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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Tommaso who wrote (53613)9/23/2004 7:42:37 PM
From: Taikun   of 74559
 
I am trying to understand this one. I think you have more experience with Splits so perhaps you can help.

Is the assumed higher dividend payout predicated on the Preferreds being called? (assuming COS has the cashflow they'd do so-but until Stage 3 is fully funded and operational I wouldn't want to bet) If they do not call the Preferreds might the yield be stuck at 1.7%.

If McDep is right about COS being 60% undervalued (probably a bit less now with the price runup) then OST is 120% undervalued. If COS announced more cost overruns the OSTs would selloff faster.

I think 2010 (the split termination date) is plenty of time to get the upside on this. I read that in 05 COS's oil hedges come off.

Unlike other CRTs, I think this is a bit more difficult to predict dividend increases on since so much is predicated on the decisions of their management on the Preferreds. If they continue to have financial hiccups as in March 04 they may not call the Preferreds for awhile.

I think the capital gain is quite certain, the question is when and how much, and how much the dividend is over that time. The again, you could also get high leverage on the oil sands' stock prices by continuing to roll over Suncor and CNQ Calls (for Canadians) every 3-6 months.
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