Interview on Seeking Alpha
I’m featured on the latest Dividends & Income Digest on Seeking Alpha!
Q: What is the biggest investment risk you’ve taken, and has it paid off?
A: The biggest investment risk I have taken was investing in a “Canroy” called Harvest Energy Trust (ticker was HTE). It was a small oil and gas trust with both upstream and downstream operations.
It was one of the first stocks I purchased when I started working. This would have been in 2008 during the financial meltdown. I had saved up a little bit of money, exclusive of my 401(NYSE:K) money, and put about 50% of the cash I had into it.
The stock had an extraordinary yield at that time in the mid-teens in 2008. Being a novice investor, this was far too much to pass up. The price was rapidly falling on the stock, and I made subsequent purchases to average down my cost basis. That’s how I ended up with this one small oil player taking up so much of my capital.
The company was bought out in 2009 by Korea National Oil Corporation and I managed a very small capital gain. The whole ordeal did not last very long, less than a year – I actually have trouble tracking down the records from that time frame. I’d have to dig through old paper tax records; the broker I used I have not used in several years.
Now, this was risky for several reasons. Firstly, this one company was a large part of my portfolio. This is something I would never do today. Secondly, it was very much a niche player, a specific oil trust not a large company with decades of a proven track record. Thirdly, my financial understanding was nowhere near what it is today. I suspect if they had not been bought out, they probably would have cut their dividend – it was simply too good to be true.
On the plus side, I did receive several quarters of that high dividend yield, which was taxed at qualified rates. Like I mentioned, I already received a small capital gain – in retrospect, this was probably a bailout that I did not recognize until now. What the experience did also instill in me is a love of dividends. It would not be for several years that I would find my way back into the dividend realm, but the seed was planted. Eight years later, I have a substantially larger and well diversified portfolio of quality dividend payers. In small part, I have to thank Harvest Energy Trust for that.
I’m quite honored that I was asked to do the interview for Seeking Alpha. I love writing, documenting my progress and then sharing that with the community. I hope to be able to do more of these interviews in the future.