Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Royalty Trust Stocks..?
Old 05-09-2011, 09:55 AM   #1
Dryer sheet aficionado
 
Join Date: Feb 2006
Posts: 42
Royalty Trust Stocks..?

Hello,

I am looking to invest about 10k in a few stocks. I like dividend stocks like I have stated before.

A friend of mine mention Permian Basin Realty Trust, so I took a look, it looks very appealing. So I started searching more stocks, Hugoton Royalty Trust, Mesa Royalty, and so on. There are many to choose from.

I just want to get some "expert opinions". I am young, and like to buy for the long run. What do you all think?
__________________

__________________
bode316 is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-09-2011, 11:33 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,752
I think you should do your own research rather than accept advice from anonymous "experts" on the Internet.
__________________

__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline  
Old 05-09-2011, 11:50 AM   #3
Dryer sheet aficionado
 
Join Date: Feb 2006
Posts: 42
Kumquat the grouch, let me guess... old, bored, and cranky?... I do plenty of research.. it never hurts to get other opinions. I guess you know it all, and dont like to hear other peoples takes on stocks.. No reason to be rude.
__________________
bode316 is offline  
Old 05-09-2011, 12:20 PM   #4
Dryer sheet wannabe
 
Join Date: Apr 2011
Posts: 13
Quote:
Originally Posted by kumquat View Post
I think you should do your own research rather than accept advice from anonymous "experts" on the Internet.
Did seem a bit rude. Isn't the purpose of this web site for people to share information?
__________________
Hamster is offline  
Old 05-09-2011, 12:39 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 19,903
I have owned oil and gas royalty trusts from time to time since the 80s. I don't own any now.

The first thing to realize is that these are wasting assets, the second thing is that you cannot know how rapidly they are depleting.

You do have the O&G engineering firms' estimate of reserves, but some are very conservative, always sitting at about 8 years of life remaining, and others less so.

In particular, PBT and SJT were my first holdings, shortly after they were spunoff from Southland Royalty. They created a gusher of payouts while I owned them, and almost 30 years later they are still gushing.

But it can't last forever, as they are not allowed to explore new acreage. The gussing game is about when is the jig up, and when do you still have plenty time.

You should also know that the market value of these things is sensitive to interest rates as well as production and prices.

Ha
__________________
Insanity in individuals is something rare-but in groups, parties, nations and epochs, it is the rule-Friederich Nietzsche
haha is offline  
Old 05-09-2011, 12:45 PM   #6
Full time employment: Posting here.
 
Join Date: Feb 2008
Location: Indialantic FL
Posts: 944
Quote:
Originally Posted by bode316 View Post
Hello,

I am looking to invest about 10k in a few stocks. I like dividend stocks like I have stated before.

A friend of mine mention Permian Basin Realty Trust, so I took a look, it looks very appealing. So I started searching more stocks, Hugoton Royalty Trust, Mesa Royalty, and so on. There are many to choose from.

I just want to get some "expert opinions". I am young, and like to buy for the long run. What do you all think?
If I were you, i would skip the royalty trusts at this stage in your life. They generally are fine for current income, not so good for capital appreciation. I would suggest you look at MLPs instead. Royalty trusts generally only "milk" the resources that were placed into the trust. Unless they have a parent company feeding resources into the trust, it will eventually go into decline and eventually be liquidated with unit owners receiving a portion of the proceeds. MLPs pay the current income and at least can grow the partnership.
__________________
JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
jimnjana is offline  
Old 05-09-2011, 01:21 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 19,903
Quote:
Originally Posted by jimnjana View Post
Unless they have a parent company feeding resources into the trust, it will eventually go into decline and eventually be liquidated with unit owners receiving a portion of the proceeds.
Royalty trusts by definition have no parent company, so it is not possible for a parent company to feed resources into the trust.
What you are describing is "dropdowns", as done usually by the GP interest into MLPs.

Ha
__________________
Insanity in individuals is something rare-but in groups, parties, nations and epochs, it is the rule-Friederich Nietzsche
haha is offline  
Old 05-09-2011, 01:31 PM   #8
Full time employment: Posting here.
 
