Crescent Point Energy Corp

CPG-T

CPG-T has gone through a rough spell. Despite higher oil prices, they have not recovered to the same degree. He blames their last acquisition as it forced them to cut the dividend. They are no longer the glamour stock. They have to "show me" before he gets back in. He would pursue the bigger more liquid names first.

They should be cautious before raising the dividend. There is a lot going on in the oil patch in Canada. It consolidated and then there was a downturn and it is still in a consolidation phase. May 9 is the end of the seasonal period for it so there will be more consolidation for the sector at this point. There is nothing wrong with it but he would wait on it.

The company has revamped, but the market hasn't responded. Is it a takeover target? Their payout used to be over 100% and issued more and more equity. That model is gone, and it's now much more sustainable. They have solid assets in the Prairies. When Canada changes governments and foreign capital buys Canadian energy stocks again, then CPG will definitely be a takeover target.

ATH-T is a prior top pick that he sold about a month ago to buy CPG-T (who has been buying back shares on free cash-flow). He has concerns over ATH-T liquidity in the market and he held heavy oil exposure in other bigger names. ATH-T has done well to deleverage their balance sheet.

He has been critical of them in the past, but it is a new story. The new managment team understands the opportunity when their company trades below book value. They are trading at 26% yield of free cash flow. They should hold production flat, harvest the cash and buy back shares. They have infrastructure and production to monetize and buy back shares. Yield 0.76%. (Analysts’ price target is $7.03)

He's researched this a lot. He's disappointed with all its write-offs and he's very negative about this. The market still doesn't like some things on its balance sheet. This isn't ready to return to highs yet--but he'll keep his eye on it.

Why do they have to sell assets? Debt is 65% debt to equity. Cut the dividend. Want to pay down debt by about 1B. In the doghouse right now. Leadership is a question mark, as well as what's a core asset. It's had a bounce, up about 50%. Fabulous recovery. Stocks will cool off in Q2, but will come back in Q4. Dips are windows to buy. Numbers are cheap based on cash flow, but the problem is the debt. May be of interest if it gets below $4.50.

He's owned this in the past and likes the management. He likes the changes they are making. But with a 1% dividend, you're looking at only equity growth. Now is a good entry point, but he wants to see light at the end of the energy tunnel--which he doesn't see first. He has a $7 buy on this as a speculative buy. He likes it.

She owns little Canadian oil in general. The past week oil stocks have recovered to reflect WCS prices rise. Some money has flowed back. She hasn't committed more money in this space yet. Wants to see what global oil will do for the balance of 2019.

It's been in a long downtrend. Since February though it's been upward. He sees anupside target of $6. If it breaks that, then he targets $10. It looks constructive here with possibly higher highs and higher lows.. Though it's not a sector leader, it looks positive.

He bought in back in February around $4.

They had a dividend that got reduced. Income investors sold and sent it down. They have 65% debt. They need to sell about $20k in assets. They are doing an issue of more stock. The stock has retreated since. He owns it and thinks it is cheap. They should have sold their crown jewels to get back on track.

Obviously, it's a tough sector that's fallen at least 50%. CPG should be worth more than what it's trading at. CPG is starting to do a better job and no longer issuing shares. Rather, they're buying back shares. Until this sector takes off, CPG won't make a huge move either. He doesn't think the oil space will change much in the near future.

A market darling for a few years. When things went difficult in the oil patch they didn't react fast enough. They are still a big oil producer. There is a lot of uncertainty in that regard. A $100 oil seems to be a far away dream now. Stable but what is the catalyst for this to go higher? He doesn't know.

He once owned it. They were good at growing assets and production, but they issued a lot of equity to do this. When oil prices rolled over, CPG got hurt; their debt levels went through the roof and got into a bind. New management is selling assets and cutting the dividend to deal with this problem. It'll be a struggle for them for a while. They have more assets they can sell, but buyers think they can get them cheaper.