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June 25, 2009 – Comments (2) | RELATED TICKERS: SJT
I'd really would be grateful for your help.
SJT has peaked my interest. San Juan Basin Royalty trust.
Does some one know how this trust works. Why is the price really this low?
How come we had a huge decline recently?
I know that they do not have any debt, can some one explain the risks if any?
At first glance:
Southland Royalty is a privately held company; it created the publicly traded SJT, which is a trust. Southland Royalty placed income producing assets (10K explains what those assets are) into SJT, and SJT distributes all income (minus expenses of running the trust) to shareholders as dividends. Income is down a lot. There's not much value owning something that produces little growth and little income. One can speculate that the assets will produce more income in the future, but right now there's not much income so share prices are down.
The decline is due to a major reductions in monthly dividend payments resulting from falling commodity prices. I'm no expert on royalty trusts, but this page provides a decent summary of benefits and risks.
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