Stupid Trades #1: NAT

By | December 27, 2006

The start of this tale begins in 2003. I had been looking for stocks with better than average dividends. After being burned somewhat in the 2000 stock debacle that was the undoing of the stock boom period, I had sought for other ways to generate wealth.

At that point, I had bought a few other dividend ETFs with returns around 8-9%. Actually, since then I’ve done quite nicely (another story, perhaps). Anyway, one of the searches that I did using Yahoo! Stock screener showed up NAT which was trading at about 13.83. It had generous dividends of around 30% at the time, though they proved to be quite volatile.

Still, I was intrigued. This was before the big run up in oil prices, as well. Oh, if only I had known how hot oil would become…. So I put my big toe by ponying up for $1000 worth of shares through my broker. Total amount of shares was 72 @13.83 + 10.99 dealer’s fee. I was quite smug, I thought, “I have bought a great stock with a generous dividend. Cool.”

But the stock did the quick whiplash, so common after purchases. I ended up exiting the position feeling lucky that I got out at $12.20 and change. Net loss: about 12%. CANSLIM teaches you that stocks that go down dramatically like that rarely recover. That may be true for those facing inherent problems. I think I read at the time that their container contracts were not being renewed, so that future revenues were no longer assured.

And then I forgot about it. Until the oil price began to matter. I checked it periodically, sometimes with relief, but then most recently with horror at how wrong my second decision had been. If I had stayed put, I’d say that each share would be worth $48.40 before taxes ($33.76 per share + $48.40 total dividends from 2003 to present), not including future revenues.

Actually, even at today’s prices,… (Courtesy of Yahoo! Finance)

P/E (ttm):8.03
EPS (ttm):4.20
Div & Yield:5.28 (15.60%)

… it is still looking quite attractive. But it is no longer a bargain price! Oh, well.

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