Cenovus Energy (CVE.TO)

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.

They are going to have some difficulty with the prices being where they are and the cost of exploiting oil sands projects. Thinks this will be one of the survivors. Have some very good properties and some where they could do a royalty spin off on, which could be a couple of billion dollars for them. Over the next few years, he expects to see the price have much more appreciation power than what the downside risk is. Current yield of 4.5%.

Energy stocks have been doing quite well. A lot of them bottomed in January and some have gone up 20%, 30%, 40%. This one hasn’t participated the way he would have liked to see. The chart shows a descending trend line from September, which is presently being tested. There isn’t too much reason to get in now.

This is not a growth situation any more until we sort out the oil prices, but feels the dividend is safe. The oil price may take only 6-9 months. This is probably as low as it is going to get.

(Market Call Minute.) He doesn’t mind this, but in a pecking order, why go there?

Very oil sands focused. They raised $1.5 billion this year to shore up the balance sheet. You kind of wonder when they are paying $900 million out the door on the other side, if they are raising money to pay you back in the form of a dividend. Have had operational challenges is some of their oil sands projects, and he thinks these are largely behind them. As a long term holding, this is all right. Thinks you can do better with something else.

(A Top Pick March 12/14. Down 24.17%.) Sold his holdings last fall at $28.80 (1% loss).

They want to keep their development plans on track so they have to issue stock to finance it. It is one of the higher quality asset plays in the oil space.