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

[billyjoe]

Webs,
So the truth comes out. You're really Ozzie. Welcome ,we aren't judgemental here.
billyjoe

[New-born baby]

Maggots need not apply

Webs, (Or whatever your name is)

Can you get that long-haired maggot off of my thread? It makes my stomach hurt.

BillyJoe,

What do you mean "we are not judgmental here?" I thought all rednecks were judgmental.

"Redneck" Newborn Baby

[Websman]

You guys may see a bunch of avatars before I'm done...I'm experimenting...LOL

[billyjoe]

Webs,
So you have MPD multiple personality disorder, you're still welcome but maybe not on New-borns site.
billyjoe

[Websman]

Webs,
So you have MPD multiple personality disorder, you're still welcome but maybe not on New-borns site.
billyjoe

How bout Sylvestor Stallone...He's not such a bad guy.

[New-born baby]

Webs Stallone

Rocky,

No wonder you were considering Ameritrade: you are punch drunk.

Stallone is ugly but not as ugly as. . .as. . . as. . . that maggot.

[df21084]

Forbes Article

New-born,

What's your take on this Forbes article? They're not too keen on either AE.UN or AY.UN. What's your take on their recommendations?

http://www.forbes.com/free_forbes/2005/0110/058.html

Thanks.

Dave

[df21084]

... or are they contracdicting themselves?

http://www.forbes.com/investmentnewsletters/2004/12/06/cz_rl_1206soapbox.html

[New-born baby]

Can't read

DFXXXXX

Sorry, the link you posted wanted me to pay $20 to read it, and I am too cheap to pay. But here's my worthless opinion anyway:

There are always nay-sayers for everything. Forbes doesn't like the Cans? You'll have to decide for yourself if you like them. Consider these facts and see what you think:

AE.UN
1. AE.UN is 75% tax-free on a 14% dividend per year. Do you like that?
2. AE.UN only pays out 50% of its income so that if the natural gas price drops, it can continue to pay the dividend of .1625 per month. Do you think that is a good policy?
3. AE earned a return of 37% this year for its investors (divys + capital gains)
Do you like that?
4. If the unit price drops to, say $12 from $14, the .1625 divy covers your loss--even if the stock doesn't recover--in one year. Do you like that?
5. 75% of all new homes use natural gas, and yet U.S. natural gas production is falling. We will have to buy it, and it has to travel in pipelines. We cannot buy it from Russia, Saudi Arabia, Nigeria. But Canada is close to the US and pipelines already exist. We do buy from Canada and the Cans. Demand for Can gas is only going to increase. Do you like that?

My point: if Forbes doesn't like them, that is fine with me. From my vantage point, it is an easy 14%+ return, and in unstable markets where people are not safe leaving their money invested overnight, well, I like the Cans.

AY.UN
They bought an exploration and drilling company and do not hire out this work. Last year I think they drilled a total of 203 wells and struck oil 203 times: 100% success rate. OUTSTANDING. Do you like that?

Furthermore, that 16.4% dividend is a real nice check to get every month. You would like that.

AY is drilling Coal Bed Methane gas wells. A regular NGas well lasts 5-7 years; coal bed methane wells last 25-30 years. They are building up the company to have reserves for the next 30 years. You have a chance to invest in a company that should be strong for the rest of your investing life. Do you like that?

My conclusion: you will not triple your money in a hot market with a Can. But no one is tripling their money in the US market right now. But a Can is a safe place to invest in a down or unstable market (such as we now have on our hands).

[df21084]

$20 -- what a ripoff

Sorry New-born,

I didn't have to pay anything to read these. In a nutshell, the first Forbes article seems to believe that Acclaim has only 7 years of reserves left, and that APF only has 5 years of reserves left. Forbes prefers 9+ years of reserves.

They also didn't like NAV Energy Trust, Pengrowth Energy Trust, and Provident Energy Trust for the same reasons.

They gave the thumbs up to Arc Energy Trust (10.6%), Bonavista Energy Trust (12.4%), Bonterra Energy Income Trust (10%), and Canadian Oil Sands Trust (a lousy 3.2%).

I think 7 years of reserves is okay, especially when considering that CanRoys can replace exhausted reserves with new ones (US royalty trusts can't). I find it hard to believe that Acclaim and APF wouldn't find new reserves when that's the only reason they exist.

One author sees CanRoys as undervalued and not dependent on $50 oil to support the current dividends. The other author is cautious because of the limited years that some of these CanRoys have as reserve.

Personally, I like APF and Acclaim. I don't see their reserves drying up.

[New-born baby]

Can reserves

DFxxxxx,

Reserves ARE an issue, but not like those authors think. . . .

You see, the Taxable amount is determined by reserve life. The more the trust replaces the expended oil/gas, the higher the taxes. The less they prove that they have, lower taxes. PMT.UN, of instance, has a lot of unproven reserves. It costs to drill to prove you have the gas, and then you have to pay taxes on that knowledge. PMT just drills for gas and does not prove the ground first, saving money (for experimental holes in the ground)and taxes. It pays a 15% divy. On the other hand, PEYTO, which these authors love, pays a lousy 3.2% divy on 30 years proven reserves. Me, I like to make 15% better than 3.2%. And taxes on PMT are less . .. .

Another consideration is that the weather up north is so severe that the Trusts cannot drill year around. Would you rather spend time and money proving reserves and raising taxes, or profitably drilling for production, and save money and time and taxes?

I really don't think many who write about the Cans are all that knowledgable about them. Raymond James is pretty good. But a lot of US writers are pretty unsatisfactory.

If you go to Oil Patch Updates, you can read about how much the Cans appreciated this year.

Best investing to you.

[MickyMouse]

New-born: 15% tax withholding

"The 15% Canadian withholding can be removed for tax-sheltered accounts by notice to the paying agent or, alternatively, by a refund request to the Canadian government."

This is from one of the forbes articles above.

You may have some experinece, would you mind comment on?

Thx

Micky
________
Yamaha FZR400

[New-born baby]

Ira

Mick--

If you open an IRA account and put a Can in there, then the 15% withholding is not taken out. It has been tax-free up to Dec 31,2004. There has been talk that the Canadian gov't may no longer recognize the IRA deduction, but the vote was tabled until 6 January 2005, and after that, I have heard nothing. So it may yet be tax-free, but those liberals are always tax-farming, so it may not remain that way.

[MickyMouse]

new-born

Thx a lot. I will be watching.

Micky
________
KD100

[New-born baby]

Can-ners:More MONEY

Can-ners,

After close yesterday, PMT.UN (Paramount Energy Trust) announced it is raising the dividend from .20 per month to .22 starting with the January 27 ex-date dividend, to be paid on Feb 15. I suspect the unit price of PMT move up from $16.90 to $17.60+ CD today. PMT now pays $2.64 dividends per year.

You may also have noted that others Cans moved upwards yesterday. Yes the price of oil was up, but we are getting closer to the ex-dates. AY was 11.99 for awhile yesterday, but closed at 11.93 I think. Earlier in the month it was 11.60. It usually does this every month. AY pays .16 per month dividend. It is possible to capture double dividends each month IF you have Interactive Brokers.