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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (28136)9/19/2007 11:47:22 AM
From: E_K_S  Read Replies (1) of 78740
 
Paul, I nibbled at a starter position in AAV. This is for the IRA account as I am seeking income. First, I believe natural gas prices are low relative to the current price of oil. NG prices should move higher over time as large consumers switch from heating oil and coal to NG. Second, The benefits of Canadian NG when used for the production of domestic electricity are many. It's a much cleaner fuel, the distribution is less per KW than coal especially with the current and planned network of pipelines being built to deliver the fuel to many points in the US (west coast & mid-west) and finally it's a domestic source and not subject to many of the issues found in the middle east.

The kicker for me is that the income distribution is paid out in Canadian dollars each month and then converted into U.S. equivalent dollars. AAV provides a nice hedge against a falling dollar which I believe will loose up to 40% of its value over the next 3-4 years. My "Return of Capital" is paid back over time in Canadian dollars then converted back into lesser valued U.S. dollars.

This small investment works well for my IRA as it generates a monthly stream of income is nicely hedged against a falling U.S. dollar and owns NG resources that I feel are currently undervalued.

EKS
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