Crescent Point Energy Corp (CPG.TO)

Reducing the dividend was a wise move in this environment. This is one of the better managed companies with one of the greatest areas to develop in terms of the number of drilling opportunities they have going forward. Very efficient operators. Thinks the dividend, for the time being, is fairly safely covered. Would not be selling, but if anything, would be looking at it as an opportunity.

There is not much more this company can do on the operating side. It has been a spectacular operator. Has reduced its cost by 25%. This is a commodity problem in this company is getting clobbered because the oil price is down. They are low cost producers compared to a lot of others.

Thinks the street would say this company is pretty cheap right now. He has consistently had a number of quarrels with this company. They are growing like stink and it is a very well-managed company. The problem is that they are paying out a dividend. You invest $10, and it pays you back $0.60 every year, but you have to pay tax on it. Then they dilute you down by selling new shares to buy more and more great opportunities down the road. Doesn’t like the dividend paying model. Institutional investors are very, very nervous about buying these types of companies, because if prices stay down for a while longer the hedges all roll off next year and it is a disaster. They have a lot of debt.

(A Top Pick July 23/14. Down 63.93%.) Sold out of this. Doesn’t have a lot of conviction that oil prices are going to rebound. Still likes the company and will probably own it at some point, but for the time being he has rotated out of this into different names.

The most mispriced oil/gas stock in Canada that he can find. Their proved reserves can produce oil for 10 years. At $55 oil, it is trading at 5.5X its total corporate value relative to cash flow. That means you are getting part of the proved reserves for free, their probable reserves for free and all of their own booked inventory for free. It has never traded as cheaply as it has today. Eliminated people’s major concerns and cut the dividend so it is right sized. He has it being sustainable at about $50-$55 or higher. The cash flow is around 2.5X. Eliminated their DRIP so there is no dilution. Dividend yield of 9.02%.

This is in panic mode. Maybe it gets cheaper still. People are liquidating wholesale, and that is always when you want to be buying.

(A Top Pick July 28/14. Down 69.34%.) He would be looking for an entry point once he sees oil stabilizing. For any of the producers, he would be asking to what level they could get costs down, marginal and average, relative to the price they get through hedging or actual sales. If the spread was positive, he would look to see the potential for production. This is a classic example of a company that can take advantage of increased production with a positive spread. If oil prices stabilize, he does not believe they will cut their dividend again.

A very popularly held stock. For the longest time it wasn’t a bad stock to hold. It was range bound, but it broke down with oil. The company is very leveraged to oil and have a lot of debt, so where oil goes, they are really going to go. Recently cut their dividend and most people that own the stock had been buying it for the dividend. It keeps breaking support levels. He looks for bases. If it started a sloppy sideways zone, where it broke out eventually, you might consider it, but at this time it is in a downtrend. Don’t buy it until it stops going down.

Cannot give any good news on the stock. You have to wonder how good the dividend is even after they cut it. Earnings are still suggesting quite a bit of downside. They do have a fairly decent balance sheet so can bluff their way through this.

Their history is that it is a serial acquirer of other companies in its geographical area, and a serial issuer of shares, so the street loves it. When a company keeps issuing shares like that, it is hard for the share price to do well. The yield on the stock was quite high, and a lot of people got sucked into buying because of the yield. Had hedged oil at $90 a barrel. They can’t continue paying their dividend with oil at $40, and they can’t hedge any more. Investors should buy commodity stocks only when they feel commodities are going up. If you are a very long term investor, he is sure you will come out OK, but there is probably going to be some more pain in the near term.

One of the most heavily followed retail stocks in Canada. The dividend cut was being forecast by the market, but they had always said they were not going to cut the dividend. Their business has obviously significantly changed in the last 60 days. If oil stabilizes and bases here, this will probably be an okay place to be. He always has his eye on this one.

Covered Call to January 2017? This stock is a challenge. It is holding its value at this stage because of its dividend, which is not at all certain. If you are able to sell a covered call on this, you are going to have a very challenging time trying to buy it back, because it is not a very liquid market. If you are selling a Call Option he would probably go a little closer, not January 2017. He has a feeling that the Bid/Ask spread is going to be so wide it is not something you are going to be able to work with.

Recently cut their dividend. He has been quite bearish on energy space for a few years and has very little exposure. His view is that the dust has not settled. Although there is some stability in the price of oil, at these levels it is difficult for these types of companies to make any money. We need oil to be considerably higher for an investor to make money. Not a name he would Buy right now.

The 2 periods of seasonal strength for energy are from January to May followed by the next one from August through to October. The 1^st one played out quite nicely with a bounce from a significantly oversold level. We are significantly oversold again and approaching multiyear lows, and what appears to be a good period for investing again. The probability of some of the seasonal influences kicking in this year is rather low. It would be preferable to see the trend in your favour, which would lower your risks of pursuing some of these plays.

They indicated they can maintain that dividend. But she thinks it is only a question of how long it can stay down there. In 2016 about a third of their production is hedged at $83. If crude stays below $50 for a long period of time you have to question a yield that high.