Horizon North Logistics (HNL.TO)

Believes that this has bottomed. There is a lot of competition in this space, both from private companies and from public guys like Black Diamond, etc. Thinks that is coming to an end and there will be a little bit of consolidation. Players that have the best balance sheet will be the ones that consolidate the most and do well in that environment. This company should benefit somewhat from an increase in activity. Dividend yield of 4.04%. (Analysts’ price target is $2.32.)

Has recently added to his position. It is transitioning from an oil camp site company, building camps in the oil sands, and are moving more into prefab homes and hotels. Hired a lot of operational talent from non-energy companies that know how to run operations. Views it as more of an industrial company rather than an energy company. Pays a nice yield.

(Market Call Minute.) An interesting one, because they have really changed the direction of their business. They were all oilfield before, and now they are getting into portable housing projects.

This builds work camps as well as doing catering. Through this downturn, they have looked to diversify its revenue base. Doing modular housing, and have the right people in place from manufacturing to logistics. They’ve won a contract from the Vancouver Affordable Housing project to build permanent modular units. Dividend yield of 4%.

The 3-year chart shows a long downward trend from early 2014, to early this year. You need to see a break from this pattern, which now seems to be happening. There is some support coming in at around $1. Will that turn into a new uptrend? So far there are no higher highs, so generally speaking this is in base mode. The 1-year chart shows some resistance at around $2, and if it breaks that, it could be interesting. At this point he would just call this a neutral position.

Lost a couple of their big camps in Fort Murray, one by fire and one by smoke. Capacity utilization has been really low in the whole camps and logistics space, so that just took off a whole bunch of capacity. They were covered by insurance, and there are estimates it could be $30 million. What he likes, as compared to similar companies, is that they have a balance sheet based on an equity issue that they did at $3.75 about a year ago, so they can now rollup some of this industry and buy up some of their competitors who are struggling. There has been the big move in energy prices, you are seeing rig counts coming up again, oil production coming up in the oil sands again, and they are getting into some new businesses now where they do some manufacturing. Dividend yield of 4.55%.

(A Top Pick Sept 15/15. Up 21.01%.) (Short.) He used to be Long. Had liked the visibility, and this was a chicken’s way to play the resources. He has now exited his position.

A camp accommodation provider for oil companies. Apart from their problems in Fort McMurray, the company is actually doing the right things to get away from the sensitivity of the oil sands accommodations, so they have a new box modular division for building accommodations for non-energy companies. A well-run company, and not too expensive. Pays a pretty good dividend.

(A Top Pick Sept 25/16. Down 21.35%.) He left this position earlier this year. Had difficulty seeing the recurring revenues theme continue, especially with things like their oil sands.

Has had this as a Top Pick in the past, both as a Long and as a Short. Liked the visibility you got in temporary housing and lodging. Unfortunately, about 2 years ago, those days ended. Be very cautious about this for the next 12 months. There has been too much optimism about LNG on the West Coast.

(Market Call Minute) Oil camp provider in Western Canada. You need oil to keep working and you need LNG plants built.

The challenge is their high exposure to oil sands spending. They were hoping to have high exposure to West Coast LNG. With the lack of effort on the part of the federal government, West Coast LNG may be dead. Also, the global price for LNG has been cratering, probably below what new green field projects require. He is not overly optimistic. They have one primary customer and it is unclear whether they are going to proceed with the expansion of phase G. Too much uncertainty for him. Dividend yield of 11.3%.

This is really built around macros in that it specializes in remote camps, both temporary and permanent and catering. Its bread-and-butter was the oil sands, which clearly has had a slowdown, and that is priced into the stock. He sees LNG as a story for 2016. Thinks Shell and Petronas will make final investment decisions in the 1^st half of next year to go ahead with their 2 projects. It has about 100% payout to handle its dividend and its capital spending program. If you believe they can capture 10%-20% of the LNG market that should boost earnings by at least 25%-35%. Dividend yield of 12.1%.

(Short.) Oilfield services. He views this as a more conservative way to play resources. He doesn’t invest directly in resources, but likes to get some exposure on the periphery, and views this as a more conservative way. The company provides temporary accommodation to workers in Western Canada.

They are crushed due to the lack of Cap-X in the oil sands. He bought it because he is optimistic about a potential contract they are hoping to get. The leverage will be enormous if they get it. It is not for the faint of heart with a 12% dividend yield.