Join Date: Feb 2008
Location: Indialantic FL
Posts: 944
Quote:
Originally Posted by haha View Post
Royalty trusts by definition have no parent company, so it is not possible for a parent company to feed resources into the trust.
What you are describing is "dropdowns", as done usually by the GP interest into MLPs.

Ha
thanks ha, my bad, I was thinking of SD, which just spun off SDT. They are not a parent company, bad choice of word on my part. But now they own a percentage of SDT. I guess when they spin off more producing wells into the next trust entity it will be SDT2 and so on.
__________________
JimnJana
"The four most dangerous words in investing are 'This time it's different.'" - Sir John Templeton
jimnjana is offline  
Old 05-09-2011, 03:44 PM   #9
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,752
Quote:
Originally Posted by bode316 View Post
Kumquat the grouch, let me guess... old, bored, and cranky?... I do plenty of research.. it never hurts to get other opinions. I guess you know it all, and dont like to hear other peoples takes on stocks.. No reason to be rude.
Not rude at all. If you have questions, ask them. If you have opinions, state them, and your reasons for holding those opinions. Why would you go to an anonymous site for "expert opinions"? No one cares more about your money than you do.

And yes, I do my own research because I am responsible for the results. If I posted that I found it appealing would that make you go buy it? Wouldn't you want to know why I thought that?

Read your initial post again and see if it makes you think that "luncheon meat" is coming.
Quote:
Originally Posted by Hamster View Post
Did seem a bit rude. Isn't the purpose of this web site for people to share information?
Interesting first post. I'll look forward to more.
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline  
Old 05-09-2011, 04:22 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 14,821
Even better than royalty trusts are Venezuelan beaver ceese futures. You have the most upside if you leverage your position in this market.
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
brewer12345 is online now  
Old 05-09-2011, 05:06 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 19,903
Quote:
Originally Posted by brewer12345 View Post
Even better than royalty trusts are Venezuelan beaver ceese futures. You have the most upside if you leverage your position in this market.
Beaver cheese has unfortunate associations with yeast infections. Please, let's put this one away!

Ha
__________________
Insanity in individuals is something rare-but in groups, parties, nations and epochs, it is the rule-Friederich Nietzsche
haha is offline  
Old 05-09-2011, 05:21 PM   #12
Moderator Emeritus
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 32,318
Quote:
Originally Posted by bode316 View Post
To everyone else, thanks for responding, I'm leaning towards mlp's or possibly sitting on some cash for a while.
May I suggest spending a few of those bucks on a self-help book?
__________________
Numbers is hard...



REWahoo is offline  
Old 05-09-2011, 10:36 PM   #13
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,320
Quote:
Originally Posted by bode316 View Post
I am looking to invest about 10k in a few stocks. I like dividend stocks like I have stated before.
A friend of mine mention Permian Basin Realty Trust, so I took a look, it looks very appealing. So I started searching more stocks, Hugoton Royalty Trust, Mesa Royalty, and so on. There are many to choose from.
I just want to get some "expert opinions". I am young, and like to buy for the long run. What do you all think?
Quote:
Originally Posted by kumquat View Post
I think you should do your own research rather than accept advice from anonymous "experts" on the Internet.
Quote:
Originally Posted by bode316 View Post
Kumquat the grouch, let me guess... old, bored, and cranky?... I do plenty of research.. it never hurts to get other opinions. I guess you know it all, and dont like to hear other peoples takes on stocks.. No reason to be rude.
Quote:
Originally Posted by Hamster View Post
Did seem a bit rude. Isn't the purpose of this web site for people to share information?
OK, we're all off to a good start here.

Bode, you're relatively new here. Unlike Kumquat, you haven't watched hundreds of newbie investors ask questions here very similar to yours. Over and over and over again. Then they get huffy when someone suggests that they do a little of their own planning & research. Posts like yours indicate someone who (1) has not developed an asset-allocation plan, (2) is going by a "friend's recommendation" and anonymous Internet strangers instead of doing their own research, and (3) seems pretty thin-skinned for just one response.

Here's my suggestion: First, if you're truly a long-term investor, then share your asset-allocation plan and how you arrived at it. This would presume you've developed an AA plan, so if you don't have one then go develop it.

