Why Sandridge Mississippian Trust II’s Shares Dropped

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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 SandRidge Mississippian Trust II (NYSE: SDR ) fell 13% today, after the company declared distributions.

So what: The company will pay $0.533 per unit by March 1 to shareholders of record on Feb. 14. This is down from $0.599 last quarter. Raymond James analyst Kevin Smith expected a distribution of $0.71, so he lowered the company's rating from outperform to underperform.

Now what: Investors own these trusts for the distributions, so when the company lowers them, the stock often falls. The other downside is that operationally, sales volumes fell 7% in the quarter, so operations aren't headed in the right direction. I don't think there are any catalysts short-term for the stock, and I'd wait to see an improvement in operations before jumping in.

Interested in more info on SandRidge Mississippian? Add it to your watchlist by clicking here.

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