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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: russet who wrote (1621)	10/12/2001 2:06:23 PM
From: stan_hughes	Read Replies (4) \| Respond to of 11633

russett - FWIW, CIBC put out a sell on PWI in early July up around $10, nice call on their part. You surprise me when you say they are still selling - that can't be good. You may already know this, but the institutional darling right now is AET. Not sure I agree with them, but that's why the price has held up so much better than the others, despite an inferior yield. Peters has had PWI on 'reduce' (a strong word in the brokerage biz) for about the same length of time, and originally gave it a target price of $7, which was already met. I believe Canaccord also formally recommended avoidance of the units. Unfortunately, none of the foregoing data sets are publically available online to my knowledge, so I can't post links. I haven't seen anything new on PWI for a while, but I have the older Peters table here in front of me as I write. Their 'reduce' recommendation at the time was based on much higher commodity prices. Granted that it's only one analyst's set of numbers, but trusts are a lot simpler to analyse compared to E&Ps. Peters laid out a serious of hypothetical commodity price regimes and production decline rates based upon their familiarity with PWI's properties. They projected out a matrix of future sustainable payout rates, from a high of $1.23 to a potential low of $0.79 annually. The range for the price of the units under those scenarios was from $5.24 to $8.19. As I said before, the table I'm looking at used $20 WTI and $4.33 AECO NG to generate the forecast - oil has performed a bit better than that, but gas prices have been and are much worse, and PWI is gas-oriented. Therefore, one would have to assume that Peters is even less enthusiastic now, although I haven't had occasion to ask. You can choose to ignore the foregoing if you want. I'm just passing on information, and also hoping the board understands that my criticisms are not all homegrown, nor are they simply idle bashing. If oil and gas prices recover strongly soon and stay there, current trust longs will do okay, maybe even look like geniuses. My personal belief is that there are painful, as yet unannounced distribution reductions waiting in the cards that will ultimately lead to selloffs in a number of trusts. I expect that to coincide more or less with the cycle bottom, and that's when I plan to buy them. Some people prefer the long term view with these things, and that's fine for them. My preference is to try to get them as cheap as possible just like any other stock. Maybe I've already missed the bottom or maybe I haven't, but that's my strategy FWIW One thing that the trusts definitely have in their favor at the moment is the lack of alternative forms of fixed income investment. Interest rates suck. I suspect that's part of what's supporting their prices these days, over and above the recent firming in energy prices. It might also result in the units not going as low as they otherwise might have, once the distribution reductions become visible.

To: russet who wrote (1621)	10/13/2001 10:50:03 AM
From: Lorne Larson	Read Replies (3) \| Respond to of 11633

russett: Regarding hedging, have a look at the hedging Advantage has put in place: advantageincome.com Don't know much about this trust. Never owned it. Anyone have any thoughts? On PWI, their press release of Sep 20, which set out their hedging program had an interesting comment, which no one seems to have picked up on. The release indicated their hedging position up to June 30/02. However the release also states that they have "recently entered into a number of additional commodity risk contracts to provide for greater commodity price certainty and downside protection over the next 24 months". 24 months would take them to Oct/03. Interesting.