Birchcliff Energy Ltd. (BIR.TO)

They are 79% natural gas. It is very, very cheap. The bottom is coming in the natural gas drillers. We are close to the bottom on Natural Gas stocks. (Analysts’ target: $8.25).

Average down? As a general rule, he doesn't ever like averaging down. Mathematically, it has been proven it’s not a good strategy. You have a situation where investors are not liking the company. There are always other investors that are going to throw in the towel after you’ve averaged down. This is interesting, because the company was up for sale in the $8-$9 range many years ago, and is actually quite a well-run gas company that continues to hit new lows, and we are in the middle of tax loss right now, and he thinks there is an opportunity. Wouldn't be really too worried if you bought more, as long as your position limit is within reason. A great company, but in the wrong sector. If you have a few years, it is probably safe to Buy.

This stock looks weak. If you have energy stocks moving up and yours is not one of them, then there is a problem. You don’t want to let this break too much lower from where it’s at. He would like it to stick at around $4.71. There are better places to be.

(A Top Pick Oct 7/16. Down 45%.) The only natural gas name he owns. He gets excited when sentiment gets so universally bearish, and worst-case expectations get built into the stock price. He finds this name attractive.

It is cheap right now but could go down more during tax loss selling, below $5 again. He likes the company. This is a table pounding buy if it gets back down there again during tax loss selling.

What is holding them back right now is the take away capacity, and a lot of maintenance on some of these collecting natural gas lines out west, which has affected production and volumes, and more specifically, a lot of that gas has been shut-in in storage, so you have a glut of gas which caused the AECO price to go to zero 2 weeks ago, but is now back to $1+. Also, one of its major shareholders sold down his holdings. He is waiting for clarity on AECO price, which we might get in the next couple of weeks.

(A Top Pick Aug 30/16. Down 33%.) Did a great job of acquiring an asset out of Encana last year. Because of infrastructure, they were able to go in and steal the asset. The CEO doesn’t get as much credit as he should.

(A Top Pick Aug 2/16. Down 34%.) Good financial discipline, and he has a lot of respect for management. The balance sheet is in great order and they have a great growth program for the next 5 years. They have the access to infrastructure, a key thing in Western Canada, especially for gas. Probably two turns cheaper than its peer group. They are focused in the Montney, the most profitable gas play in Canada.

A natural gas producer. Natural gas has 2 seasons; heating and cooling. This is not the season for natural gas. The last one was from March 22 to June 19. You want to be in the sector before the event actually takes place. Wait until September before actually taking a look.

Should they buy Altagas’ Gordendale plant? He would be surprised if they would purchase it. A lot of energy companies try to run asset-like programs. He doesn’t think Altagas would want to sell the asset.

(A Top Pick July 29/16. Down 32.42%.) Management has always been underappreciated. They’ve done a really good job in building an asset base, and most importantly, paying down debt. Have a fairly good 5-year growth plan.

A low cost natural gas producer. When this comes off the bottom, it does very well. In January of last year, it was trading at $2.84, and it went to just over $10. Thinks it probably backs off to below $6, and even below $5.50. Feels the company is going to do a 70,000 BOE’s a day this year and 80,000 by the end of the year. He has a $13 one-year target. Dividend yield of 1.7%. (Analysts’ price target is $11.50.)

A very high quality company. Natural gas focused, so it has had some challenges in the last 5 years. They’ve been extraordinary implementers. Despite very low natural gas prices, their exploration efficiencies and production efficiencies are such that they make money even with these extraordinarily low prices. If you have a 5-year horizon on this company, you should do very well.

He would be cautious on British Columbia natural gas producers. They are strategically and geographically disadvantaged. Pricing in Western Canada is reasonably weak. There is nothing wrong with their assets.

(A Top Pick April 22/16. Up 64%.) The stock did fabulously well, and he pulled it off his recommended list when it got over $9. It is getting cheap again. BV is $6.64, and NAV is $9.27, so it is trading very cheaply. He likes their long-life reserves of 21.9 years proven RLI. He has a target now of $13. Any time you see any weakness below $7, it is something to start taking a look at.