Harvest, a Canadian oil, gas and refiner income trust, reported a $1.59 per unit loss as compared with a $1.07 unit loss in 2Q '08. The loss per trust unit for the first six months of this year was $1.28 as compared with $1.08 in the first half of '08. I didn't know that my earlier attempt to "discount doomsday" would prove to be optimistic.
However, the distribution's being kept as is; the operations-cash-flow payout ratio has shrunk to 33%. The company explained that the distribution is not increasing because they want to divert cash flow to repaying bank debt. A cynic would interpret this statement as meaning the company got itself too leveraged earlier. As of March 31st of this year, Harvest had slightly more shareholders' equity than debt. Given the loss, the company may be trying to keep the debt-equity ratio below 1.
Disclosure: I have Harvest in my actively-managed Marketocracy mock fund.
Buffett's annual letter
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