New-born Baby's Cans: Making Money in a Down Market

[buckhunter]

New-Born,

I'm posting on your thread just because we are fellow cheeseheads. I'm from Menomonie myself. Monroe and Menomonie seem to both have good high school football programs every year.

I haven't read through all of your posts, but you seem to know quite a bit about energy plays. What do you think of HDWR? I think it was a $$MM winner last year (or at least a Top 5 finalist). I have closed out four winning trades in HDWR since October. I bought again early this morning and it seems to be doing well. Any company that focuses on adding value to the junk left over in the bottom of a barrel of oil has to do well when that barrel approaches $60 per. HDWR seems to drop to its 50 DMA and then bounce about 10% before dropping back.

Just wondering if you (or anyone else) is still watching this one.

[New-born baby]

Hdwr

New-Born,

I'm posting on your thread just because we are fellow cheeseheads. I'm from Menomonie myself. Monroe and Menomonie seem to both have good high school football programs every year.

I haven't read through all of your posts, but you seem to know quite a bit about energy plays. What do you think of HDWR? I think it was a $$MM winner last year (or at least a Top 5 finalist). I have closed out four winning trades in HDWR since October. I bought again early this morning and it seems to be doing well. Any company that focuses on adding value to the junk left over in the bottom of a barrel of oil has to do well when that barrel approaches $60 per. HDWR seems to drop to its 50 DMA and then bounce about 10% before dropping back.

Just wondering if you (or anyone else) is still watching this one.

BuckHunter,

Yes, I follow it, but haven't invested any into it. I like the company and think it will do well. HDWR issued 6 million new shares about a month ago. At the time I was considering buying some HDWR but the announcement came, and I stayed away because I knew there would be some dilution of the price. Still a great company.

Any more info you want to throw on the board here? I am an oil man, and a dividend hunter.

[buckhunter]

New-born,

Excuse me if you've posted on the subject of "tankers" previously, but I haven't read all of the previous posts on this thread. I have TOPT which pays out a dependable dividend (currently 4.5% yield). Revenue & earnings are growing as well. It's a 2004 IPO with a heavy debt load, so that may scare most investors off.

I'm not sure if the technicians on this board like it at this price or not, but it seems like a good company from everything I've read about them. They were an "IBD New America" stock a few months ago.

Just my 2 cents worth.

[yaoyao]

AY.UN div

Newborn,

I got even on my AY-un.to purchase today. And got the Can$.16 div last month, which help me beat market this year. Another div this month will put me ahead with a bigger margin.

Thank you.

MickyMouse/Newborn,

When do you get your div each month for AY.UN? According to TSX, the payment should be made on 3/15, but it is still not in my account. Hey, I've been making money on it in this down market. Thanks, newborn.

[New-born baby]

Tomorrow

MickyMouse/Newborn,

When do you get your div each month for AY.UN? According to TSX, the payment should be made on 3/15, but it is still not in my account. Hey, I've been making money on it in this down market. Thanks, newborn.

YaoYao,

If you have Scottrade, you'll get paid tomorrow. They are slow. Checks leave Canada on 15th, but Scottrade usually posts to your account three days later.

Glad you are making $$$$. And the exchange rate has worked for you, too. You are in good shape. Glad things are working out for you.

Want free advice? Okay, I'll give it to you anyway. You could sell AY.UN on Marhc 28th in the a.m. (before 10 a.m. EST) and then she'll fall back about 3-4 divy worth. Could re-enter later.

[yaoyao]

Thanks, newborn. I'm with Scottrade too. I plan to hold FRO and AY.UN for a long term and enjoy divs. Thanks for your advice. I would've done that if I could buy/sell online.

[MickyMouse]

yaoyao,

I got mine yesterday @Ameritrade. I have some issues with Ameritrade, and think about transfer to IB or Scott. Earning money in a down market is what I was not able to do before. All thanks to Newborn!

Cheers
Micky

[MickyMouse]

You could sell AY.UN on Marhc 28th in the a.m. (before 10 a.m. EST) and then she'll fall back about 3-4 divy worth. Could re-enter later.

New-born,

Thanks for the FREE advice. I might just do that on 28th.

Cheers
Micky

[scifos]

Got some FRO today. Been watching the charts and I think I have figured out a way to trade it resonably well. Not a great entry point, but I didn't want to wait.

[yaoyao]

YaoYao,

If you have Scottrade, you'll get paid tomorrow. They are slow. Checks leave Canada on 15th, but Scottrade usually posts to your account three days later.

Glad you are making $$$$. And the exchange rate has worked for you, too. You are in good shape. Glad things are working out for you.

Want free advice? Okay, I'll give it to you anyway. You could sell AY.UN on Marhc 28th in the a.m. (before 10 a.m. EST) and then she'll fall back about 3-4 divy worth. Could re-enter later.

I got mine today, but with 15% deducted for foreign tax. Do I need to pay U.S tax again next year? It's a regular margin account. Thanks.

[New-born baby]

US Taxes

I got mine today, but with 15% deducted for foreign tax. Do I need to pay U.S tax again next year? It's a regular margin account. Thanks.

