Michael Sprung South Bow Corp SOBO-N HOLD Nov 27, 2024

He sold right after the split, as the growth assets and those with better potential were assigned to TRP. SOBO got the oil pipelines, which are great for an income-generating dividend, but no growth. Stock's done well, but don't buy here. Look at TRP.

Only real growth will be multiple expansion and what value people will give to the dividend. Owns 100% of Keystone, its key asset. High quality, very stable cashflows (~94% recurring). Pretty cheap PE. Yield proxy. Yield is 8-9%.

In a spin-off, look how the market treats the underlying investment, and SOBO is up 20-25%. He has increased his holding in this, but it isn't a core holding. SOBO (running a liquids pipeline) can offer exposure to the Keystone pipeline, which Trump says he wants to finish. Canada doesn't tend to double-up on pipelines (TC Energy and Enbridge already run pipelines. He'd wait and see on SOBO.

Entirely a liquids pipeline business. He likes it because there's no growth, so there's very little you can do with it. Management has nothing to spend $$ on, so it'll return cash to shareholders. Yield is 7-8%, reasonably well-covered by cashflows, should grow to some extent.

He sold it early when it was spun out. SOBO owns the rights to Keystone, but they have the land back after Biden cancelled it.

Quality company that is very safe. Dividend is excellent with strong assets and management. Would recommend holding for yield oriented investors. 

Likes the oil patch broadly speaking, and it's fairly low risk.

Crude oil pipeline. Pipelines are generally more defensive in the energy patch. In future, if pipeline development is more welcome in Canada, that would benefit existing companies. Nothing wrong with this name, but she already owns ENB and PPL.

Grinding higher. Infrastructure companies will have opportunities as power demand in NA continues to be robust. There's also a rate-cut story at play. If we don't get a cut in September, markets could have a tantrum with some of the interest-rate sensitive names pulling back. That's a short-term dynamic.

Spun off from TRP, initially not well received. With time, market got behind it. Has done well. Bit volatile, but relatively strong since the spinoff. Likes it going forward. Perhaps it gets sold. If you hold it, collect the yield of 7%. That's your upside. Downside is more problems with the pipeline, and there have been many. He's happy to hold and see what happens.