Canadian Natural Rsrcs (CNQ.TO)

Horrible performer. They have to seriously think about increasing their dividend to improve valuation.

He has this as an outperform with a $42 target. Yield of 1.4%. One of the issues that he has with Canadian oil is that he thinks that we are in a tough predicament of where he thinks oil prices are going to go in North America, so he is a little bit cautious.

Encana (ECA-T) or Canadian Natural Resources (CNQ-T)? Go for Encana. It is much better. 200 day moving average is flat and the stock is starting to flirt with it and probably going to break out. Downside risk is about $1 and the upside is to about $30. On CNQ the problem is you still have a falling 200 day moving average.

Looking back 5 years it is attractive because it is at the lower end of the range. Owning it at this point is ok but in the next couple of years it will be range bound. Get out at $33 and when it dips down you nibble at it again.

Just sold his holdings, partly for tax loss reasons and partly because he is changing his focus somewhat away from energy into other resource plays that will have better opportunities over the next 12-24 months. This is a 1^st class company but he is getting a bit nervous about the oil sands and their exposure there.

(Market Call Minute) Thinks it is a very difficult environment for them.

It has done nothing and yet it is one of the premier companies in the oil patch. The last quarter was a big miss for them due to higher royalties and the heavy oil royalties. If you look at the production profile it could be up significantly over the next few years. It is looking attractive at the current levels.

(Market Call Minute) pricing is going to be tough.

Sold in May, went away, now it has gotten under $28 and is fairly compelling. 50/50 oil and gas. Less than 5 times cash flow. Discount to net asset value. The only problem is the differentials between heavy oil and WTI. That is why the stock is low. He thinks the differentials will narrow.

Another very cheap name. Execution has been largely very good and management team is well regarded. They don’t have refineries so are more exposed to heavy oil differential. Some refineries have been knocked down by Hurricane Sandy. Is planning on buying next year.

Continuing problems. Well managed, though. It would be good to get one solid year of production out of Horizon. It is at a great entry point right now. He would look to add to this when he puts more cash back into the market.

Has been a favourite amongst the seniors but Cenovus has taken over. CNQ is having trouble getting back up to speed on production. People are uncomfortable with this. Has best leverage amongst the seniors apart from Encana. Likes leverage to Nat gas in the long term.

(Market Call Minute) at $26

One of the biggest exploration companies in Canada. Top quality management team. Very disciplined. Cut back their natural gas drilling by a long way. Thinks they will do very well once natural gas prices recover which he expects might happen next year.

Thinks it’s safe to say that this is a company that cannot get taken over so you are buying on its fundamental value, ability to grow cash flow and hopefully its ability to start paying significant dividends. Reasonably priced.