Clark Street Value is bullish on ECA Marcellus Trust I (NYSE:ECTM) stock. Clark Street Value is an individual investor that is focused on finding value and special situation investments. ECA Marcellus Trust I (NYSE:ECTM) is a statutory trust. It owns royalty interest in producing wells and development wells. In the last one year, ECA Marcellus Trust I (NYSE:ECTM) stock lost 68.1% and on January 4th it had a closing price of $0.191.
Clark Street Value said that ECA Marcellus Trust I (NYSE:ECTM) is currently a nano-cap stock on the verge of liquidation of the trust, which means return proceeds to unit holders. The investor added, “ECTM shut off the dividend and if the royalty payments fall below $1.5MM for the trailing twelve months the trust will liquidate, royalty payments were $1.12MM through 9/30 putting it very close to tripping for the year.” Greylock, the successor to the original sponsor ECA, expects the royalty to exceed the threshold limit. The trust has about 17.6 million units outstanding trading at $0.17 for a market cap of only $3 million compared to a book value of $17 million.
Clark Street Value added, “Most of that book value is the estimated fair value of the royalty interests which can be pretty squishy, Greylock has the right of first refusal buying the royalty interests back and there’s a bit of uncertainty around if ECTM is entitled to get 100% of that payment or 50% (I read it as the 50% clause applies only on the formal trust termination date of 3/31/30 but I could be wrong). Either way, pretty attractive upside that should be non-correlated with much of the market, but again, only a small PA type trade.”
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