Second, go research some of your trusts and explain why you think they're appealing. Not just "great upside potential!!" but rather an analysis of their dividend history, their payout rates, selling below book value, or whatever fundamentals are important to you. This blogger cranks out a dozen a week, so perhaps you could do one or two. Then, as Hamster points out, you'd be sharing info. Your analysis could give other posters here a clearer indication of what you're seeking and lead to other ideas.

That's my expert opinion. Let's see what you choose to do with it.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline  
Old 05-10-2011, 06:01 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 14,821
Quote:
Originally Posted by haha View Post
Beaver cheese has unfortunate associations with yeast infections. Please, let's put this one away!

Ha
What, and deny the prominence of this unique Venezuelan export on the world market?

They have to grow some really big beavers down there to export all that cheese.
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
brewer12345 is online now  
Old 05-10-2011, 08:35 AM   #15
Dryer sheet aficionado
 
Join Date: Feb 2006
Posts: 42
Quote:
Originally Posted by Nords View Post
OK, we're all off to a good start here.

Bode, you're relatively new here. Unlike Kumquat, you haven't watched hundreds of newbie investors ask questions here very similar to yours.

I have been here over 5 years, I guess I am new.. Hes been around alot longer, 6 years!

Didnt mean to cause an uproar, just asked a simple question.
__________________
bode316 is offline  
Old 05-10-2011, 09:57 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 19,903
Quote:
Originally Posted by bode316 View Post
Didnt mean to cause an uproar, just asked a simple question.
Ya see, that is where you went wrong...
__________________
Insanity in individuals is something rare-but in groups, parties, nations and epochs, it is the rule-Friederich Nietzsche
haha is offline  
Old 05-10-2011, 12:49 PM   #17
Dryer sheet aficionado
 
Join Date: Feb 2006
Posts: 42
Quote:
Originally Posted by haha View Post
Ya see, that is where you went wrong...

No more questions from me! Wouldnt want to upset Kumquat, he has been around alot longer than me! (1 year)
__________________
bode316 is offline  
Old 05-10-2011, 01:44 PM   #18
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 10,693
HaHa, you gotta admit, the Beaver cheese would be a great investment....
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline  
Old 05-10-2011, 04:33 PM   #19
Dryer sheet aficionado
 
Join Date: Feb 2006
Posts: 42
Quote:
Originally Posted by Sarah in SC
HaHa, you gotta admit, the Beaver cheese would be a great investment....
Beaver cheese would be a great investment.. But like the almighty has said, don't ask for advice and do your own research! Don't rely on help or opinions!! Haha
__________________
bode316 is offline  
Old 05-10-2011, 05:00 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 14,821
Quote:
Originally Posted by bode316 View Post
Beaver cheese would be a great investment.. But like the almighty has said, don't ask for advice and do your own research! Don't rely on help or opinions!! Haha
Let us know when you have hired a tractor to drag that telephone pole out of your @ss.

For the record, I would not be eager to chase royalty trusts. These things are capital arbitrage vehicles used by oil and gascompanies to raise the cheapest capital they can get (the people who run SD are no fools). As such, you only want to be buying when the market runs away from them. If you really want an energy investment, look for an exploration and production company that is capable of growing reserves and production at a fast pace. I like and own CHK, but I would also point you to EOG, UPL, RRC, DVN and SD.
__________________

__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
brewer12345 is online now  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Oil and Gas Royalty Trusts? nun FIRE and Money 5 12-13-2010 04:43 PM
Canadian Royalty Trust changing to Corp. sailfish Stock Picking (Individual Security Analysis) 4 12-13-2010 01:23 PM
individual stocks vs index funds,stocks poor choice mathjak107 FIRE and Money 31 09-12-2006 12:12 AM
Trust/Will Preparation? OldAgePensioner Other topics 11 11-01-2005 08:38 AM
Canadian Royalty Trusts modhatter FIRE and Money 8 08-22-2005 09:38 AM

 

 
All times are GMT -6. The time now is 07:08 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2014, vBulletin Solutions, Inc.

Early Retirement News right to your Email!

Stay up-to-date with all the latest news to your inbox!

unsusbcribe at anytime with one click

Close [X]