photo credit: swisscanStocks have been crushed over the past couple of months due to the credit crisis and the weakening global economy. Oil and natural gas stocks have been included in the massive sell-off as people are beginning to realize the global slowdown that is in place. While I appreciate that gas prices are now under $2, my stock portfolio is being hit hard. I currently own shares of a natural gas company called Harvest Trust Energy. Part of my holdings in the company are from assets taken from a loan I took out recently from Prosper.com.
I took out a Prosper Loan seven months ago in an effort to increase my family’s monthly cash flow. The strategy in taking out this loan is to borrow money at a low interest rate in order to purchase higher yielding investments so they can be added to my portfolio of passive income streams. These passive income streams will allow my family to reach our long-term goal of financial freedom.
I would like to provide the monthly status on my Prosper loan that I took out earlier this year. For a history of activity, please check out the following post – Peer to Peer Loan Status. When I last posted the status of my investments using this $1,000 Prosper loan, I had accumulated the following assets -
- Stock – I purchased 46 shares of HTE (Harvest Energy Trust).
- Cash Generated – As a result of selling Covered Call Options against my HTE position, I have generated $40.20 in positive cash flow. It is important to note that selling a Covered Call Option contract requires 100 shares. I have combined my $1,000 Prosper loan with additional funds to meet the 100 share requirement.
- Remaining Cash – I had $14.55 remaining in leftover cash after making the purchase of HTE.
- Dividend Shares – I have received 2.671 shares of HTE stock through dividend DRIP payments. The total number of shares owned as of September was 48.671.
Current Status
I received the monthly dividend payment for October which was reinvested back into the stock using DRIP -
- October Dividend Payment – I received approximately 1.132 shares of HTE as a result of the October (2008) DRIP payment. This brings the total number of shares owned up to 49.803.
- Covered Call Contracts – I have generated $18.48 in additional cash during the past month by selling covered call contracts against my HTE position.
As of the close of the market yesterday (November 19, 2008), I estimate that value of the assets listed above at -
- Shares – 49.803 @ $10.99 per shares = ~$547.34
- Cash – $73.23
- GRAND TOTAL – ~$620.57
Oil and natural gas stocks have been beaten down the past several months, along with the rest of the market. It appears that some of these stocks have stabilized a bit over the past month. As a result, the value of my Prosper.com loan assets increased by 22.7% compared with last month. The total payments required over the course of the 3-year loan are $1,095.07, so I am now ($474.50) behind. I have 28 months remaining on my loan, so I will need to make up an average of ~$16.95 per month from here on out. Obviously I am disappointed in my return (or loss) on my investment over the course of the loan. However, I still believe natural gas and oil stocks will rebound in the next few years. As long as HTE continues to pay a monthly dividend, I will remain in this stock.
Do you own any oil or natural gas stocks and are thinking of bailing on them?
{ 2 comments… read them below or add one }
I work for a Natural Gas Company, and our stock has declined by half – at the same time that we had one of our best quaters on record and declared a dividend increase again (several quarters running at this point). This market is INSANE!
I own quite a few shares that I’ve obtained in the ESSP (none in my retirement accounts). I’m still putting my $25 into the pool twice a month. We aren’t doing anything different than we did a year ago, we still have the same assets (even more, actually) and the same people.
Here’s to hoping that things calm down soon!
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I don’t like Canroys, especially given the fact that 2011 might mark the end of them. My question to anyone who is buying them is: if the yield was 4%-5%, would you still be buying this trust? Most often the answer is no..
Now the oil and gas futures have declined a lot… The oil and gas trusts do yield juicy yields right now, but if these dividends are cut ( which they could be as they are paid out of operating earnings) then you are hit twice: lower divs and lower prices..
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