Nexen Inc (NXY-T)

(A Top Pick Oct 25/12. Up 19.61% as at Feb 28/13 when it was taken over.) Had bought this when the deal was brought into question by the government and he had felt very strongly that it was not a national asset and the government would give approval.

(A Top Pick Nov 1/12. Up 16.7%.) Acquisition got approved and that was a big win for his investors.

(A Top Pick Oct 25/12. Up 19.61%.) Acquired.

Application for a takeover by the Chinese company CNOOC has been made. Price is not at the takeover price as there could always be something happening that would affect the deal. Not very likely in this case, but the Americans did not like the deal.

CNOOC deal was approved by the government. Feels that for the net benefit of Canada, despite having become such a political issue, it was absolutely the right decision. The amount of capital requirement for oil Sands, tight oil and feedstock for West Coast LNG is absolutely humongous so we need companies like this to come in. There are some concerns that we need to pay special attention to but it was an absolutely great and proper decision for the oil patch.

Still a big spread on offer vs. actual price. Deadline is Monday. He thinks it will go through and that the spread is perhaps large. Risk arbitrage is for professionals but he stays out of that game.

This is his Special Situation pick as he didn’t buy because higher production growth or lower costs. It’s more a bet on that the deal will go through. Has recently been hurt by the rejection by the Canadian government of a takeover. Only 30% of its production is in Canada so it is not strategic to the country. It might drag out a little bit. Thinks the review will be extended.

At this level you have about $3.50 upside or $3 downside if the deal doesn’t go through. Very tough call. Would probably be aggressively buying it today if it was around $14. He probably would be more biased to the upside that the deal goes through but as each week goes on will be getting more information and better decisions can be made.

This is reasonably risky. Expects deal will be consummated.

Chinese are looking to acquire this and he thinks it is a reasonably high risk treasury bill. Has an annualized return of about 30% from where he bought it. It gives him US$’s which is what he wants to have in December in order to buy US equities. Doesn’t think the government is going to turn the deal down. 25% of their assets are in Canada and everything else is international.

CNOOC is making an offer to acquire at $27.50. If you own, he would sell this and move your money into one of his Top Picks tonight.

Confident deal will get done. NXY has really under performed and has not had assets that have been managed very well. Went up markedly on the news of the joint venture. You will not see much out of it for the foreseeable future.

(Market Call Minute) $2 in it. Thinks deal will go through.