Hi Jay -
Royualty Trusts -
a) Yes, some reputable firms. But behavoir can change as people change. Recently, many trusts have moved some functions around to get more fee income. Also, incentives are not perfectly aligned- some mangements get paid more for just doing deals.
Also two other possiblities - 1) Company does something dumb 2) Company does something good, but doesn't fit your time frame- may have a big pay in 3 years, and you want to get out 9 months from now as prices peak.
Solution to much of the above to own multiple names - say more than 5. Then, a single point failure won't mess up the whole strategy.
c) & d) I'm not sure the gas price is going to weaken - I was hoping it would a little, so I can buy more.
Portfolio postions -
I have had over 40% of my portfolio, and a portfolio for which I have a fiduciary responsiblity, in Royalty trusts. As the value of the trusts went up, that percentage started edging up above 50%, and I sold some, and some of the proceeds went into utilities stocks, (RRI,CNP,CPN, WMB, DUK etc.)
Some of the sales of the trusts were used to cover expenses, and in one case for a small follow-on investemnt in a gas well in Texas.
Currently, the conservative fiduciary portfolio has about 20% in trusts, and my personal protfolio has about 10%.
Part of this percentage reduction was due to large gains on the utility stocks, making the portfolio slightly larger.
I decided to move more into utililty stocks, which I think will continue to move up quickly for a few more weeks, then to buy trusts on weakness.
I am very comfortable with about 35% of my portfolio in trusts, but I try not to let any one stock get above 5%.
I consider that level to be reasonable while natural gas prices are in a long term upward trend. I may go as high as 50% of my portfolio in trusts, but I would consider that a speculation and would only do it for my own account.
For wobbles, look back at SJT over past 6 months. Nice smooth ramp, ramp became steeper with March gas panic, spike and then came down. PWI had some more drops.
There is a lot of smoothness and consistency to the trends -at least most of the time. |
