TC Energy (TRP.TO)

(A Top Pick Dec 20/13. Up 13.14%.) Doesn’t think Keystone matters anymore. If it happens, that will be gravy. What is more important is the pipeline that they finish building between Oklahoma and the Texas coast. Pipelines are a monopoly. No one is building them any more and there are a lot of restrictions.

His problem with this is its valuation. Trading around 23 or 24 times earnings. Looks like it has some earnings growth built in at about 5% and some dividend growth which is good, but the valuation just astounds him. They still need a lot of capital.

Thinks this is fully valued. There are a couple of hedge funds running around trying to agitate for some change and do some financial engineering by spinning off some of the assets into some MLPs, juice up the yield, borrow some money and sell it to investors so the hedge fund can make a bunch of money. If this sold some of its power assets, that would be a positive. Very interest-rate sensitive.

(A Top Pick Dec 20/13. Up 20.83%.) Has been adding to his holdings in the last week, just on speculation of the Keystone project.

A republican senate is positive for TRP-T, but there are plenty of home grown opportunities. Keystone would be an added benefit.

Thought this one got a little bit overdone on the news flow that they would be able to split the company. He owns it and likes it. It is a great company, but he would prefer Enbridge (ENB-T).

Keystone XL does not matter anymore. Growth of the company will happen inside Canada. They may spin out their power generating assets and release value. This is a dividend grower.

Pipelines are massively overvalued and could remain so for quite some time. He has a fundamental value for this one at $38.94, a negative 28%.

If you are going to own pipelines for a long period of time, he would give the edge to Enbridge (ENB-T). This company has had a correction, but what has been holding them up is the worry about the XL pipeline. Over the next several years, he sees their cash flow going up to the $6 range, so he feels you are paying a fair price for it today, but it is not a bargain.

Prefers ENB-T as TRP-T is more fully valued. He would take money off the table, but you can’t go wrong owning this.

Owned for some time. There has been some punchiness based on activism south of the boarder, Does not think that is well founded and was trimming his position when it was high. His is now holding. Fundamentals of the company are quite good, however.

(Top Pick Nov 21/13, Up 26.49%) It is rumoured that there are activist investors that have taken a position in the company. It could be broken into the power and pipeline parts of the company.

Stays away from the larger pipelines. They have keystone XL which is going on 6 years trying to get approval. They may reverse a pipeline to sell oil on the East coast. She does not think it will be broken up, nor taken over. There are certain assets the government may see as crown jewels and so block a takeover. She would prefer a KEY-T, which could get taken out.

You have a proliferation of pipelines and they will do well.

This is a real core holding, not only for its pipelines, but also its power generation. There was some speculation last week that activists were looking at this as an under performer and they could break it into pieces. He thinks this is a company that the Canadian government would protect and would not let it get taken over.