Investment Q&A

Q: Hello,
With what is happening in the oil sector, can you list a few names that you would buy and hold for 5 year plus. I can take some risk (ok with smaller cap) and i don t need dividend. Also, please fell free to add names in other sectors if you feel they are treated unfairly. My approach would be to buy half now and the rest mid january. Thank you.

Q: On the oil getting whacked theme, have you guys looked a PRE today? Down to $8.20. They are forecasting the following:
A base case average WTI oil price assumption of $70.00/bbl during the year and the 2014 average Brent-WTI benchmark price differential.
Oil price realization is expected to average to approximately the WTI benchmark price assumption.
EBITDA of $1.9 to 2.1 billion and Funds Flow (Cash Flow) of $1.45 to $1.55 billion.

So the company is currently trading at just over 1X EBITDA and 1.5X Cash Flow. They do have debt on the balance sheet but at low rates strategically and are long term. Unless oil stays well below $70 for a very long time valuations like this seem crazy. What am I missing?

Q: Despite all the negatives about this company and lack of confidence even by the directors (based on their sales of stock), I see the CEO has been continuously purchasing shares from February to the present. He had about 100,000 and now has about 450,000 (direct and indirect). Is he an idiot or should I be following his lead? As always, I very much appreciate your opinion

Q: Hi,

I bought this a couple weeks ago thinking it was over sold. Was I wrong! I'm down 25% in a couple weeks and it keeps dropping. I read of fears with the dividend and price target cuts to $74! What do you make of this? I'm happy to hold for a long time but worry that, like ACQ and AVO, logic has nothing todo with it. Should I sell?

Q: Enbridge is up substantially today (Great!), but I'm not sure why transferring $17b to anther company creates so much value?

Poor old BDI, what did they do to deserve this drubbing?

Your thoughts as always, are greatly appreciated.
Mike

Q: I am looking at some of the oil stocks and see SGY and PD for example are trading at or below book and with a P/CF of less than 5 (based on stats from TD's web broker). Both pay dividends, though these may yet get cut a bit. Sure there is likely to be volatility for a while, but if not these, what metrics would you use to say it is time to start overweighting some of the sector?

Love your service!

Q: The other day Jeff Rubin, on BNN, talked about his 2008 thesis for $200 oil; and how the shift in world oil industry dynamics has altered the competitive landscape and hence oil prices. His current position is that oil prices will continue to fall until the high or highest cost producers cut back or shut down production, namely and mostly, Canadian Oil Sands players; but also US shale plays as well. Until these companies do cut back he expects oil prices to continue down. Where the bottom is no one knows.
In his mind, it is naive to look to Saudi Arabia (the low cost producer) to cut back at all.

Do you agree with his reasoning?
And do any oil sands or shale companies come to mind that might capitulate and reduce production?

Thanks again.

Q: Good Morning 5i team

Temperatures are dropping in the US big time and another cold winter is likely. Natural gas is a major fuel source for both heat and electricity. It is produced as we all know largely as an "associated gas" when oil is pulled out of the ground.

According to S&A Resource Report, Natural Gas supply/inventory is at a 5 year low in the US. And at $60 PB many of the oil producers will be shutting down less profitable wells in turn reducing NG production when it appears it may be needed the most.

My question is this... which well managed NG producing Canadian Companies would you recommend? And what is your view on my above comments?

Thanks for all you do

Gord

Q: To Rick's question of Dec. 1 regarding Birchcliff's dividend: Birchcliff's preferred shares pay 0.50 per quarter. There is also bir.pr.c, paying a bit less.

Q: Hi Peter and Team, Do you think that SGY's yield of 14.085% is sustainable until some stability returns to the oil market? Hopefully they won't do a "COS". Thanks!

Q: Hello, crazy times in the oil patch. I am hearing some analysts touting oil and worried about natural gas and of course lots of people saying the opposite. I do have Tourmaline which is down of course. Any sense switching for CNQ, or just let time do it's thing . I was going to wait until closer to the end of tax loss selling before making any changes

Q: I am thinking of putting a credit spred on this Oil etf .I want to go out to 2016 (jan)
Where would you think Oil`s range would be then ?$75-80 ? Is there a symbol that I can follow OIL-- on chart to plot 20-50-200 day average ?
Thanks ---great service ---great site
Don

Q: Would you consider Freehold Royalties a buy? Tx

Q: Hi Peter,

With the dramatic sell off in oil prices lately and all the talk of energy loans that the Canadian Banks have supposedly given. What effect will this have on the Canadian Banks, Should a person be trimming some bank positions? We are long term holders of TD, Royal and BNS( non registered accounts).

Thank you

Q: Husky has been a solid, steady investment for us for years but is now badly underwater. Hold or sell? Also, what is your opinion on Suncor. We have a full position. Hold or add?

Q: With the latest drop in oil prices and the volatility of this stock is there any point in holding onto this product or is it best just to take whats left and run?

Q: I have 200 COS @ $18. I'm considering exchanging them for an equal value of SGY because COS goes down when other oils go up, as happened again today. I suspect that SGY will increase faster than COS when the market turns. Would you recommend the idea? If you like the exchange idea, is there another energy you would switch to? I hold PKI and WCP. It may not show in this question but I appreciate your lessons in holding a long term steady hand. I'm leaving my other 15 stocks and 2 oils untouched.

Q: I have a little more than one half of 1% holding in SGY with a similar amount of WCP and RRX.I am thinking of doubling down on SGY. Your thoughts?

Q: I am trying to evaluate a purchase of WCP, ALA, KEY, ENB, IPL or PPL. PE ranges from 9.5 (WCP) up to 57 (ENB). Would you use any other ratio to determine best buy. Of these which do you consider best buy.

Thank You As Always
Craig

Q: Hello 5i team

second week March I bought RE @ $4.52. Sept 22 I sold at $6.88. Everything I read about this company (including your Nov 6 comment) tells me it is well managed and able to earn even with lower oil prices.

I am eager to get back in and am wondering what your recommendation would be at this time... i.e. wait or buy now.

Thanks for all you do

Gord