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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Think4Yourself who wrote (15413)12/3/2002 9:56:41 AM
From: Tommaso  Read Replies (2) of 206347
 
I have to reconsider NCN every day because I have so much money tied up in it. Management's main source of income is the 3.25% of operating income that they take (and that percentage is about average for comparable trusts). They do get a fee not only for making acquisitions but also dispositions (1.5% in each case), and that might make it in their interest to do some churning, though I don't see that happening. It would seem that to stay in business and enrich themselves, their best bet is to maximize operating income.In the last year they decided to manage the operating income rather than distributing it all as it came it, evening out the distributions and reserving some for acquisitions. Previously they had made new stock issues each time they made new acquisitions, and the stock issues temporarily diluted equity (or at least was perceived as dilution)and drove down share prices because the distribution was less than it would have been, until the new properties came on line.

But so far I haven't heard of anything fishy about the whole concept or operation. Since they have real income, it's not a Ponzi scheme.

But it does come down to "If it's too good to be true . . ."

Cannacord Capital, whose reputation depends on giving good analysis, rated them a "buy" --second only to ARC Energy Trust (which has slightly lower management fees), in a report date April 2, 2002.(I can't give a link because I printed it out from a PDF file that I no longer know the link to.)

Kurt Wulff told me that he considers NCN to be leveraged to the price of natural gas. He knows about it but does not publish analysis of it.

I own so much NCN that it probably would be worth my while to make a trip and talk to the management. Maybe I will turn myself into an analyst of royalty trusts when I retire from my "real" job <G>.

Here's their web site:

nceresources.com
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