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Michael Simpson, CFA Enbridge Income Fund Holdings ENF-T BUY ON WEAKNESS May 31, 2017

This has a lot of the mature assets in Western Canada that was spun down to this income fund from Enbridge (ENB-T). There is much slower growth in this one. It may be going down because of some concerns that the parent may have to raise equity and may drop down assets to the income fund. They are both very good companies. There is a little concern about US interest rates going up in June. He would be buying this if it went down.

Michael Simpson, CFA

Owned

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$32.440

Stock price when the opinion was issued

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COMMENT

Enbridge wants to buy ENF to simplify their corporate structure. In the States, Enbridge offered a small premium, while in Canada, they offered a premium. He suspects the directors of ENF-T are waiting for a higher premium (or that's what he would do). Pays a higher yield than Enbridge Inc. but lacks the dividend growth potential.

COMMENT

ENB taking over ENF: Sell one, buy one or both buy? The reflationary sectors will do well in the next leg of this cycle, but the pipelines will not. Instead look at U.S. financials. Hold onto ENB, maybe make a move on the fund, ENF. Buy stocks/sectors that will benefit from rising rates.

PAST TOP PICK

(A Top Pick December 11/17 - Up 8%.) 15% up including the dividend. Given the shortage of capacity the demand for its assets are very strong. It’s going to be consolidated with the main company and this is going to disappear, and you will get a share of Enbridge (ENB).

COMMENT

Is being rolled up by the parent Enbridge. Now they have tried to simplify their corporate structure. If you hold this, you will either get Enbridge shares or could elect to get cash. Simplifying the structure should make investors more comfortable.

DON'T BUY

He understands this will get folded into the Enbridge parent. He's always liked this stock, but not anymore. So, look at Enbridge, which has some value, but is also not very exciting.

PAST TOP PICK

(A Top Pick Dec 11/17, Up 12%) They'll raise their big dividend. You're buying at the bottom now, but be patient for it to rise.

PAST TOP PICK

(A Top Pick Jan 19/18, Up 10%) This is now absorbed into the Enbridge parent company. It was cheaper than the ENB-T at the time.

PAST TOP PICK

(A Top Pick Jan 19/18, Up 17%) That was a sweet recommendation as this was better than Enbridge (ENB-T). It was absorbed by Enbridge (ENB-T) that he doesn't like as much.

PAST TOP PICK

(A Top Pick Apr 19/18, Up 17%) He's not sure why ENB split the ENF out and ENF traded at a discount to ENB which yielded more and was cheaper than ENB. That's why he chose ENF. ENG bought it in the end.

HOLD

What happened to ENF-T? It was brought in by the parent. It does not have a lot of growth potential. You get a great dividend. It is difficult to show where growth comes from, however.

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Michael Simpson, CFA Enbridge Income Fund Holdings ENF-T BUY ON WEAKNESS May 31, 2017

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