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Canadian Natural Resources Limited (CNQ)
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Tourmaline Oil Corp. (TOU)
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Vermilion Energy Inc. (VET)
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iShares S&P/TSX Capped Energy Index ETF (XEG)
Q: Hi Peter and co,
Although Mark Carney has eliminated the *consumer* carbon tax (which leaves industry still paying it I suspect, and the costs will still get passed through to consumers), given his track record and recent comments about commitment to net-zero and "heavy emitters will have to pay", it sounds to me like there will be significant headwinds for Canadian Energy companies if the Liberals are elected. I am considering lightening up on my Canadian energy holdings, given the probability of 4 years of energy-hostile policies. What are your thoughts on this move, for or against?
Although Mark Carney has eliminated the *consumer* carbon tax (which leaves industry still paying it I suspect, and the costs will still get passed through to consumers), given his track record and recent comments about commitment to net-zero and "heavy emitters will have to pay", it sounds to me like there will be significant headwinds for Canadian Energy companies if the Liberals are elected. I am considering lightening up on my Canadian energy holdings, given the probability of 4 years of energy-hostile policies. What are your thoughts on this move, for or against?
5i Research Answer:
We do not like making portfolio moves on what 'might happen'. Under the scenario in the question, one has to pick the winner of the election, predict the policies and also the market reaction to same, which is often not one expects. There is a lot needed to get 'right' here. Without getting political, we would note CNQ is up 154% in the nine years of Liberals, TOU 150%. Money can still be made, especially at low current valuations. Sector weightings need to be personal, but we would not advocate for a zero percent position within the sector today.