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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks
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To: Lorne Larson who wrote (3424)6/12/2002 4:33:41 PM
From: Peter W. Panchyshyn  Read Replies (1) of 11633
 
Unfortunately many of the trusts were buying way too high last year.

------- Some very good points you brought up in your post. The one problem is that many of these trusts don't have your crystal ball and 20/20 hindsight. They have to conduct their buisness and their buisness plan well in advance of changes in commodity prices. Not after the fact. If a trust wants to grow it needs to increase production. It needs to find that source of production regardless of what prices are now. And it is competeing for these with others including other trusts. They have to "best guess" as to what prices will be. If they are in for the long term which many are. They will average out their worse guesses with a number of instruments which yes include hedging. But also some others. Check some annual reports for the other examples. And also with better guesses of the past or in the future. The probably worse thing a trust could do is hold back waiting and waiting and waiting just because it might pay a little too much. It may wait a very long time and miss an opportunity because they got it wrong and missed their chance. A trust doing that would not survive too long -----------

The PWI/Cypress deal is the prime example, although PWI covered their risk a bit by immediately hedging a large part of their production. AVN and PVE, on the other hand, appear to have delayed major acquisitions until prices dropped.
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