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Harry Long is the inventor of Hedged Contango Capture and Hedged Convexity Capture and is the Managing Partner of ZOMMA, the world's most innovative strategy index creator. Mr. Long is a globally recognized expert on the research and development of quantitative investment strategies. The ZOMMA... More
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  • Short Idea: GNI 0 comments
    Jun 3, 2011 7:22 PM | about stocks: GNI

    GNI is a classic negative carry short based on the notion that GNI is mispriced due to people reaching for yield, retirees who are unsophisticated and want dividends, quant funds searching for higher dividend yields, etc. I give a special thank you to Citron Research for first bringing this situation to the market's attention.

    Disclosure: I've been trying to short GNI, but can't find any shares to borrow. I will keep trying.

    [from the 10-K, page 1, bolding, italics, underlining my own]

    Item 1.    BUSINESS


    The Registrant (“Trust” or “we” or “our” or “GNIOP”) owns interests in fee, both mineral and nonmineral lands, on the Mesabi Iron Range in northeastern Minnesota. The Registrant is a conventional nonvoting trust organized under the laws of the State of Michigan pursuant to a Trust Agreement dated December 7, 1906. Because the Trust properties and offices are all located in Minnesota, the Trust and matters affecting the Trust are under the jurisdiction of the Ramsey County District Court in Saint Paul, Minnesota. Income is primarily derived from royalties on iron ore minerals (taconite) mined by our lessees from these properties and minimum royalties. The Registrant is presently involved primarily with the leasing and care of these properties. There have been no significant changes in these functions since the beginning of the fiscal year.


    The terms of the Great Northern Iron Ore Properties Trust Agreement, created December 7, 1906, state that the Trust shall continue for twenty years after the death of the last survivor of eighteen persons named in the Trust Agreement. The last survivor of these eighteen persons died on April 6, 1995. Accordingly, the Trust terminates twenty years from April 6, 1995, that being April 6, 2015.


    At the end of the Trust on April 6, 2015, the certificates of beneficial interest (shares) in the Trust will cease to trade on the New York Stock Exchange and thereafter will represent only the right to receive certain distributions payable to the certificate holders of record at the time of the termination of the Trust. Upon termination, the Trust is obligated to distribute ratably to these certificate holders the net monies remaining in the hands of the Trustees (after paying and providing for all expenses and obligations of the Trust), plus the balance in the Principal Charges account (this account is explained in the Trust’s Annual Report sent to all certificate holders every year). All other Trust property (most notably the Trust’s mineral properties and the active leases) must be conveyed and transferred to the reversioner (currently Glacier Park Company, a wholly owned subsidiary of ConocoPhillips Company) under the terms of the Trust Agreement.

    [from the 10-K, page 1, bolding, italics, underlining my own]

    Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in GNI over the next 72 hours.
    Stocks: GNI
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