Opinions
Terry Shaunessy
Horizons Active Preferred Share ETF
HPR-T
DON'T BUY
Dec 09, 2020
$8.110
Stock price when the opinion was issued
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HOLD
Stock has been languishing. They were trying to drill 8 wells in Duso(?) in Alberta. Because of the weather, they only got 6 done. Their production in Q1 was about the same in Q4 of 3,100 BOE's a day. They have quite a bit behind pipe which will be coming on in April so they will be about 4,000 BOE's a day which will be 1,000 BOE's coming on. Likes the story. Feels they have the ability to exit at 4,300/4,500 a day. Reserve Life Index of 8.2 years. Waiting for the stats.
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HOLD
Has $50 million debt level on the books which is a bit higher than he likes. Should do cash flow this year of about $35 million. Thinking about selling some non-core assets, but don't want to unless they can replace it with new production. Have some very high impact drilling going on right now, which, if successful, will probably look to sell something in Q3/Q4.
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For recent years, he's been off and on preferred shares. Preferreds are volatile. When interest rates plunged 2-3 years ago, this asset class got reamed. HPR pays a big dividend, but also offers huge volatility. Also, it lacks the growth of stocks but carries the volatility. He had a terrible experience with this. Look at ZUP-T, which covers US preferreds which are largely fixed-rate, a key difference to Canadian preferreds. Also, US preferreds are less volatile than Canadians.