Hi Bill,
That sounds like a creative move. Jeez, I don't know if I'm the best person to ask.
Suncor is certainly an attractive stock as far as American investors are concerned and the exposure to the oilsands is virtually unrivalled. It can be more volatile than ERF, though.
Since you didn't state your objectives I can only assume, from what you wrote, it was:
1. Same level of stable distribution
2. Exposure to Canadian oil
3. Opportunity for capital gain
4. Low risk
5. Rotate out of a trust with high non-resident ownership
The only thing I would say is that I find Suncor to be a bit expensive. CNQ has the lowest BOE cost of the Canadian majors and TLM and ECA are lower than SU. I am not sure they wouldn't outperform on a fundamentals basis, although I know SU is more popular.
Also, Tommaso did some nice work on OST_U.TO, and since with ABF you're still buying a trust, if you are thinking future upside, I'm not sure OST_U.TO might give you some good upside to the oil sands and future yield plus capital gain.
I am wondering why you chose APF? I know they've been beaten down and have a nice chance to appreciate and have a yield that likely isn't going away, but do you like that much exposure to hydro?
From their newsroom:
The implementation of the Fund’s diversification strategy has resulted in improved cash flow notwithstanding the widespread challenging hydrologic conditions faced during the quarter
algonquinpower.com
Is there a chance that distribution will be challenged int the future? I do like their mix of generating facilities, though and they do have USD income from US operations which will help smooth out exchange rate issue. Aren't there other stable trusts with a good yield you might like to mix in with APF? May I ask why you eliminated CLE_U.TO or COU_U.TO?
Did you do this based on DBRS ratings?
investcom.com
Is there any particular reason you would like to put the non-trust piece into SU? Are you planning on selling covered calls. If so, I understand you can't do that with CNQ but you can with TLM, ECA. ECA still looks to me to be good value at this point as it has not participated as much in the current runup-so far.
If it were I, I'd at least have some CNQ.
Regards,
David |
