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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: A Horse With No Name who wrote (31480)	6/5/2005 12:28:48 PM
From: Tommaso	Read Replies (1) \| Respond to of 116555

OST.UN tends to stay about $20 less than COS.UN because that's about the value of the OST preferred issue. If and when distributions from COS incrase, that separation may diminish because of the high yeild of OST, which will get ALL of any increase. The preferred distributions are fixed. So it's not a 2X leverage--more like an extra 30% under present conditions. I originally bought COS.UN when crude oil was priced at about $25 because even under those conditions it looked as if the Syncrude project would be able to produce crude for $12 a barrel and it seemed pretty good. I constantly restudy COS.Un to make sure I am not fooling myself. The latest thing I worry about is that they will just plunge ahead with one expansion project after another and never raise the payout very much. Of course that is reinvestment in itself and should raise the value of the stock in the companies that participate in Syncrude. But I would like more income. Critics of Syncrude continue to come up with arguments why it is chancy, the strongest of which is the cost of natural gas. I do wish Syncrude had hedged its gas costs. Instead, it misguidedly hedged its selling price, costing hundreds of millions of dollars in losty revenue. Now the hedges are off, so the income should soon double, with oil prices at $55. One reason I continue to hold COS.UN is that I have a block that I bought at a much lower price and also, I hold it as a stock certificate in my own name. OST.UN can only be held electronically, in a brokerage account. I do not want to pay taxes on my gains in COS and also there is some added security in holding the certificates myself, in a safe deposit box. (Brokers will tell you that doing that is silly). Some brokers get confused about how to report the income from these Canadian trusts. When I get the check from COS, it is not even reported to the IRS. I report it and pay taxes on it, but I don't have to worry about a screwed-up 1099-DIV. If COS lists in the U.S., of course, then they will start sending the IRS 1099-DIV forms, but they will probabaly get the figures correct.