Baytex Energy Corp (BTE-T)

Drawdown 100% connected to price of oil. More debt than average. Risk-off market. Totally fine on liquidity. Deep value, but needs oil at $65-70 to really start humming.

Eliminated dividend in 2015, reinstated a smaller one last summer. Has since bought back 11% of shares. Doesn't generally earn its cost of capital, and so it trades at a discount. De-leveraging balance sheet, though still not investment grade. Chart's making lower lows.

They executed in their drilling. There's been huge multiple contraction among small/mid-caps. He exited around $3.85-3.90. Shares are in an air pocket now, falling on no natural buyers (energy is out of favour). Stock is cheap, given cash flow. They pay half that cash to buy back shares. Are better stocks than this, but wouldn't rule out buying this again.

Likes the energy space, so he'd be OK with buying this name. Pipelines to the West Coast have opened up. His play is through CVE.

Oil is down, which doesn't help. The budget shows a slight decline in production from year end exit rates, so investors may be worried that all the spending ($1.2B) is not going to boost actual average production rates. BTE also updated its five-year plan, which looks OK to us with a planned reduction in debt. But the sector remains out of favour overall right now. 
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Support has been broken. You need to see the up-and-down consolidation sideways to know whether the downtrend is over.

Huge disappointment, not operationally but on the share price. Typifies an out-of-favour stock:  Canadian mid-cap with hair on it. Last quarter had no hair, beat expectations, paid down debt, generated lots of free cash, bought back stock. Deep value, mispriced, too cheap to sell. He's waiting, but patience is being tested.

Oil stocks are under pressure with the China slowdown. There could be more chances to drill under the Trump administration, therefore more oil and lower prices. Also OPEC is not cutting production. If there was a takeover it would go for a premium.

Serial disappointment, underperforming the sector. Technically, not the kind of stock he would buy.

BTE mentioned that it allocate 50% of free cash flow to its balance sheet and the other 50% to allocating capital to shareholders through buybacks and dividends. Net debt reduced 5% in the quarter but remained high at $2.28B. Earnings were solid as production and net income were up for the quarter. The current capital allocation strategy is quite shareholder friendly but we would like to see debt come down more in the future. The call seemed generally positive.
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They continue to deliver, like moving into the Montney and with acquisitions. The stock is cheap and they're paying down debt. Over 75% of free cash flow now goes to shareholders. Expect more buybacks. The risk is energy prices falling, but he likes it.

Trend not going well. Energy stocks not performing well recently. Waiting for stabilization on trends before we buy. Generally speaking, is positive on outlook. Would recommend holding. 

Volatile year with energy stocks. If we continue to see lower rates and pickup in economic activity, this name will do well. More heavy-oil focused. Cost of production is higher than others, so they need higher price for oil. Historically cheap, small dividend.

Despite market sentiment, strong company. Company will continue to buy back stock. Very high torque to rising oil price. Above $60 WTI - very strong company. Would recommend holding. Owns shares in the company. 

Frustrating. A 10% weight for his fund. Good inventory depth, probably 12-15 years. Respects the CEO. Investors are getting 50% of free cashflow. 23-26% free cashflow yield next year and 2026. He targets $9.30 in 1 year, $11.20 in 2 years, so roughly 90-100% upside.

Meaningfully buying back shares means an inevitable, eventual rerating in the stock.