Exuberance Over May Distribution Has Driven Hugoton Royalty Trust Beyond Reasonable Value
- Investors believe they are receiving a 10.60% yield on their investment, which includes return of investment and a one-time, extraordinary distribution, when in fact they are receiving a 9.08% yield.
- HGT cash distributions depend heavily on the price of natural gas. Recently the price of natural gas has decreased, and prices are expected to continue to decline.
- According to HGT Trust’s recent 10-K, the net present value of the future cash flows from proved reserves is $206.4 million or $5.16 per unit.