Why WHX Still A Good Counter To Invest For 30-50 % Return ??!!
Calculation base on market information about termination in year 2015.
Below is the conclusion & statement from an article , let we study it for the truth !
" WHX is currently predicted to be terminated June 30, 2015. With a decline rate of 9% to 11% a year, the above dividends will decline by approximately 10% each year to $2.25, and $2.03 for the next two years. The last four months' dividend (from March through June 2015) would amount to approximately another $0.65. This is a total payout of $4.93 (or roughly $5) between now and when the trust terminates. If oil and gas prices go down in a recession, the payouts could be considerably lower. WHX is only 80% hedged. Plus, its oil hedges are at a floor of $74.00. If oil falls, the payouts will suffer dramatically, especially since costs to produce the oil have to be paid before any dividends.
In other words, an investor would likely receive $4.93 or less for his/her $6.04 investment in WHX on March 1, 2013. With the small amount of time left before the trust terminates (about 2.33 years) the possibility that oil prices will rise enough to dramatically alter this picture seem remote. Keep in mind that the US Fed has already told you it intends to keep rates low until mid-2015 at least. This should tell you that any economic pick up will be mild and slow.
The oil hedges ceiling is at $141.72/barrel (with a floor at $74/barrel), and the natural gas collars have a floor of $6.50/MMBtu and a ceiling of $14.27 MMBtu. If I were an investor, I would dump this dog ASAP! "
A. Assume Overall decline rate : 10 % ( both dividend payout & market share price ). Thus , forecast price in
June 2013 : @ USD 6.14
Dividend payout 2013
= USD 2500 ( 2.50/share/ year )
June 2014: @ USD 5.53
Dividend payout 2014
= USD 2250 ( 2.25/share/year )
June 2015: @ USD 4.97
= Dividend payout 2015
= USD 2030 ( 2.03/share/year )
Total dividend recieve + forecast share price 2015
= 2500/2(half year only from Mar - June 2013) + 2250+ 2030
+ 4970 ( forecast price remain )
**(for 1000 unit holding)
First forecast price = USD 10.50
B. Market fluctuation factor .
If let say overall decline rate in share price is true , thus can I say that the share unit price is fluctuated from reduce price in 50%& increase price 40% with repeating movement from year 2007 to 2013 ?
Period consider ( recent 6 months )
From highest 8.50 @ Sept 12
Reduce Lowest 4.50 @ Dec 12 ( decrease 47%~ 50 % )
Increase back to 7.60 @ Feb 12 (increase 68% ~ 70%)
Reduce again to 5.50 @ End Feb 12 ( decrease 27% ~ 30% )
Increase again to current 6.30 or ?
( increase forecast should 50 % )
Pattern fluctuation :
- 50% > + 70%> - 30 %>+ 50%
2nd forecast price :
5.50x 1.50 = USD 8.25
C. Period consider (Huge gap movement for recent 12 months )
For mar 12- July 12 : HIGHEST @ 18.00
For July 12- Sept 12: Price drop to USD 8.00
WHX PRICE from 18.00 decrease to 8.00. ( decrease 55% )
For early recent 6 months in 12 months period : decrease 55%
For recent 6 months period : PRICE is reduce IN 3% as per above calculated (assume decrease ~ 5% )
Total reduce price in 1 years pass decrease 60% .
If WHX IS really decline 10 % in yearly is truth , thus there is a margin of room for increase back in share price in 50% in future
Overall % = - 60% + 50%
= - 10% ( overall % reduce )
= I suspect this reduce is to pay off the dividend for yearly declaration .
Thus current price : USD 6.30
Forecast increase back 50 % to cover the 60% drop lost to give overall return (-10% in share price )
= 1.5 x 6.30
= USD 9.45 ( 3rd forecast price )
D. ASSUME Overall return ( - 10% ) due to dividend purely payoff from WHX share price .
IPO PRICE : ~ USD 20.00
FROM YEAR 2007 - 2013 ,(total : 6 years )
4th forecast price :=
20 x (0.9)x (0.9)x (0.9) x ( 0.9)x ( 0.9) x (0.9)
= USD 10.62
E. Take average from above condition :
A. 1 st forecast : USD 10.50
B. 2nd forecast : USD 8.25
C. 3rd forecast : USD 9.45
D. 4th forecast : USD 10.62
E. Average forecast price : 10.50+8.25+9.45+10.62/4
= USD 9.70
F. Final forecast price ( short share factor)
Due to short share factor , price reduce to 55% - 75%,
Thus , if average decline rate for share price is - 10% , thus the share price might possible increase back to 45% - 65% INCREASE .
@ USD 8.00 = 1.45 x 8.00= USD 11.60
@ USD 4.50 = 1.65 x 8.00=
From whatever possible calculation for the FUTURE WHX PRICE , the forecast price should be about = range 9.70 , 11.60 @ 13.20 to break the resistance increase
*** it is break through price resistance USD 6.00 going to break 8.00 & 10.00 & 18.00.....