Today I started the building of a new position in the VOC Energy Trust ($VOC) by trading 5% of my cash position for units costing $12.68.
The exact details of the trust are nuanced and I will get into them later. The high level overview is that VOC has profit rights to a percentage of several oil & gas related assets until a pre-arranged expiration date or a total level of production is attained and sold, whatever comes first. I’ve reviewed the arrangement and believe that at current pricing, with the amount of time and volume remaining to the trust, it’s a no brainer investment.
At $12.68 and the most recent distributions to unitholders, the trust was yielding 12.3% annually.
If you look up the chart, you’ll see some extreme volatility. That makes perfect sense, as VOC is a leveraged play on the price and volume of oil. But over the remaining life of the trust, I think today’s prices are a solid bet.
More detailed analysis will follow. Cash stands at 23%.