Douglas E. Johnston
Long/short equity, hedge fund manager

SandRidge Mississippian Trust II: Significant Downside Risk Remains

The underperformance of SandRidge Mississippian Trust II (NYSE:SDR), along with other SandRidge (NYSE:SD) trusts (e.g., (NYSE:SDT), (NYSE:PER)), has been huge. The stock has traded down $4.5 from a year ago with investors only collecting $2.35 in distributions. Performance since IPO has been abysmal with investors losing nearly half their original investment. Poor well performance versus original advertisement is the primary culprit and recent results have not been encouraging. SDR's recent 10-K, highlighted a PV-10 that was reduced by $2.30 to $7.60 per share, nearly equal to the distributions received in 2013, implying little to no economic return. To top it off, SDR drilled wells in 2013 that were "on locations different...

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