Tuesday, May 22, 2012

Can't Truss It: HGT

"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.

Tuesday, May 1, 2012

Stocks Of The Month: AGNC, AMZN

I've taken the opportunity to lock in some short-term losses for a couple of loser stocks. Gone are Chimera Investment (CIM), which was down 25% from when I bought, and the extremely volatile Netflix (NFLX), down 57% even after dollar-cost averaging.

In their place, I've added to my positions in similar-yet-evidently-superior stocks: American Capital Agency (AGNC), which I've already deemed as better than Chimera once before; and Amazon (AMZN), a tech services company that unlike Netflix, has delighted both its customers and shareholders of late.

Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.

Apple (AAPL) 16.71%
Baidu (BIDU) 8.71%
Google (GOOG) 7.10%
Southern Copper (SCCO) 6.35%
Intuitive Surgical (ISRG) 6.14%
American Capital Agency (AGNC) 4.47%
Ace Limited (ACE) 4.31%
Annaly Capital Management (NLY) 4.20%
BP Prudhoe Bay Royalty Trust (BPT) 3.40%
American Software (AMSWA) 3.15%
Amazon (AMZN) 3.00%
Tesla Motors (TSLA) 2.91%
Apache (APA) 2.81%
Intel (INTC) 2.72%
The Distressed (APKT, BEBE, DNDN, EA, ESI, GSOL, HNSN, JSDA, LZB, MAKO, MSI, PCS, RBCN, RVR, SRZ, SVNT, WFC, ZIP) 2.65%
Kinder Morgan Energy Partners (KMP) 2.58%
McDonald's (MCD) 2.41%
Prospect Capital (PSEC) 2.29%
DuPont (DD) 2.17%
Vodafone (VOD) 2.16%
F5 Networks (FFIV) 2.09%
Blackstone (BX) 2.04%
Hugoton Royalty Trust (HGT) 1.89%
Under Armour (UA) 1.80%
BreitBurn Energy Partners (BBEP) 1.69%