Argent Energy Trust (AET.UN-T)

There are a lot of better places to put your money. Have had a lot of trouble in the past, which is not going away, because they are having difficulty with asset sales. It got to a point where they had way too much debt and had to do a big write off of their assets. Their CapX is actually smaller than their interest payments.

This along with Eagle Energy Trust (EGL.UN-T) and Parallel Energy Trust (PLT.UN-T) are Canadian trusts that have operations in the US, mostly in Texas. This one and Parallel had big stumbles lately which pulled down Eagle a little. People are concerned a little bit about the dividends in all 3 cases. Yield of 8.5%.

Well results never did hit what they expected. To say there is value in this name is hard. A different operator may well produce better well results.

Lots of turnover at the top. They have not performed well and tacked a lot of debt onto the balance sheet. There were concerns when the reserves came out and they cut the dividend. Thinks they will get acquired.

When stocks are cheap in this sector, they are cheap for a reason. This one he has been very cautious on. The leverage is far too high. You might get a bit of a bounce.

If you take out DRIP payments, a 77% cut in the yield will not solve their problems. Announced they are going to cut their CapX by about 20%. They really have to start selling some assets.

This is one of the most recent poster childs for the kind of financial engineering that gets sold to investors. It paid out a dividend it could not afford for far too long. They could not keep the game going because they could not find new things to buy to get financing to keep the scheme going. Don’t even count on it being taken over.

He looked at it in the past. Management is being very cautious with this cut in the dividend. The fall in share price still makes it an attractive dividend. Wait a few days at least.

Not sure what is going on with this company. Yield of almost 24% which doesn’t look sustainable. If they have to cut the dividend, the stock will probably go up. Be careful.

If the stock stays flat here and you clip an 18% yield, which is not a bad return. The risk is that eventually they may have to cut the dividend. Pretty hard for them to raise equity here to do more acquisitions or finance growth for issuing equity with an 18% yield. Have gotten themselves into a bit of a corner here with some poor operational results and packed on too much debt. $5 is probably the right price for the stock but your 18% yield could become 10% pretty quickly if they decide to cut it later this year. There are lots of companies out there that give you that same total return potential of 15%-20% without the risk of a dividend cut. These would be names such as Whitecap (WCP-T), Torc (TOG-T), Crescent Point (CPG-T), Twin Butte (TBE-T), Peyto (PEY-T) and ARC (ARX-T), which can give you 15% total return without a potential dividend cut.

Saw big selling in the last week or so. There are only a few trusts that have their assets in the US, but are listed up here. He is beginning to consider re-adding this to more aggressive accounts.

Many hedge funds have been actively shorting this stock. He thinks most of this shorting has dissipated. The NAV is above $7 so it should not be trading down here. We are going to see insiders move out of a black-out period (a week) and he expects them to be buyers then. Assets are oil based. Prospects for oil are that prices will continue to be firm. 2/3rds of their production is hedged at $90 anyway.

A cross-border trust that was set up because they can take advantage of the SIFT rules. Baytex’s (BTE-T) acquisition of the Australian company, that has assets around their properties in Texas, will be an advantage. The value that Baytex is paying sheds some light on the assets that this company has in the same play. Expect the dividend is probably safe but he is not that close to the company. Dividend of 14.5%.

(Market Call Minute.) Wouldn’t own this stock because of leverage. Their drill results have been pretty good but the balance sheet is too stretched for him.

Head office is in Calgary but properties are in the US. He prefers doing this through US run companies. This company sold off recently as they stubbed their toe on a well, which hurt their operational momentum. Management has been telling investors that the 13% dividend is safe. He would prefer other yield names such as Crescent Point (CPG-T) or Enerplus (ERF-T).