I know it's up to the individual to make his/ her own decision on this situation, but what do people advise for those still holding shares? I am not relying on the dividend. I bought in to PTF over a year ago and added after the merge into PWE. I considered it to be a moderately safe LT investment... Now, I don't know whether to sell and take a loss or wait it out. Any advice for this individual investor?
If you use this quarter's cash flow, the assets are worth $28.50 plus value for the four year's of tax relief $4 + something for the acreage and the oil sands project, maybe $5,gets you to high $30's. Problem is, investors bought this for the yield and it is going away. There will need to be a transition away from those investors to long term appreciation buyers. Gut feeling that mid $20's will be lows. High 20's could be a plateau. All this assumes current oil prices don't crater.
Hold the shares. On net asset value in a buy-out situation, the value of PWE hasn't changed. ExxonMobil or whoever would still pay the same price for the oil and gas in the ground. The difference is that over the long run, say 10 years, you now must expect more of the total return to come from share appreciation (or a buy out) and less from distributions.
Relative to assets in the ground, PWE was selling at premium before the Halloween surprise, now it's fairly cheap and could be a buy out candidate (at $40) if management so inclined. It has a good amount of undeveloped acerage.
Hold. Isn't it trading below nav? However, I would not read too much into the 3q report. It is the new baseline from the merger of PTF. The 4q is the one to compare to see how production per share is doing.
PWE is now cheaper than the non-trust canadian oil companies. So, if PWE has to become one in four years because of the new tax law, then it is certainly not overpriced now. If this was down 21% because of poor results and a dim future, fine, then sell. But, this company is doing very well, was over owned by US hedge funds who were taken by surprise and have bailed. Look at Canadian Oil Sands, it has come almost all the way back. PWE will as well. This is an opportunity. Why do investors become excited by rising prices rather than when a stock falls to bargain prices. What should you do. BUY. PWE is an excellent buy. Since the tax bomb was dropped, most oil companies have rallied as crude oil is tracing out a bottom. So, PWE below 30 is one of those gifts that rarely come along. Take advantage of it. Buy.
I hear you but who exactly is going to buy right now. We all love to hate hedge funds but the reality is they added the fuel that allowed these trusts to move higher. I think they are gone from the scene for good. I just don't see the demand to move them higher. Flaherty has just spooked all the "big money" that might have been interested.
Sad state of affairs that could easily have been prevented. You don't want telecom or other sectors converting to a trust then write legislation to exclude that. You just don't slam the entire sector the way he did. Unconscionable. Idiotic. Disastrous for Canadian economy. JMHO.
Sell out energy royalty trust and put the money into power generating or transportation trusts? That is crazy. This canadian trust structure was created expressly for natural resource extraction; oil and gas and the shale/sands. Other sectors jumped on because the law was too broad.
If there is any chance of the law being modified, it will be to leave the trusts for oil and gas only, and kick out the port authorities and misc manufacturing companies which should not have been allowed in from the get-go.
Do this and don't look back. If you can get a rally sell into it. Take the loss. That's at least some money back on your tax return. Buy some other trust like ERF if you think these trusts are all of a sudden going to go to the moon. I DO NOT! If you buy something else, buy the HIGHEST QUALITY TRUST YOU CAN. Forget the divvy. Buy quality.
Yes, if you hold PWE in a taxable account, you can sell now (or wait and see if it stabilizes) and buy another similar trust at the same time, like ERF. So you take the loss off your taxes but still own a good trust when these start going up again. These seem to move in tandem, so this beats simply holding it and waiting for it to come back.
Unfortunately, I own this in an IRA, so no tax swap for me.
If you can not own a stock for 10 years you should not own a stock for 10 seconds. I recently took a position in PWE @ 29.20 and I bought more on Friday @ 29.45. PWE has the assets and the right people managing the company! It will be fine over the long run. In my opinion it is @ a pretty attrractive value now. I am only looking to add as it drops. You have to realize they have the ultimate protection agianst falling commodity prices increased production. Do not worry about the new tax law it is 4 years away if it even goes through. You have the mgt. team to make adjustment if it does go into affect.
