Investment Q&A

Q: I am interested in changing a portion of my wife’s RRSP holdings to US Oil Producers. I am looking at Chevron CVX, Kinder Morgan KMI, Devon DVN as candidates due to the recent oil price meltdown. Would you recommend any of these or do you have a favorite US Oil Producer. With the weaker Canadian peso we would have been better to do this when the dollar was at par, ah hindsight!
She is 62 and plans to roll the RRSP into a RIF when required, say 10 years. The portfolio currently has 40% fixed income and 60% Canadian equities. What level of US equities would you recommend? We are comfortable with medium risk exposure.
Many thanks for your service!
John

Q: hello 5i:
this is a follow up to my last question regarding the use of Cash Flow for evaluating companies. Thank you for a quick and precise reply. the follow-up question may be more art than science (hopefully not): When looking at cash flow for a company, are the numbers projected based on the latest data ie. if, for an oil company, prices had been projected at, lets say $80/bbl, how soon are figures updated to take into account higher or lower numbers? Hopefully, my question here is clear.

Q: I had 1/2 positions in these energy names before the downturn in oil. Which 2 would you add to first and why. Thank you for your help.

Q: What is your outlook and opinion on BTE.T and can it be bought now?

Q: Hi Peter & 5i: I heard mention recently of the prospect of Canadian O&G producers running into debt problems as a result of current debt covenants that require them to maintain threshold ratios on metrics like debt/cash flow. Lower oil prices would mean significantly lower cash flow and potential difficulty maintaining the required ratios. Also, with the prospect of the lower oil prices extending at least well into 2015, IFIRS requirements may also have them writing down their oilfield values by the February-March timeframe, which could be detrimental with any similar provisions using metrics that involve asset values. What are your thoughts regarding these concerns for the O&G stocks generally and, more particularly, for Baytex? Thanks.

Q: Hi Guys; A follow up question on Energy pairs trade. Can you give me the name of 3 or 4 high quality dividend paying energy companies that you would use for this strategy?
Cheers, Darcy

Q: Many energy companies have hedges in place that will allow for continued capex and divs...but who is on the other side of the trade? Some organization must be losing massive amounts to balance these hedges, could it be the Canadian banks and could that explain some of their recent downslide? Thank You Ron

Q: Could I have an updated comment on ATH given that they have no dividend to cut and how much cash do they have in the bank?
Many thanks!

Q: Thanks for your service! Curious about the portfolio review you offer but couldn't find info on the website.

I currently have minimal exposure to the energy sector, and am thinking about dipping my toes in the water for about a 5% weight that could be added to if oil had another shock to the downside. I'm looking at adding a few lowest-cost larger-cap producers that would be the "last men standing" should oil stay at these levels for an extended period. What would be your choices for core holdings in the space?

Also, why do you think OPEC kept production level?

Thanks!

Q: Hi Guys,

I am a dividend investor and one of my rules in my portfolio management is to immediately sell any company that cuts it dividend without thought or question. I can repurchase the stock after a 60 day waiting period. This has helped in the past as the stock price usually keeps falling.

I own SGY and CPG in my portfolio in equal weight of 3% each. I am considering not using my "sell on dividend cut" rule as these stocks have dropped prior to a POSSIBLE dividend cut and may even rise if a cut is announced.

I would appreciate your comments.

Regards
John

Q: Peter, only for the information file, I spoke with management at Surge this week. They told me the dividend is safe and they will protect it at all costs. They said they had prepared for this scenario in oil and would see there commitment on dividend through. Who do you believe, analysts or the boss of the company. I will take the boss of the company, Ken

Q: Will these companies have to cut their dividend, it oil stays between 55- 65. For the next year or is the dividend safe . Dave

Q: I am holding a basket of energy, of which are underwater at present and would appreciate your comments on which to hold a which to sell. With the sales proceeds I will redeploy the funds into the "keepers" or alternately add a new holding(s) that you might feel will provide best opportunity for go forward hold.The holdings are BTE,POU,CPG,BNE WCP,TOU,SGY,TVE.
Thanks

Q: It seems oil investors are throwing the baby out with the bathwater,two companies in particular-WCP has 48%of its 2015 production hedged @ $98/barrel,SGY P.O.ratio is @95% and its drilling new wells with a payout of less then 1 yr.even at $60 oil according Dundee.I own both companies and am considering gradually doubling my position.A good idea?

Q: I currently do not have any exposure to the energy sector. I am starting to get attracted to the high dividends of some of the higher quality companies such as WCP. I am thinking of a pairs trade; shorting XEG and buying WCP long. This would allow me to collect the dividend but protect me on any further down side. Once the energy sector calms down and starts to behave rationally I could slowly take off the short position leaving me with a long position in WCP. What do you think of a strategy like this?

Thanks, Darcy

Q: I need some capital loss to use because of capital gain I have.I have CNQ and VERMILLION.Of th e 2 which one is safer to keep in present oil uncertaity.?I appreciate your advise and thank you.Ebrahim

Q: Hi Petr and team

Could you give your opinion on 7 Generations Energy

Thanks

Ross

Q: 1. If Oil prices do not recover in the next couple of years, is HNL at risk?
2. Does it have any significant debt maturing in the next 2 years that they might not be able to renew?
3. I know that you rated HNL as a C+ in October. Has your view changed in the last couple of months?
4. Would you recommend selling? It is a very small portion of my portfolio.

Thanks,
Hans

Q: Hi folks,
I'm asking you to think about a bottom in oil and how this will all play out. If you put aside the gripping fear for a moment around the oil "crash", calmer heads suggest these sort of events have happened before in history many times and we have a good idea how it plays out. Peter called it by saying dividend cuts and reigning in cap ex would occur. Where do we go from here? Insolvencies? Do you think when Buffet throws one of these oil majors a hefty lifeline that were close to a bottom? Remember when he bailed out GE at $3/sh or did the same to GS at $75 share. Thanks for your thoughts.

Q: Hi Peter
I suspect I have been overweight in oil/gas and have lost more "paper equity" as it has been dropping though I prefer to think I have still spent it on "good companies".
When you say 10-15% energy weighting and that TSX is 21% or 25% do you include
a)PIPELINES like ALA,ENB,IPL,KEY,PPL,TRP
b)SERVICES COMPANIES LIKE BDI,CFW,FRC,HWO,PHX,PD,SVY
c)OIL BASED OTHERS LIKE BAD,MTL,PRW,QST
Thanks for all you do
Dennis