"Divided and sold, for liquor and the gold, smacked in the back" - Chuck D
I can now say that I've owned a stock that fell 34% in one single day. Hugoton Royalty Trust (HGT) has the undesirable characteristic of representing substantially less in future cash flows than market capitalization. In other words, its owners will be paid back much less in dividends before the trust's expiration date ("termination"/"liquidation"), than what they initially bought in stock.
This is not the first time I've been burned by a royalty trust. Dominion Resources Black Warrior Trust (DOM) and Great Northern Iron (GNI) had similar (albeit slower) valuation meltdowns. I can't help but reach the conclusion that all royalty trust stocks are ticking time-bombs which aren't worth the risk.
HGT will be sold at the market open tomorrow. BP Prudhoe Bay Royalty Trust (BPT) has a sell trigger set, should it fall at all...which I have no doubt it will.
