Stockchase Opinions

Gerald Allaye-Chan Inter Pipeline IPL-T BUY ON WEAKNESS May 29, 2009

Very well run business. Likes the surety of their cash flows. Decent growth possibilities in this. Very handsome yield.
$8.730

Stock price when the opinion was issued

oil pipelines
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DON'T BUY

Fascinating display of a lack of IPL corporate governance. IPL has done everything they can to not engage with Brookfield, but happy to risk 350M of shareholder money in break fees as a bait to get PPL to bid for them. He doesn't understand it. Wouldn't invest in a company that won't negotiate a bona fide offer. Missed expectations in last couple of years.

HOLD

Will be acquired by Brookfield or Pembina. Final decision mid-June. If you own shares, hold on. An attractive asset for PPL, which she owns, as it expands their footprint.

COMMENT

Important infrastructure assets. By June or July, the board has to decide whether to accept the PPL or the BAM offer. The offer price is already baked into the share price. If you don't want to own either of those two companies, sell your shares now.

COMMENT
Has not looked into the deal and how it would affect the company stock. The chart is not telling him anything material.
HOLD
There is always a risk when there is a buyout offer that the deal falls through, but in this case there are two bidders. You should hang on and see what the final decision is.
PARTIAL SELL
It's trading at a premium to the Brookfield offer, so hold or sell? Whether to sell or hold depends on your individual weighting in your portfolio. If share price drops, will it hurt your portfolio? Maybe sell part of it now, then see if a higher bidder comes, which the market is waiting for.
BUY ON WEAKNESS
The growth of the pipeline industry will be strained. Natural growth is challenging. For a trade, it is positive due to short term considerations. Big picture, you can buy into weakness and you can earn a decent yield. Don't chase strength.
HOLD
Pembina and Brookfield are battling over this. Brookfield wants to remove the break-up fee that IPL must pay Pembina, but the regulator let it stand. The bid deadline has been extended to August 6. IPL is trading around the bids of $20. Brookfield Infrastructure may bid higher. Pembina's could be in stock; or you can transition to another energy infrastructure dividend name. Keep holding IPL and let it play out. One of these companies will buy IPL and it could receive a higher bid. Expect a resolution in the next month or two.
COMMENT
In the midst of a takeover battle from two companies, Pembina and Brookfield An interesting tug-of-war. He sold at the initial offer of $18. Since then, Brookfield has entered the picture to battle Pembina. Pembina is the logical buyer, because there is more synergy. But Brookfield wins on a valuation basis. He doesn't know how this will end, but he expects people to tender in Brookfield's offer. Maybe both companies partially finance and defray the risk. Anything can happen in the coming weeks. He's tempted to tender to the Brookfield offer--the price won't get much better than that.
HOLD

In the midst of a bidding war. More of a hold than a buy. Prospects for material upside are not very high. Better opportunities elsewhere. If you made profits, take some and invest in something like GEI or even TWM, if you have a higher risk tolerance.