I have just been re-reading the Oil Sands Split prospectus, and remain comfortable with owning it.
No investment is a sure thing, but with the Chinese taking an interest in the Syncrude project, and with United States investors buying heavily into COS.UN itself (as well as big Canadian investors, including Newmont's 8 percent or so holding), there seems to be a lot of confidence that the project is going to be a long term winner.
The cash position of COS.UN is solid, but would be much better if they only had not hedged a lot of production. The management of the trust is understandably interested in guaranteeing its perpetuation, but has sacrificed enormous profits to do so.
The Chinese might well wish to buy out the entire project, as they have recently tried to buy Noranda, but national security of Canada, not to speak of much U. S. interest, would surely prevent this.
In any case, OST.UN clearly is designed to maximize, through leverage, participation in the tar sands project. The offering fee was outrageous (10% of the cost of the shares) but the continuing management fee is --as best I can tell--very low, as it well should be, since an office with one or two people in it should be sufficient to take care of the business of this largely passive operation. |