You'll only have to pay US tax if you made over $20,000 in Canroy dividends.

[Sabrina]

Three questions

New_born,

Thanks for this excellent thread. I have bought some PVX and ERF recently. Just to test the water. I got three questions after reading the posts here.

1) I read some posts on Yahoo and it seems that the ROC part of the distribution has to be removed from the cost of basis. So they are treated as the capital gain. We still have to pay tax for it. Just not dividend.

2) I am using Ameritrade as my non-IRA account broker. So I want to know if the non-IB account users could also take the advantage of the dollar weakness. For example, if I bought 100 shares ACNJF.PK on day 1 and the AEUN.TO is traded at 12CD on TSX at that time and the exchange rate is 120CD/100USD. My cost is $1000 less commission.
Then I sold them all on day 2 and assumed the AEUN.TO price is the same and the exchange rate is 100/100. The money I got should be $1200 less commission. So even the AEUN.TO price is unchanged, I got almost 20% gain because the dollar weakens. Please correct me if I miss something here.

3) How do you select the Canyols? I mean what is the most important thing you consider when you select them, the distribution yield, management team, reserves, debt, BOE/day, etc. I am now looking at several Canyols and plan to put some money in them. Have not decided which one is the best choice. The Cans that I am considering are PWI, PVX, PGH, PTF, ERF, TELOZ and the ones you mentioned before.

Sorry I asked so many questions.

[New-born baby]

Three answers

Sabrina,

You are not the little witch I've heard about, are you? [If you don't understand that joke, ask me].

1. ROC: when you sell your shares, if you take a loss, the ROC is a cushion that removes tax from the distribution you have already received. If you sell shares at a profit, then you would have to pay tax on ROC.

2. If that is how it works on Ameritrade, GREAT. I am not sure since I have never had an Ameritrade account.

3. I select Cans based on all the things you mentioned. I do not like PVX, PWI, PGH, ERF or TELOZ myself. If you make money off of them, who am I to complain? But all of them that you mentioned offer lower divys, have less RLI (Reserve Life Index), and generally don't offer much upside. What you want, Sabrina, is to buy a Can that pays a certain amount of divy, and then have that same Can "raise the divy." The result is that your share price increases dramatically, and you really have a deal then. For instance: I bought PMT.UN at 8.28 USD when it paid a divy of .16 CD. Then PMT raised the divy first to .18, then .20, and now .22. The Unit price is now $14.53 USD! Nice capital gain. AND, (and I mean: ANNNNNDDDDD!!!)= this:

.22 CD divy is .183 USD per month X 12 months =$2.196

$2.196 Divided by $8.28=26.52% dividend per year.

See?

THAT'S why PVX, PGH, PWI, and all those you named mean little to me.

BUY: VKR.UN NVG.UN AY.UN AE.UN BTE.UN PMT.UN

In my opinion (i.e. I don't know anything) these offer a better upside.

Adios, amiga.

[Sabrina]

Re: Three answers

New_born,

Thanks a lot for replying my questions today. I am anxious waiting for it.

For the Ameritrade account one, I am not sure. I will call the customer service to confirm it. I will let you know when I get the answer.

Could you please explain the RLI a little bit more? I also want know more of your opinion on the two Cans I have bought (PVX & ERF). I did little homework on them. What is the reason you think they do not have the potential to increase the dividends?

I wish I was the girl knowing all the magical tricks. Then I don't need to do my DD anymore. I like the Sabrina who is the chauffeur's daughter.

[New-born baby]

Rli

New_born,

Thanks a lot for replying my questions today. I am anxious waiting for it.

For the Ameritrade account one, I am not sure. I will call the customer service to confirm it. I will let you know when I get the answer.

Could you please explain the RLI a little bit more? I also want know more of your opinion on the two Cans I have bought (PVX & ERF). I did little homework on them. What is the reason you think they do not have the potential to increase the dividends?

I wish I was the girl knowing all the magical tricks. Then I don't need to do my DD anymore. I like the Sabrina who is the chauffeur's daughter.

Sabrina,

RLI is "Reserve Life Index." It measures how long the company can run pumping at current production before they pump themselves dry. For some Cans, they have a 40 year RLI. Others, 3.2 years. Are you buying a Can that is using up its oil faster than they can drill it? Do they have access to land that has oil under it? etc.

However, RLI can be deceiving, too. For instance, it costs money and time to prove reserves. Time is important in Northern Canada, where the temperature only allows for drilling 3-4 months per year. And money is important, too, because money spent proving reserves could have better been spent drilling for production. And provable reserves affects taxation, too. If the company has a lower RLI, ROC is greater. And vise versa.

The research I did on PVX was from last April, and its health is one of the worst of all the Cans. I personally do not want it. Much better plays out there. Can you tell me why you want a Can paying 8% (or whatever it is now) instead of one paying 17%? And PVX is in no shape to raise the divy.

Baytex has $2 of oil in the ground for every $1 of investment. Now that looks better to me than PVX.

Again, I am a know nothing. Make your own decisions. God bless you,