Lyle Stein Vermilion Energy Inc VET-T BUY Feb 07, 2025

Too much noise. A tax-loss candidate. Don't buy. The warm winter meant weak heating demand. Also, their assets are too scattered, lacking focus, while the dividend isn't attractive enough. Some flagship assets will decline. It's a value trap.

Sell it. Value trap. Too many assets, not enough geographical concentration. The free cashflow yield that everyone's fallen in love with rolls off significantly in 2 years.

Looking at 2026, they're almost negative free cashflow because they're benefiting from European gas hedges that are about to roll off.

Too geographically exposed. Inventory light. Hedge on gas about to expire. Not a good option for investors. 

Owns shares, and has suffered share price depreciation. Europe pricing very hard on business. Company is going to have to re-evaluate Europe assets. Better options in the energy sector for investors. 

Lately they've had success in exploration in Germany, but near-term capex to exploit that is questionable. Are hard hit, now trading at half their book value. Are paying a near-6% dividend. He's held on. He may use VET as a source of funds, but otherwise won't sell it.

If you own, sell it and buy names like WCP, which pays a higher dividend.  VET's bases are scattered around the world. VET poorly executes.

It went international, at least partially, but there is lots of opportunity in Canada. Also international valuations are lower. Return on Capital is lower than what he looks at. He would consider Logan instead.

Canadian gas is where it's at. Interesting angle with this name is that they have gas in Europe -- Ireland, Germany -- and the market's not fully reflecting these assets in the price. Well managed, good tradition of being shareholder friendly via dividends, buybacks, and managing debt well. Underappreciated. 

In this market, he doesn't want to chase highs. He's looking for stocks that haven't moved yet because the market is overlooking them. Yield is 4.78%.