Mar 24 2009
Update on TELOZ
After Hurricane Ike, the price of TELOZ, a high dividend yield stock that distributed trust money from wells off of the Gulf Coast, fell like it had dropped from the sky. At that time, I recommended jumping into it because I had seen this happen before. There was a storm, and people fled the stock. Those investors who grabbed it in the low teens, watched the stock race into the mid 30s.
The company did not release any news of the impact from Hurricane Ike for well over 30 days, which was the time I waited before saying to grab. I, too, grabbed a fair amount of the stock.
Then the company released a statement saying that the rigs had sustained a high amount of damage and probably would not be fixed. This severely negated the dividend capacity of this trust. Of course, the stock dropped down to the floor and many people, including me, lost value on the stock.
Today, the stock moved over 14%. The most recent press release from the company indicates that Chevron has not made a decision about what to do with this trust. They are looking into drilling new wells, fixing the damaged wells, and completely closing it down. They did put out a small dividend last quarter, which was from the production of some of the wells that were not damaged.
It’s hard to say whether you should sell on a run up of the stock. If you feel you can ride this out, and hope for good news, plus continue to get dividends, that is probably a good idea. Any run up on the stock at this point is either pure speculation or someone knows something about the future that is not being publicly released.
All in all, these kinds of stocks are to be a long term holding. Perhaps in a couple more months, wells will be fixed or redrilled. Or the company will buy out the stocks. Hopefully it will be the an outcome that will affect us positively in the long run.
Anything that has to do with the market just terrifies me. Maybe it is because I do not understand it. When it comes to the stock market, my mind freezes.
I gotta tell ya, after 20 plus years of investing, this year has just kicked me around. But it’s money, and not the people we love. It’s important to keep it in perspective.