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Strategies & Market Trends : Value Investing

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To: gcrispin who wrote (57948)	9/7/2016 10:57:19 PM
From: E_K_S	2 Recommendations Recommended By gcrispin Grommit of 78705

Veresen Inc. (FCGYF) - 7.5% yield Spectra Energy Corp. (SE) - 4.5% yield I too own SE and have a low cost basis. They are/were my top 2015/2016 best idea for income and growth. I was attracted to SE as a Corp C company not an MLP. They focused on NG which I continue to think will be the clean fuel especially for power plants that are/will be converting from coal. The kicker for me was their exposure of pipe on the East Coast and potential for expansion into Mexico and eventually the West Coast. For me it was all about exporting the LNG and getting that LNG from the U.S. wells to these U.S. export facility terminals. W/ doubt on the development of the Keystone pipeline, an Enbridge/SE combination helps expand their delivery footprint w/o the Keystone pipeline. I also have been building my investment in Veresen, another pipeline company located in Canada and a 10% monthly div payer. Veresen just announced they are looking for a buyer of their Power Generation Segment (generates about 18% of their Revenues). Veresen is the missing link for SE/Enbridge to get LNG to the West Coast if they can get their Jordan Cove LNG facility approved. This is the Veresen footprint and is now well capitalized w/ all the proceeds from their Power Generation Division going to reduce debt, and finance future Capx (through 2019). I think Veresen would make the perfect complement to the SE/ENB combination and w/ only a $4Bln market cap it provides the last link to get all that NG to the West Coast (if Jordan Cove is approved). The Prince Rupert export LNG facility just announced their closure do to Shell and/BP terminating their plans to develop. It was a money loser so the only West Coast LNG facility possibilities are in the Gulf of Mexico (SE has exposure there) and Jordan Cove in Oregon (currently delayed on appeal for approval). It's all about the total footprint for the pipelines, the midstream processing/storage assets and future expansion to the LNG export terminals. Long term LNG delivery contracts (usually over 10 years) can be obtained from Europe & Asia that will drive the demand/capacity of the pipeline. It's the best FCF model that I see now in this market and both SE and FCGYF have historically paid dividends to shareholders for many years even-though they are smaller players but own valuable assets in prime areas. FCGYF is one of my largest holdings in the IRA & ROTH and they pay monthly. Unfortunately all my SE is in the taxable account but that is all qualified dividend income (and at a very low cost basis). If you just look at the footprint coverage and where the NG and oil is produced, these pipelines provide the most cost effective way to move that product w/i the U.S. and Canada and eventually to Asia and Europe. The value Buyers were buying these companies earlier this years and for FCGYF, I think shares can still move 60% higher. FWIW, I own FCGYF shares at $6.00/share and at $15.00/share. The story is still a good one. Here is a comparison chart of FCGYF vs SE VS ENB 2010 through 2016. Good Investing EKS

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