Why Chesapeake Granite Wash Trust's Shares Got Crushed

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chesapeake Granite Wash Trust (NYS: CHKR) fell as much as 14% today after the company announced a distribution to shareholders.

So what: The company said that it would pay a quarterly distribution of $0.6588 per share for the first quarter ending March 31. The distribution was below the $0.74 target the company had set, and shares reacted by declining sharply.


Now what: The sell-off seems to be a bit extreme considering that this was just one quarter and that the sell-off was at one point higher than the 11% miss by the distribution. Lower realized unhedged prices of natural gas were faulted for the miss in the first quarter.

The sharply lower price of oil might also bring future distributions down as well, but we're starting from a high point from a yield standpoint. The stock's 12.3% dividend yield (according to Yahoo! Finance) looks attractive, and even if it comes down some in future quarters, I think the stock can move higher.

Interested in more info on Chesapeake Granite Wash Trust? Add it to your watchlist byclicking here.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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