Crescent Point Energy Corp (CPG.TO)

(Top Pick Sep 4/14, Down 47.56%) They are well managed and have done the right things. They cut CAP-X and their dividend as well as costs.

They were correct to reduce the dividend. It has great oil leverage and is in Saskatchewan where there will be no NDP fall out regarding royalties. When the market comes back, this one will go very quickly.

He has never been a fan because of the high dividend payout. You invest in it and they give you back your capital and you have to pay tax on it. Oil prices can’t stay down here that much longer. It is not sustainable. The best cure for low prices is low prices.

Has probably been one of the best light oil producers. It almost feels like a value proposition. The quality of dividends is not good, though, as they cut back on it. The operating numbers look pretty good. You get into the tax loss selling in December and you realize you should be waiting until January to look at it.

He was worried that the dividend would not be sustainable. They locked in hedging at $90, but then pricing did not come back and so dividends were not sustainable. He would not own a commodity stock for the dividend.

A name that was painful to be in earlier this year until they did their cut in August. There has been a relatively good response since then. A great light oil, high margin producer focused in Saskatchewan. Balance sheet has been right sized with a cut in the dividend. He thinks they can maintain a 100% payout. If oil stays where it is for another 6-9 months, everyone will be susceptible to having to make some cuts. One of the “go to” names if you are looking for a large, liquid light oil producer that can give you some upside. Fairly well hedged at about 35% in 2016, near the $85 US per barrel range.

It may only be a matter of time until the dividend goes to zero. People were chasing yield at their peril. As oil prices came down, so had the dividend to. It is only a matter of time before they cut it again.

A high quality company that cut their dividend like many of them have. They will move along with oil prices and they will keep their balance sheet strong throughout, even if it requires a dividend cut.

A lot of these heavy income names have taken a tumble. You are looking at a forward price to cash valuation of 4X. Ultra, ultra cheap. Management historically has serially issued equity to be able to pay out dividends. Now they are using existing cash flow. Cash flow is still very healthy. They are probably going to be able to ride out the energy problem better. If there is a recovery in oil, this will rebound much faster than others. Excellent assets with light oil exposure. Dividend yield of 7%.

He is negative on the oil space as a whole and thinks there are more chips to fall. He wants to wait until he has more conviction. They have done everything they said they would not do. It is not too late to be trimming this. If it is the only oil you own, then you could hold it.

In energy he has everything in one of 3 buckets. 1) The “highly leveraged” names with very poor balance sheets and the potential to go bankrupt. 2) “Highly leveraged” names, that in a $30 environment would be highly levered on a cash flow multiple. 3) Solid balance sheets. This company straddles the 2^nd and 3^rd buckets. Balance sheet is okay, NETBACKS are some of the best in the industry, it is light oil. In a $40-$50 oil range, this company is fine. Have a good hedging program and the dividend has already been cut. One of the knocks is that they are a serial issuer of equity, and we are not going to see that at any time at these levels.

She owned it for a number of years. They finally cut their dividend. She is not buying energy right now. She is not buying it for new clients. Refineries shut down in the fall for maintenance. Inventories are high right now. She would wait for some stabilization in crude prices and to see some declining supplies.

Oily stocks tend not to do too well this time of year. Their period of seasonal strength is actually from January right through until May. We are currently outside of the period of seasonal strength.

This is one of the oils he decided to retain, mainly because it is so diversified. It is not in Alberta, but is in Saskatchewan. One of the best managements going. The bounce lately is at the bottom. He is quite sure this is a company that will survive this whole low oil price period. Not a bad buy if you want some income as well.

Div $0.10 yield 7.48% Recently cut it's dividend in half. She is happy with this, since it doesn't really help with growth. Feels that it is good that they rationalized the dividend/payout ratios. Great assets. A good management team as well. It's at a very very low level, so now is the time to buy. They added at $13 or so.