Energyplay, Everyone I spoke to in HK in the past few days about the royalty trusts, money manager and investors alike, had eyes glazed over, looking as a donut would, and reacted 'how interesting' and left the subject as we started, with no curiosity, no impetus to study, and no urgency to investigate.
So, keeping true to my standard 'lonely path is right way', I have sold a substantial amount of my previously high yielding (on cost) Asian USD denominated bonds/funds, converted the proceeds to CAD, and will be deploying the troops to take the energy fields of Canada. The Asian USD bonds have risen much and now the yields are no longer commensurate with the risk, especially relative to the energy trusts in question.
My take on the construct : About the trusts, I like the yields, the commodity and energy aspects of the underlying business, the simplicity of the construct, and the implicit but not appreciated (valued) call option on the volatile value of the untapped reserves.
My plan: I will buy very quickly to a point and stop at that point at which I am willing to do a double of allocation should the price of the trusts fall. I will embrace 9 names to start and later may back down to 6 or 7 as I gain imagined familiarity or false confidence;0)
This stuff may be dangerous if I achieve initial success, because the urge to borrow Japanese Yen to buy Canadian energy is strong.
Imagine, a construct where I get to use cheap and worth-less-and-less Japanese paper to buy high yielding Canadian energy that are supplied to American J6P whose currency is propped up by the Japanese Sake-4-bottles, so that J6P can leverage his balance sheet and buy more stuff from Wang-3-cups factories also financed by Sake-4-bottles' fiat money, but in equity form of contribution.
Sweet.
Chugs, Jay |
