The merger activity is one reason we as individual investors need several CERT holdings and not just one. That's my defination of diversification, several CERT's and several US Reits LOL seems to even out the sometimes unnerving drops and pops.
Winmore and All, A few questions as I'm new to arena of trusts. What is a CERT holding?
New to the arena of trusts. I've been watching BTE for a while and have read that it is a buy at 20 or below-so that would be here. Also have been reading that ratio of oil/gas is a factor to consider- ie- HTE 70%oil/ 30%gas, I believe. I don't know hat BTE is.
I am wondering,overall, whyUS investors choose the Canroys over the US trusts-ie SBR. US citizens do pay 15% on Canroy profits--even in a Roth--which is where I would buy and hold. OF course, on a high return, I can see where Canroys could till outperform a US trust. Would appreciate any comments. AS I understand it,US Trusts are completely tax-free investments in a Roth--or IRA for that matter--- can anyone confirm?
What is the downside to a trust? Why don't they attract conservative investors in droves?
All comments much appreciated as I gear up here. Thanks Park
I am a US citizen and I invest in canroys because of the overall yield and reserve replacement. Also, the 15% Canadian w/h tax is creditable (in whole or in part depending on each investor's compostion of Canadian-sourced and US-sourced income) against US income taxes. Plus, I think the C$ will outperform the US$ in the next few years.
CERT = Canadian Energy Royalty Trust as distinguished from just Canadian Royalty Trusts as there are now many companies that reformed under Royalty Trust laws. And yes, in Canada these trusts can grow their holdings. In the US they can only use the original land leases. Sure the US can drill more wells, on existing land holdings, but they cannot acquire other companies as the Canadians do. Tax deferred US accounts must do the math and see if the difference is worth having CERT's. You do not get the credit for the withholding, forget what the refund nuts say. Maybe that is why CERT's do not attract US investor "in droves". But in time, as word gets out, CERT's will be like reits in the USA. By then it will be too late to the party.
Canroy do not worry about reserve life as they are always growing. Now US trusts are worried about reserve life so that when the price of Natural gas drops they cut production so as not to sell of reserves on the Cheap. EXAMPLE:
BTE's most likely merger candidate would be PWT. PWT has 300,000 acres in the Seal area and BTE has around 60,000 acres. I would assume that Bill Andrew at PWT has approached BTE already. PWT has not made it a secret that their forward strategy is aggressively pursueing Oil Sands assets.
All the oilsands trust seem to be constantly on the lookout for merger partners. This premium buyouts are driving wealth building in this industry. One facts really stands out...that BTE is not big enought to stand alone. It has to actively seek to buy out other trusts and oil cos. or be taken over itself. The quaility of BTE's assets make it a tempting target. I own what I feel are the seven best trust and I would not be at all surprised to wake up one morning and find out that over a five year period (OR LESS) that they all have mergered into one huge oil co. But the point for the newbies here is that the merger activity can excellerate the wealth building for your personal portfolio. Part of this is the China oil cos over in Canada making partnership deals and owning percentage interests in pipelines. They are relentless in pushing forward their interests. In part the mergers are a reaction to the China activity.... Trying to become too big to be taken over.