Canexus Corp (CUS.TO)

Had a 40% cost overrun on their unit train expansion and the market did not like that at all. They followed the news by a sizable equity issue. The dividend is now more secure because they have that financing in place. Wouldn’t recommend this one right now. He has this as a C+ rating in his company and it is just barely hanging onto it.

Exited his position when he was concerned the company had undertaken a little bit too ambitious growth plans with respect to building out their terminal facilities in Western Canada. Recently learned they had a cost overrun so it was going to cost them a little bit more to realize some of that growth. Had to do an equity issue to fund it, which is why the stock came under pressure. Feels the 9.5% yield is safe, but the payout ratio is going to be close to 100% this year. You’ll start to see it drift down below 100% during the next 2 years as the terminal business begins to generate some pretty decent cash flow. Another concern is that they have a pretty significant chemicals division, which could come under a little bit of pressure. Represents decent value.

Stock took an immense hit because of a bit of cost overrun. What causes that? This shows the risks of investing in companies that are making big bets going into new ventures. They were good at handling chemicals and assumed it would be an easy transition to get into trans-loading of rail.

(A Top Pick Oct 11/12. Down 7.94%.) A chemical company that got into building a big “oil by rail” terminal and he really liked the upside on this. Has been tax loss selling some of his holdings. Stock price had fallen off because the underlying chemical business had softer pricing than expected. They are getting the terminal up and running in 2014, so there may be some good rebound, something like $6-$9.

Likes the overall business, but the debt has kept him away. Certain aspects of their business are very cyclical. They need to raise a little bit of equity and get the debt concerns away from investors.

No longer has a position in her funds because of tax loss selling but her company still has holdings. This company has a chemical business that has been under pressure. The chemical business is the core of their business and is where all the cash flow comes from to pay for dividends and has been under pressure. Outlook is still uncertain. Building a crude by rail facility, but cash flow from that is not going to come until the 2^nd half of next year. Quite a bit of debt, but it is convertible debt. Expects there will be a bit more pressure on the stock.

Do you think their chemicals will support the dividend or is there a chance they might cut? Management has committed to the dividend. The bad news is that their 2013 payout ratio goes up to 140%. He will be looking to see if they are booking customers in December and January. If they get good traction on that, that will be a pretty good sign. As long as you are risk tolerant you should be stepping in and buying.

Sold most of his positions and started at around $7-$7.50. Started getting a little concerned about execution going forward. This is a highly leveraged company and had a lot of growth potential because they were going to expand their crude by rail business. It hasn’t quite come to fruition. All the growth potential is still there but is taking them a little bit longer to execute and signing of contracts. As time drags on, this affects estimates and growth estimates, projections for the company. Another risk is that a part of their company that was going to fund the expansion is starting to come under a little bit of pressure. 8.8% dividend yield is sustainable. If they have to do an equity issue to fund growth, that is not a good sign.

Basically a chemical company which produces the stable cash flow of the business. Growth side of the story is the play of crude by rail. Spending a tremendous amount of capital developing a train facility that will allow transportation of liquids. Have already signed up a number of companies and locked in a fair amount of capacity. Yield of 7.35%.

Doesn’t like it. Has a few challenges, leverage of 4x. Convertible debt offering. He still thinks it trades at a premium. Prefers others.

Had a really good run 2 or 3 years ago. Have a number of basic industrials like supplying pulp and paper with chloralkali and other industrial products. Good business. His only issue is the level of leverage. There are operational issues in every company and when you have a lot of debt in the company it just accentuates the performance of the stock. Missed the quarter and the outlook for this year is a little bit more cautious. Starting up a new division that does rail terminaling for oil which is a really interesting project but has a lot of CapX requirements. There is a level where the value will be really good but he doesn’t think we are there yet. If he owned, he would Sell and buy it back cheaper.

(A Top Pick May 23/13. Down 14.17%.) Their chemical division has been under some pressure but management thinks this is in a trough. That division generates about $100-$130 million in EBITDA. Believes the dividend yield is safe. This is a buying opportunity. You are going to see the infrastructure side ramp up. Worth about $10-$11.

Has been trimming it recently. They changed their business model for investment bankers but he thinks the easy money has been made in it. If you can get it at $7.50, he would not rush the exit but above $8.50, you should trim it. Nice dividend. It will be fairly flat for the next year.

(A Top Pick July 23/12. Up 19.94%.) Could see it going over the $10 mark in the next 12 months. Stock has dropped in the last couple of days because of some operational issues. Good yield and a pretty good growth story. 6.3% dividend yield.

(Market Call Minute) Decent 6% dividend and has commodity participation as the cloud is clearing.