In February of 2017, the Chesapeake Granite Wash Trust was trading above $3.00 per share and I published a research article entitled Chesapeake Granite Wash Trust - Irrational Price Spike, Time To Sell. The Trust share price level trended sharply downward after the article and reached a low of $2.20 on 6/22/2017. Since late June the share price has stabilized, trading in the $2.30 to $2.40 range. The question that investors need to review now is will the downward trend is going to continue after the stock goes ex-dividend, or is the Trust now fairly valued?
I have followed, and periodically provided market reports on CHKR shares through time since the early 2014. The recent retreat from the February levels was a very easy call based on the trading history of the Trust combined with the very poor well performance results thru time. Now the Trust has four straight quarters of dividends in the $0.10 range, giving it a current yield of over 16%. Many value investors look at this yield and begin to ask the question, “What can possibly go wrong?” In the case of CHKR, there are plenty of warning signs for those who are thinking about buying or holding this value trap.
There is plenty of fundamental data to support this view, and I share it in this report.
Distribution Stabilization Temporary, Steep Drop Ahead
Chesapeake Granite Wash Trust (OTC:CHKR) announced quarterly results on August 4, 2017 and declared a revised distribution of $0.10 per share on August 11 th. The distribution level was flat compared to the previous quarter. However, the distribution level has rebounded from the lows experienced in the May and August of 2016 time period.
Many issues continue to plague Trust performance.
Trust management has repeatedly emphasized in recent financial reports that unit
