TOP PICK
Buy Cdn$ versus US$. Bullish the Cdn$ which has traded in a $0.90-$1 range in the last year. With current oil price, Cdn$ should be at $1.035. He’s been Buying below $0.955 and Selling above $0.985. Be cautious of timing as it is currently about par and could easily go back to $0.95 on a global crisis. (This will happen over the next couple of months.)
TOP PICK
6.11% bond due Aug/25/40 with a Short of equal term of Gov’t CDN bond. Cheap.
TOP PICK
4.72% bond due Sept 26/11. 4-month bond that will preserve your capital when interest rates blow out. You’ll still have your money and you’ll have a better idea of what is happening in bond yields.
DON'T BUY
Bond funds? Wouldn’t go this route. With interest rates going higher, it will lose you money.
COMMENT
30-year bond. Good company and well managed. A bit higher yield than most plays. He owns it as a Short against a 30-year Government of Canada bond interest rate as a hedge.
HOLD
7.5% bond due August 2019. Good company and decent spread. Likes the bond but recently sold his holdings because it has come in such a long way in terms of credit narrowing.
SELL
May 2029 strip bond. Good company and great management but a strip bond is basically a leveraged play on interest rates. You want to own Strips when rates are high, not when they are low, as is the case now.
COMMENT
“Backup in Yield” phrase. What does it mean? Means bond yields are increasing. Today bond yields are backing up and everyone is worried about it so you so you don’t want to be long interest rates.
DON'T BUY
5.75% bond due march 2017. Great company and great management team. Likes longer dated Shaw paper rather than shorter dated so consider the 2039 bonds. However he would also Short a 30-year Government of Canada bond interest rate as a hedge.
TOP PICK
A departure for him because it is gassy but is very liquids rich with gas liquids coming out of their production. Have 5 gas plants throughout the deep basin. Will probably grow production by 35% next year. About to convert to a Corp which could become more attractive to common stock investors. 4% yield.
TOP PICK
A play on north-south traffic, Canada, US and Mexico. Commodities moving include automotive, coal and agriculture. Also have a big inter-modal business. Traffic between the US and Mexico could double next year.
TOP PICK
Dominant player in mining, oil and gas. Dominant player in international markets. Very strong growth and price performance.
COMMENT
Oil service is a very strong theme in the market, more on the land base rather than deep water drilling. This company has a major market share in every major market they play in globally. Headline risk over hanging it that he doesn’t care for. Prefers Weatherford (WFT-N).
DON'T BUY
Doesn’t want anything with a potential big problem.
COMMENT
In oils likes mid-cap exploration/production companies as well as international intermediate companies that are doing some elephant hunting. Interesting that trusts converting to Corps are largely under owned by institutions. Yields are very attractive so dynamics are better than in the large integrated oil companies. (Likes Gran Tierra (GTE-T) and Baytex (BTE.UN-T).)(See Top Picks.).