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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Good morning Peter and Team, To stay in the energy sector, albeit a low weighting in our portfolios, I was thinking of selling VET and buying WCP. WCP's chart certainly looks better, and their dividend is higher. Your past positive comments about WCP have also influenced me. Your thoughts on this swap? Thanks in advance.
Read Answer Asked by Jerry on April 10, 2015
Q: Hello,
Wondering if you can give me your analysis of CDI, I am down about 30%, happy to bear risk and hold for the long term.

Thanks,
Read Answer Asked by Joe on April 10, 2015
Q: I understand the general idea of convertible debentures, but specific cases are puzzling to me. For example, AXL.DB.B, maturing June 30, 2017, has a conversion price of $1.70/s, but the stock is currently trading at around $0.07/s.

The debentures are substantially discounted; at today's price, $10000 face value would cost only $4750. But given the conversion price of $1.70/s, the 5882 (10000/1.70) shares you would receive in 2017 would be worth only $412 (assuming the stock price remained the same.)

Yes, the loss of conversion value is somewhat offset by the yield; with its discounted price, AXL.DB.B currently shows a yield-to-maturity of around 50%. But this only nets the purchaser around $2375 ($4750 @50%); $412 plus $2375 is still well-below cost.

If just breaking-even requires a ~600% recovery in the stock price, what, then, could be the incentive to buy the debentures? Or is there an 'at-par' conversion option I'm missing here?
Read Answer Asked by John on April 10, 2015
Q: Good Morning Peter and crew: I am considering liquidating a position in Cenovus (taking tax loss for next year) and opening positions in one or all three of Torc, Cardinal or Whitecap. I'm interested in getting your opinion on the relative merits of all three of these, and of Cenovus as well for that matter. I know the three mentioned are all well respected names but wonder if you see advantages in some over others if at the end of 2015, wti oil price was still below $60. Many thanks, Don Lockett
Read Answer Asked by Donald on April 10, 2015
Q: A recent BNN guest said he was short IPL because it was at 27X earnings - another guest said they had a huge EBITDA bump coming from previous work and had a great long term horizon unless oil falls apart for an extended period. IPL has lagged the other pipelines the past two weeks. Would you bet against this company?
I notice you have done a complete 180 degree turn on Surge and I bought a large amount following your strong recommendations last year. I only own SGY, IPL and SPE (Spartan). Was SGY's debt not a factor last year and due to their hedges this year, do you see any future upside with a modest recovery in oil over the next 12 months?
Thank you.
Read Answer Asked by Steven on April 10, 2015
Q: Further to John's point on the risk of Surge, my position is now relatively small. I am assuming that the bottom for the stock would be it s book value, since it does own tangible assets. First, what is the estimated book value of the stock and would that be a good proxy for the floor price?

Thanks for the insight.

Paul F
Read Answer Asked by Paul on April 10, 2015
Q: Good Morning
The Globe and Mail reported today the following debt to equity ratios for oil stocks which are quite different from the debt/equity ratios reported by TD Waterhouse. Do you know who is correct?

Globe and Mail TD Waterhouse
HSE .6 21.26%
CPG .84 22.46%
CR .75 19.87%
BNE .73 23.46%

Thank you
Read Answer Asked by Terry on April 10, 2015
Q: Hi Peter,

Your recent answers about Surge Energy (SGY) have shaken me a little. Your advice is all about the long-term and don’t worry what the markets are doing with the current price. In answers to members, SGY has gone from a strong buy to a sell (Peter’s answer on April 9) in less than a year. In my mind, that means SGY is no longer a good long-term investment and should be sold by all members.

In your opinion (not worrying about sector diversification), IS SGY A SELL FOR ALL CONSERVATIVE, INCOME ORIENTED MEMBERS?

Is there a quick way you can advise all members about the change in your opinion on any stock you give advice on?

Thanks
John
Read Answer Asked by John on April 09, 2015
Q: Hello 5i. Seems like consolidation may start ramping up in the oil patch, Could you recommend a set of 3-5 names to hold as a basket and explain why you think they would look attractive to a potential suitor
Read Answer Asked by Kuldar on April 09, 2015
Q: Just wondering if you follow StonePoint Energy and if you believe management is in a good position for making acquisitions in this cheap oil environment? Thanks.
Read Answer Asked by Curtis on April 09, 2015
Q: High Arctic Energy is down more than 6% today. I can find no negative news to explain the drop. Can youy shed some light on what is happening and give me your opinion of the conpany's prospects.
With appreciation
Ed
Read Answer Asked by Ed on April 09, 2015
Q: The plan of arrangement for Repsol to take over TLM has two options for Shareholders. 1)To receive the equivalent Cdn$ of $8US in cash. or 2) To receive $8US Cash. Based on these two options which one is best at this time considering the low Cdn$ relative to the US$. Of course any capital gain or loss would have to be taken in Cdn$
Read Answer Asked by John on April 09, 2015
Q: Hi Peter and Team,
This company announced the re-organization to create two oil-focused companies.
Under this structure, shareholders of Dee Three will receive 0.5 shares of Boulder Energy, and 0.33 shares of Granite Oil Corp, while the latter company will pay a monthly dividend of 0.03 of each Grsnite shares.
Do you think this is a positive move for share holders?
I am currently holding this stock, which is 3% weIghting of my p/f.
Should I continue to hold and make the transfer to these two new companies when approval is obtained?
Thank you for your advise as always.Pui
Read Answer Asked by Pui on April 09, 2015
Q: With today's announcement of the mega-merger between Shell and BG, along with the inevitable fall in the price of oil to the $30 range due to increased production by Saudi Arabia and dwindling storage capacity, I am interested in your opinion on possible take-over candidates in the Canadian energy sector, especially in well-established mid-cap companies. Your opinion please? Thank you.
Read Answer Asked by Paul W on April 08, 2015
Q: What are the prospects for KEL in the current oil/gas envrinment. I currently own RRX and WCP, both up nicely. Would you trade one of these for KEL at this time, or just add KEL.
My oil/gas weighting is about 4%
Read Answer Asked by Guy R. on April 08, 2015
Q: I hold these stocks in my cash acct. Each is down about 50%.
Although I don't need to sell them at this time, should I look at getting rid of one or more. Inventory issues and other questions about the future for the sector make me question holding them for another year or two.
Thanks for the advice
Read Answer Asked by Ron on April 08, 2015
Q: The oil and gas sector in Canada has been on the decline for a while. What are your thoughts on the prospects of this oil index and the oil/gas sector overall recovering in the summer, when the demand for this resource is expected to rise.

I bought HOU.TO at around $7.3 and am not sure when I should short it and if it is worth it to wait it out till the summer time.

Read Answer Asked by Michael on April 08, 2015
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