Altagas Ltd (ALA.TO)

(Past Top Pick, June 14, 2017, Down 17%) He made a mistake with this one. They bought California utility assets five years ago, which was a mistake. Now, they bought WGL in the U.S. Management has really blown it. It's deeply disappointing. Bad on him for sticking with a loser. He sold it. Spinning out the company is just ridiculous; it's a sign of desperation. The CEO-founder continues to flounder.

He avoids pipes and utilities in a rising interest rate environment. It is a small short position for him. The valuation is still pretty high. It has a big yield but the payout ratio is a concern.

They are making a secondary offering that dilutes the share price. This stock has been falling for a number of years. It is a huge dividend payer. It is unsustainable. He thinks it has to be cut in a half or a third. He would not touch it.

He's still happy with this. They did what they said they'd do: did the wgl acquisition, then sold off assets with more to come, and THE dividend is still safe. Management though will likely stop dividend increases for a year or two because they're conservative managers.

(Past Top Pick, Oct. 30, 2017, Down 16%) Doesn't like it, but still owns it. A high-quality name. We're close to breaking to new lows. The recent weakness is due to needing more funding for the WGL buy by spinning off Canadian operations. He's started a DRIP to compound returns. But if it continues to fall, he will take his lumps and sell. Pays a stable 9.5% dividend.

Spin-off announced today. Markets didn't like their big US acquisition, so they are spinning off Canadian assets. The spin-off is the right strategic move, but it doesn't interest him to buy the stock. They're making up for past mistakes.

Announced a spin-off yesterday. He used to own it before they bought WGL. ALA is selling the family jewels to afford it. (He sold to get more pro-cyclical exposure.) He dodged a bullet. This is a debacle of corporate governance. The WGL deal took too long to close, expensive, levered up their balance sheet and got put on credit watch. Now, they're selling non-core assets. He has no confidence in the management and doesn't know if the dividend is safe.

They did a big acquisition of a utility in the US and financed it with an equity issue and a bridging loan. They are making asset sales to repay the bridge loan. Of the 2 billion that they had to sell, they have sold off about 1.5 billion of assets so far. They expect to complete the asset sales by the end of the year. She expects them to be able to sustain the yield. She does not see much near-term growth. However, the company is still a little more leveraged than it would like, and it might offer more hybrid securities or do another equity offering to reduce its debt. She expects the completion of the asset sale process to be a positive on the stock. Yield 8.8%.

They sold off a bunch of assets today. The market is expressing sustainability of the dividend. It has gone up today as a response, however. Gas shares tend to do well this time of year. Today's action is positive. This is not a bad investment at this time.

Acquisitive and have grown quickly, which makes him suspicious if they don’t have a competitive advantage. Cash flow doesn’t cover the dividend. If one acquisition goes wrong, the dividend will be cut.

They are not even making their dividend. There is a reverse compounding thing going on where your book value is being eroded. It is a losing proposition.

Subscription Receipts. (A Top Pick Sep 20/17, Up 2%) It was subscription receipts but now is just common stocks. They had a troubled time period after the deal because they took on more debt. The yield is about 8% now. The debt levels are high, however. He hopes they will generate free cash flow now and will pay down debt with it.

Has had some problem with this name. Need to figure out how to pay for the recent acquisition and divest assets. Cash flow from operations needs to sustain the dividend. Good at these levels, as dividend quality is still strong. (Analysts’ price target is $28.75.)

He used to be big owners of this company. The 10 year yield started to take off after Trump was elected. They are levered quite high and therefore difficult to raise yield. They have a huge debt load and the cost of carrying that debt will go higher. It is in a difficult place in the market. Dividend should hold over the mid to long term.

Is watching it. Good yield, but tied to Alberta economy. With the pullback recently, hold onto it for now.