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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (53674)	9/25/2004 1:37:01 PM
From: Taikun	Read Replies (2) \| Respond to of 74559

OK. Kill the market could be drastic, but it could kill-or at least temper- the current run. I agree with your observations. Sometmes ADRs trade at a premium (I can think of Indian shares) to their domestic counterparts inaccessible to foreigners. Since most of the CRTs are below the 49% level this should not be an immediate problem, but by proposing to accelerate the enforcement of the law, unprepared funds (other than Esprit) may have to take drastic measures. For example, COS (and I've been wondering how this affects OST by the way-is ownership of OST included in COS calculations or not I wonder) in its charter does not allow the trust to do anything until 49% is reached. Notice that Esprit-since it is a new fund-is building in a margin of error to allow them to perform redemptions before they reach 49%. On a more practical note, many of these CRTs have not been calculating foreign ownership on a regular basis and will now have to. If we roll back to March 04 when a similar proposal was previously announced the CRT market sold off on the news. It later rebounded, and traded lower in April due to other factors, but the market reaction may have nothing to do with fundamentals. I think it is a smart idea to focus on the newer trusts and less well-known trusts. Investing in Esprit and other emerging issues is a good idea. Speculating on which junior E&Ps will trust will be the next thing. I wonder how the Canadian gov't will react when the market produces another several hundred trusts, all of them at 48% non-resident ownership? I was scanning a few annual reports and saw Vermilion at 31% as of 12/31/03. Then I remind myself about Stefaan (posting here and Stockhouse), the Belgian fund manager with 'heavy' money from 'private banks' who have never heard of CRTs before and expect to invest in a big way in these 'bonds on steroids' as he calls them. He recently discovered CRTs. Ditto the hedge fund manager posting on the Yahoo ERF board recently wanting to know how sensitive the CRTs were to forecasts of crude prices or the portfolio manager (quoted on the Yahoo ERF board) who claimed that using Lehman Brothers discount CF model CRTs are undervalued by 25%. The CRTs have been discovered and the Canadian gov't is responding. I just would hope that if there is any conversion to be done it is in a LIFO method (does Esprit promise this). This could get a bit bumpy as CRTs make announcements about how they will respond to this. January 1, 2005 is <100 days away.