Baytex Energy Corp (BTE.TO)

This is one of the companies that he follows to some degree. It is possible toward the end of the year he might hone in on it more closely. With all of these companies, take a look at debt load relative to revenues. He may buy it later in the year, depending on his firm's analysis

(A Top Pick August 3/2017, Up 12%) Still trading at a discount. If I can get 12% out of a bond, why would I buy equity? Less risky to own the bond than the stock. Buying the stock would need the price of oil to go up, guaranteed.

It is challenged like CPG-T in that there is excess capacity and not enough sales. He can't comment on the merger as he is not an M&A expert.

Merger is not popular with Raging River shareholders. However, Baytex shareholders are saying it is a wonderful deal. Have added a free cash flow machine in their Viking asset. This name has been beaten down by Raging River shareholders. The deal gets voted on mid August. At $70 oil he has a $7.00 target and at $80 oil he has a $10.00 target. That is 60% to 130% upside. (Analysts’ price target is $6.00)

They are making the acquisition of Raging River (RRX-T). Raging River will control the merged company afterwards. BTE-T has had quite a few problems. Both stocks reacted negatively when the deal was announced so he would stay away from it.

They got themselves in trouble when they over paid for an acquisition. This one has a hill to climb so it is a question of how long you are prepared to wait it out. Ultimately you will be rewarded. There are better names to invest in, however.

Bought Raging River, multiple is in line, and they have decent growth. Market thinks they overpaid for Raging River, but if you buy good rocks, you’re going to get a good result.

RRX-X amalgamation. Both went down when they announced the merger. This is unusual. There are a lot of costs involved in a merger for a quarter or three. He does not like all-paper transactions.

BTE-T vs. RRX-T. RRX-T has been taken out by BTE-T. One analyst says you will now own a company with a much higher debt. BTE-T is a zombie company because of debt. 78% debt to equity last time he talked about it. After the deal RRX-T will have a huge increase in production. If you believe in $80 oil by year end then this a good leveraged play on oil. He thinks we will below $60, the problem is that this stock is too levered. It will be at 75% debt to equity. The market is voting negatively on the deal.

Texas and heavy oil in Canada. Their price for oil is more linked to Louisiana than to Canada. (Analysts’ target: $6.09).

Baytex versus HMMJ. There is no correlation between these two. BTE-T looks fine technically as he thinks WTI should return back above $70 before year end. The recent breakout is positive, especially since it was basing around $3.50. He does not understand the cannabis market, so can’t render an opinion. “You can’t make an iPhone in your basement, but you can grow marijuana.” He thinks demand is already met, so he would only hold a small lot of HMMJ-T to talk about at cocktail parties.

(A Top Pick June 1/17, Up 7%) BAYTEX BOND 6.625% A bond that offers a return like a stock. In 2014, Baytext stock got hammered and the bonds got hurt too when oil plunged. That was an opportunity and he's done well by this. Compared to the Baytex stock which is tied to oil's ups and downs, the bond is a quiet ride that enjoys an 8% return.

One of the heavy oil producers. They made an acqusition of Aurora at the wrong time, so they got stuck with bad oil prices and wound up with a rocky balance sheet. The oil differentials have recently narrowed in their favour, but analysts expect them to expand back over the summer. The balance sheet has improved.

This is one of the go to names for beta to oil. It only trades 4.1 times EBITDA and has over 130% of upside if WTI goes to $80. Their Eagleford results have been good, but not enough to move the needle. If you are bullish on oil, this is definitely a name to go with.

Very lever to a higher oil price. The balance sheet is pretty indebted. Strong reserves growth. A risky name. There are much easier and safer ways to make money.