LUK: You are mostly right in the need to select stocks carefully then hold them for a long period of time. I don't blame some folks for selling for the capital gains, after holding it for a long time, but they will be hard pressed to find an inexpensive distribution machine out there now.
I bought PTF awhile back at an average of $12 a share. It has gone up and now down. To assume it will remain in the basement with high oil prices folly. If it comes down more, I'll look to add to my position; since it will be four years of great distributions before the looter government puts that shotgun to our head.
Of course, the modern thought is buy/sell, buy/sell, so it is to be expected that people panic when there is some selling. I bought DSX awhile back at 14/share. Then all the panic folk yelled sell, sell, sell. I doubled down and now have an average of 12. I watched it slip under 10, but still hold it at 15, along with the nice dividends.
Stocks go up. Stocks go down. I love to see people panic, since captial gains are not what I am looking for. Bring it down so I can buy more for a higher yield on my original investment. If you buy the right stocks, you can afford to wait for a rebound, since you are bing paid while waiting. Most of the traders I have met, have generally lost money over time. Most value/dividend investors have generally done well, with money in the bank from distributions/dividends.
Still, each to their own kind of investing. Despite the slide, I don't have any "dogs" as one person called this stock. I am still green, though the mower has cut down the height of the green, but the roots are strong and the green grass will grow again. Cheers.
I go with you on this one. Definitely not pleasant to swim in a sea of red, but if one owns the strong trusts such as PWE, ARC, ERF, COS and hangs on through thick and thin this tax thing might even be considered an opportunity.
You MUST believe in the energy story, however. For the next four years you will still be collecting distributions. PWE has vast amounts of drillable land so they probably won't have to raise capital for acquisitions. It also has its foot in the oil sands and will be using CO2 as a method of extracting the bitumen, which is considerably cheaper than the current steam method.
This proposal as it stands is NOT yet law. A lot can go down in the coming weeks and months, modifications, change of government, etc. I, for one, see some modification to ease the pain. One idea going around is extending the date from 2011 to a few years beyond. And you can be certain that the lawyers for all the trusts affected are now at the drawing board searching for ways to minimize the effect.
It's tough. But the most important thing in investing is not how much money you make or lose - it's the ride. If the situation keeps you up at night, by all means sell. If you stick it out you could be rewarded nicely. I'm taking that chance.
"If you can not own a stock for 10 years you should not own a stock for 10 seconds. "
Get real. This is America 2006. Not the 1940's where one could hold a stock for decades. Stocks like ATT, IBM, Xerox were great until ,GOVERNMEMT STARTING TELLING BUSINESSES WHAT IT CAN AND CANNOT DO.
That's exactly what happened with PWE and the other trusts.
You wnat to hold an equity for 10 years buy a mutual fund. At least they sell the dogs.
HOLD. I am. I got the below info from PWE website.
Third quarter 2006: Revenues increase by 67.2% and net earnings are up 20%
MONTREAL, Nov. 10 /CNW Telbec/ - PEBERCAN INC. (the "Company"), (TSX:
PBC) is pleased to present its results for the period ended September 30,
2006. All amounts referred to in this press release are in U.S. dollars.
Performance: Third Quarter 2006 results compared to Q3 2005
- Total revenues increase by 67.2% to $27,210,000
- Net earnings are up 20%, totaling $7,410,000 or $0.10 per share
- Total production of Block 7 reaches 1,747,034 barrels
(18,989 barrels per day)
- Pebercan's net share of Block 7's total production reaches
710,341 barrels (7,721 barrels per day)
First of all thank you for posting earnings info.
Second: PWE has 4 million acres of land and that comes close to couple thousand per acre. Which should be a good property to own with a little long term perspective.
Wall street journal has an article that Q4 oil demand is going to be hot. Just as OPEC is working on cuts. Confilicting forces at work here. There are those who want to project high demand and encourage production and then there are those who want to sight weakness and cut production. There is a lot of paper supply as well. We should all take a look at what Boone Pickens is saying I guess.
I guess if we grow earnings, upshoot in oil prices, this whole tax thing will be qickly forgotten..Let us watch oil price.