Why I Sold BP Prudhoe Bay Royalty Trust (BPT) and Replaced It

I went to work, took care of some calls and emails, talked to staff briefly and dug in for some research. The first thing I did was to take a look at MSN’s Stockscouter. I looked at stocks rated 10 and then screened for dividend yield. The stock that jumped out at me was National Resource Partners. I looked at the quote; it was sitting at $22.24 paying a dividend of $2.20 per year about 10%. It was sitting right in the middle of its 52 week high and low ($28.22 and $16.90). Not too hot and not too cold. P/E a little high at 17 forward P/E is 11.5. Earnings were less than the dividend. I then read that assets consumed are written off to lower tax, making earning look lower than the cash available to make payouts to investors. My gut told me this was it.

But then I read the company profile and I was disgusted, but excited. They own mineral rights to coal bearing lands, cringe… but wait, they are diversifying and they got my attention with the word “trona.” I had been doing research on Rio Tinto plc (NYSE:RIO) the week before and found they had bought US Borax in the Mojave with the trona works in Owens Valley. What the hell is trona? Turns out it‘s soda ash, and it’s a key ingredient in the glass making and paper making processes, and baking soda is also made from it. This stuff is an important industrial commodity, and it’s in short supply.

Well, I thought maybe I would buy NRP if it was at $22.00. I checked the price and it was at $22.14. I told myself, take it slow, do more research. It goes ex-dividend February 5 paying $.55 on the 14 and it has risen 20% since the fiscal cliff deal. So, I thought okay, if I am going to buy this before ex-dividend it has to be at a discount equal to the dividend on the current price. I went back to business and checked the price an hour later; it had bottomed at $21.60. Then, it was back up to $21.72, this was a sign, so I moved on it. I bought my shares at market. Executed immediately at $22.74. It began to fall again. I was back at the craps table. I was being moved by fear and greed, but my gut said it was a good move.

Friday, I woke to NRP at $22.38. I am still doing research on the stock, but I like it. It was a gut reaction and it seems like the right choice. Yeah, I’m okay with the gut…

The article Why I Sold This Trust and Replaced It originally appeared on Fool.com and is written by James Coffman.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!