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SandRidge Mississippian Trust I - Beware Of This Derivative Inflated Yield Trap

Published Wed, 04 Nov 2015 08:57:21 -0500 on Seeking Alpha

Summary
Since mid-August, SandRidge Mississippian Trust I's shares have plunged to $2.00 from $4.75, then rallied back to a range of $3.25 to $3.75.
After the latest distribution announcement on October 30, 2015 of $0.30, the shares traded off briefly, but have steadily moved back toward the pre-announcement level.
SDT unitholders are currently the beneficiaries of a windfall derivative contract, set to expire in December 2015, which distorts the true earnings power of the Trust.
This article provides investors updated information about the Trust's proven reserves, production and product pricing trends to assess whether SDT units are currently fairly valued.
Since mid-August 2015, SandRidge Mississippian Trust I's (NYSE: SDT) units plunged to $2.00 per share from $4.75 prior to the August distribution press release. Several market factors likely fueled the plunge, including continued price deterioration in the energy market, continued poor production results and shareholder fears of a potential spillover effect should SandRidge Energy (NYSE: SD) enter bankruptcy.
Since the plunge in value, the share price has recovered to the $3.50 range and currently trades in the range leading up to the share ex-dividend date of November 10.
The price action of SandRidge Mississippian Trust I's units can be visibly traced in the following chart.

Now that the shares have retraced over half of the lost value, is the Trust worth $2.00 or the range it... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
SANDRIDGE MISSISSIPPIAN TRUST I 0.57   3.4 0.17 0.11 18.15

SANDRIDGE MISSISSIPPIAN TRUST I - SDT
SANDRIDGE MISSISSIPPIAN TRUST I - SDT  


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