Great Northern Atomic Expose 26 In Addition To The Persistence Of Worthwhile Counterparties
Great Northern Iron is a funny traded instrument. It is a trust. The trust expires on vi Apr 2015 when they volition pick out 1 in conclusion cash payment together with larn to zero.
This is non controversial. The trust explains this on its website:
The solely affair that unit of measurement holders inward the trust are entitled to is dividends betwixt directly together with Apr 2015 - summation a in conclusion termination payment.
The "stock" trades are an sum higher than whatever sum of dividends probable to endure received. It is thence an obvious brusque together with many people pick out written nearly it (notably including Citron). Here is a typical example.
This is all good known. Buy this "stock" together with yous are nearly guaranteed to lose money.
Because that is then good known the stock has a xx pct borrow cost - roughly offsetting the turn a profit yous volition larn from shorting it. In that feel at that topographic point is a rational market.
But that is the solely feel at that topographic point is a rational market. People ain this. They volition lose money. Ponder equally a mightiness I can't intend of who the suckers mightiness be.
Except 1 group. Computer driven trading firms. They come across the high profits (iron ore prices are non depression yet) together with the eighteen pct dividend yield together with the algorithms reach them to ain this. Maybe them together with some really dumb dividend chasing retail investors.
This should distress me - simply it doesn't. I similar sick informed people making stupid investments inward the marketplace position together with their persistence pleases me. They pick out a name: counterparties. May at that topographic point endure many to a greater extent than of them!
John
This is non controversial. The trust explains this on its website:
At the destination of the Trust on Apr 6, 2015, the certificates of beneficial involvement (shares) inward the Trust volition cease to merchandise on the New York Stock Exchange together with thereafter volition stand upward for solely the correct to have for sure distributions payable to the certificate holders of tape at the fourth dimension of the termination of the Trust. Upon termination, the Trust is obligated to distribute ratably to these certificate holders the internet monies remaining inward the hands of the Trustees (after paying together with providing for all expenses together with obligations of the Trust), summation the residual inward the Principal Charges concern human relationship (this concern human relationship is explained inward the Trust’s Annual Report inside the Notes to Financial Statements). All other Trust holding (most notably the Trust’s mineral properties together with the active leases) must endure conveyed together with transferred to the reversioner (currently Glacier Park Company, a wholly owned subsidiary of ConocoPhillips Company) nether the terms of the Trust Agreement.
The exact in conclusion distribution, though non determinable at this time, volition to a greater extent than oftentimes than non consist of the centre of the Trust’s internet monies (essentially, full assets less liabilities together with properties) together with the residual inward the Principal Charges account, less whatever together with all expenses together with obligations of the Trust upon termination. To offering a hypothetical example, without factoring inward whatever expenses together with obligations of the Trust upon its termination, together with using the fiscal disputation values equally of Dec 31, 2011, the internet monies were unopen to $7,927,000 together with the Principal Charges concern human relationship residual was unopen to $4,962,000, resulting inward a in conclusion distribution payable of unopen to $12,889,000, or nearly $8.59 per share. After payment of this in conclusion distribution, the certificates of beneficial involvement (shares) would endure cancelled together with pick out no farther value. It is of import to note, however, that the actual internet monies on manus together with the Principal Charges concern human relationship residual volition most probable fluctuate during the ensuing years together with volition non endure “final” until afterward the termination together with wind-down of the Trust. The Trust offers this instance to farther inform investors nearly the conceptual nature of the in conclusion distribution together with does non imply or guarantee a specific known in conclusion distribution amount.
The solely affair that unit of measurement holders inward the trust are entitled to is dividends betwixt directly together with Apr 2015 - summation a in conclusion termination payment.
The "stock" trades are an sum higher than whatever sum of dividends probable to endure received. It is thence an obvious brusque together with many people pick out written nearly it (notably including Citron). Here is a typical example.
This is all good known. Buy this "stock" together with yous are nearly guaranteed to lose money.
Because that is then good known the stock has a xx pct borrow cost - roughly offsetting the turn a profit yous volition larn from shorting it. In that feel at that topographic point is a rational market.
But that is the solely feel at that topographic point is a rational market. People ain this. They volition lose money. Ponder equally a mightiness I can't intend of who the suckers mightiness be.
Except 1 group. Computer driven trading firms. They come across the high profits (iron ore prices are non depression yet) together with the eighteen pct dividend yield together with the algorithms reach them to ain this. Maybe them together with some really dumb dividend chasing retail investors.
This should distress me - simply it doesn't. I similar sick informed people making stupid investments inward the marketplace position together with their persistence pleases me. They pick out a name: counterparties. May at that topographic point endure many to a greater extent than of them!
John
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