Investment Q&A

Q: Could you advise what relationship there is between Brookfield and this company? I heard today on BNN that Brookfield is covering the high dividend yield of this company by purchasing stock in the company. If this is true, does this mean that the dividend is safe at these levels?

Q: FRU cut its dividend after market closed today. Do you feel that the market already anticipated the cut or do you think the stock will go down further tomorrow?

Thanks in advance.

Wayne

Q: I get the impression that, even while the price of oil-versus-natural-gas producers have declined in parallel because of overproduction, their underlying market dynamics are distinct and de-coupled. Oil prices have collapsed because (a) oil is something you can (mostly) move around, so prices are set globally; and (b) some OPEC producers realized that, by selling even more oil, they might take market share from higher-cost North American producers.

Gas prices, on the other hand, have collapsed because (a) gas is harder to move around, so prices are set more locally; and (b) too much gas is being produced specifically for the North America market. This matters (or should) because, for example, even were Saudi Arabia finally to cut back on oil production, this should not, in theory, provide any boost for natural gas producers.

But, in any case, the price of natural gas itself isn't that different, now, than in 2011 or 2012 - so what is the economic rationality for penalizing domestic natural gas producers for market dynamics that should be limited to oil? More specifically, why should the market capitalizations of ARC, Tourmaline, Pine Cliff, and so on, track the price of oil when they (mostly) don't compete in that market?

Q: I know 5i is keeping faith with Mart, but with oil priced so cheaply AND turmoil in Nigeria, what's really so compelling about it as compared to, say, beaten-down domestic producers - even, say, PWT - which have the potential to recover with the price of oil? Put another way, what about Mart makes it so ten-bagger-ish - net cost, recycle ratio, proximity to Europe, etc.?

Q: How can we find the production cost of the company? Who are the best low cost producers? Thx

Q: I am in a quandary, Peter. Of my own making. I am due to make a RRIF payment later this month.I am fully invested so something needs either to be sold or transferred in kind. My winners are mostly 5i stocks that I bought for the long term and would like to keep. My losers are O&G (surprise) and it's here I thought I would make my selection. The two worst are Black Diamond and Twin Butte. Each would need to double or triple from here for me just to break even. (Please don't ask how I managed to get into the abyss as my response would not be suitable for "family viewing." LOL )So, what's the best course of action? Dump one or both and move on or transfer to the cash account and wait for the dawn of a better day?
Thank you and kind regards,
Geoff

Q: To Sell or Not to Sell, that is the question...Should I bite the bullet and take the loss and try to re coup the loss by buying westjet or ac or something that should do better in this low $ low oil price environment. I too believe that eventually oil will go up and probably fairly quickly when it does, but when of course, is the question. So while tog is in my rrsp I am more stuck but if you thought it was the worst of the three I may still decide it is worth selling and try and make up in a better category and then buy back into energy when it stabilizes somewhat. Thanks very much for your expert advice. I very much appreciate your service and what I have learned thru it.

Q: I have been reading a lot of comments from fellow members about trying to pick an individual pipeline or utility stocks at these reduced prices, great if you get it right, not so great if your wrong. Instead would you have an ETF you would recommend that covers the pipelines and utilities. I have a small position in ZUT. I am just sitting on cash right now as it is just too silly out there to buy. Thanks always for you great and prompt responses to members questions, your team does a fantastic job.

Q: Which do you think are the strongest oily juniors during this oil price weakness? i am especially interested in how you think RMP will do relative to others

Q: Hi 5i team,
I get why oil production companies, especially smaller ones, have been hammered in this unbelievable oil price collapse. I don't get why the pipelines have also had big stock price falls, especially when you include consideration of the deflationary effect of the oil price fall. Eg IPL's stock has fallen 21.6% (37 -> 29 approximately).
Have stock traders overdone the pipelines selloff?
thanks, Mike

Q: Greetings! You mentioned that Badger has about half of its revenue coming from the energy sector, currently. How much of it do you think would be E&P related, as opposed to pipeline maintenance, etc? I'm trying to get a handle on whether the shares should be tracking oil prices as closely as they have been. Cheers.

Q: It looks like oil stocks have bottom out if one is intrested to buy now which energy stocks are best under the current circumstances,or you still believe to avoid them?much apreciated.

Q: While I am not sure where oil prices will bottom whether that is $30,$20 or even lower, they will bottom at some point. I would like to follow a short list of 4-5 energy producers that are financially sound and have the most potential for a strong rebound when prices strengthen. An alternative is to buy an ETF like XEG or perhaps a fund like Sprott's energy fund. I would appreciate your views and a short list of companies that I could buy for potentially strong gains in the energy sector if and when that happens. Thanks.

Q: AVO represents 5% of my folio holdings; should I half since it looks like it's going nowhere and redeploy to OG sector? My IT exposure is currently 16% and OG is at 8%.

Merci Charlie

Q: Good morning: purchased Nal a few weeks ago and it has dropped about $4 per share recently. What is the reason and what do you see for the future. Thanks.

Q: Do you consider 18-20% exposure to the energy sector (oil and oil servicers) at the moment too high ? I have a long term horizon (10y+) and my losses are very limited so far since I have started adding to a 5-7% position in the last few weeks ? I also have excess cash that I could add in the next fews months to oil or other sectors if prices fall.

Also, just a guesstimate, do you think current oil price could stay this low or even go much lower during the next 12-24 months ? Thank you.

Q: Royal Bank released an update with a new target of $4.00, sector perform. Their release also indicated an "exit net-debt-to-trailing-cash-flow ratio of 3.3x, higher than its direct peers at 1.9x". The SGY website indicated their "current" D/CF was 1.4x. BNN analysts have said that a D/CF ratio > 2.0 is a warning sign. Your thoughts please?

Also, I have been using P/CF, D/CF and hedging % (H1 = 34% @ $101, H2 = 14%) as a few of the metrics to guide me. Your thoughts please?

Thanks for your help,
Steve

Q: More of a comment than anything else-if you have a 3-5 year view and can pick energy companies that will not go under, this has to be presenting itself as a great opportunity to purchase and just wait it out. I would think Whitecap, Torc, Suncor just to name a few.

Q: My wife maintains a small portion of her RRSP in 7or 8 stocks. We purchased 500 shares of Sgy at 6.90, and want to know if you would recommend buying another 500 at current prices?? Want to hold for the longer term. Thanks

Q: Peter and Team,
We have Tourmaline, Surge, Manitok & Corridor in ~equal amounts. Does it make sense at this time to sell the lesser known Mei and/or Cdh to top up our Tou and Sgy with the mind they are better known bigger producers and will likely see more attention when the sector turns ? Other tacts are to stay put or use the proceeds somewhere else (Wcp ?). Thank you, and have a great weekend. Paul