accounts as evidenced by the K-1 form being extended last year with a box to indicate whether the account is a tax deferred retirement account or not. The first step to enforcing it is to identify which accounts to target and that change to the K-1 form is a potential facilitator. Otherwise, why else would they add that to the form.

I haven't read this whole thread, however I can say that rlp has the correct understanding of the UBTI rules.

I didn't know norris missed me

Like I said, it is a common misconception. Common misconceptions get repeated a lot. Read the brokerage margin agreement.

So far the trend has been lower every quarter. I think the best you can hope for is that the payout stabilizes above 60c. There is no chance of the next payout being the best yet which would require over 50% increase.

5/16/2013 0.632
2/14/2013 0.651
11/15/2012 0.761
8/15/2012 0.894
5/16/2012 0.955

That is not what happens. If 'risk free' investments like treasuries have a higher yield, other yield investments have to trade at higher yields to compensate for the extra risk. The yields have to rise which means the unit prices come down.

Maybe it will play out like CEP...in that case lenders gave them just enough slack to keep operating but by reducing the borrowing base every 6 months made sure that all income went to debt reduction meaning no distributions for years.

I haven't read the 8-k - care to post a summary?

No chance at all, since this is a defined lifetime depleting trust.
It is not an operating company.

P.S. When I emailed ARLP IR over a concern I got a personal phone call from the CFO.
How comes with LINE they only give me Toni A. Montegut, Investor & Public Relations and Hays Mabry, Senior Analyst?
My personal opinion is that they know they are scrwing unitholders here, and not keen on engaging with the people who can see through their little deception.

Not necessary to be in a cash account. Simply do not carry a margin balance and they are not allowed to loan your shares.
Correct that GTC order does nothing - it's an urban legend of investing, often repeated but with no basis in fact.

Not only can they only loan shares in a margin account, that account must also have a current margin balance. If you have a margin account with no current margin balance they are not allowed to loan your shares. The rest of your post is the same as my understanding - I believe Etrade may have the same policy as Fidelity as I have never had MLP units loaned out although many times have had trust units loaned.