Cenovus Energy (CVE.TO)

(A Top Pick Jan 16/15. Down 12.9%.) At the January level it was good to be averaging into the position. The biggest way to make gains is having the confidence to average into a stock you have confidence in when it is down. This company has the best cost structure of any oil sands company and still pretty good growth ahead if oil prices rise.

It had picked up quite nicely before the oil price turned. He likes this company because they really addressed their balance sheet challenges. They have one of the best balance sheets in the business now.

There is the potential of another oil/gas company looking into this company. An interesting company because of their assets. Trading at 7X forward price to cash flow, but he is confident in their ability. A very healthy balance sheet with $5 billion in cash.

(A Top Pick Aug 26/14. Down 45.02%.) He has stuck with this. It has been one of the more proactive in this environment, right from the beginning. Feels they have done a very, very credible job. Operationally they seem to be doing fine in their latest quarter. One of those companies that will prosper going forward.

(Top Pick Oct 2/14, Down 38.01%) Their cost structure is amongst the best in industry. They have done their best to get through the downturn and that is why you own this. They cut their dividend recently, but they are still the highest yielder amongst the group.

(A Top Pick March 12/14. Down 31.32%.) One of the problems is that it is at the end of the pipe, the oil sands. The good aspect is that they do have refining capacity in middle America, which is a wonderful place to have refining capacity. They cut their dividend, which makes sense in this $45-$50 oil.

(A Top Pick May 7/14. Down 38.1%.) This went down with all the other oil stocks. The company has substantially cut back CapX with cash flow coming down. Recently did an equity issue, as well as a royalty sale, so they really addressed their balance sheet problems and are in very good shape. They have good, long term, core assets. This company has about 85,000 barrels of potential growth that are in various phases of development, which they can bring on fairly quickly when it pays.

This is in a sector inside the market that is out of favour right now. He is not seeing any money flows into energy stocks right now, and thinks there are still negative outflows. This summer is going to be difficult on energy.

In this commodity environment, people are taking a hard look at these stocks. Their share price is a function of the commodity price. You should hold large cap energy names that pay a dividend so this one is one of the ones to own.

(Top Pick Jul 2/14, Down 37.23%) He got out. He bought it as a trade, but it did not work. The headwinds in the oil side of the business are pretty big.

It was not unusual for them to raise capital earlier this year. Many in the US have done this to shore up balance sheets. He would be careful. He thinks there is a risk that this sector will be difficult for a while. There is money to be made in other sectors. You have to be a good seller of your position and don’t let a little mistake become a bigger one by averaging down.

One of the better asset based, especially on the SAGD oil side. Breakeven point is more like $65 rather than $80. Their issue earlier in the year was that they were over levered with the commitment to the capital expenditure. The big equity issue fixed that problem, so they have a good clear line to having this built. However, it is one of the more expensive names with the uncertainty that is going on in Alberta; the potential royalty review and potential emission charge increase.

Cenovus (CVE-T) or Husky (HSE-T)? He moved some money to Husky when oil prices came off, as he felt they would benefit from the retail side of their business, and he would still feel that way.

His favourite of the large cap integrated companies. It is caught in a market sentiment cycle. Long term they are a low cost producer with assets that are decades long. They had some operation issues. People are concerned about a dividend cut, but he has been buying it. He really likes the management team.

This was a spinoff from Encana (ECA-T). It has been under pressure with the fall off in oil prices. He is going to continue holding.