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See bottom of page for summary of positions and trading history performance; also see Stock Analysis for more details on each stock
Long stock positions (in order of dollars invested):
Nexen Inc (T-NXY,N-NXY; Oil and gas)
I bought Nexen at $39.37 as I wanted to add to my oil and gas holdings. Nexen’s latest earnings were $1.19 per share which annualizes to a p/e of 8.3 making it one of the cheaper oil and gas companies. Nexen has exposure to the Canadian oil sands and has a proved and probable reserve life of 22 years which is higher than average. Nexen should be able to increase production shortly which is in contrast to many of the larger oil companies which are seeing production declines.
Petro-Canada Inc (T-PCA,N-PCZ; Oil and gas)
I purchased Petro-Canada at $49.98 after it released its 1st quarter earnings of $1.86 per share. Extrapolated out for a full year, this works out to a very cheap P/E of 6.7 (I haven’t updated my analysis since the release). The average price of oil in Q1 was USD $98, and so far in Q2, it’s been around $119 which means if oil stays at present levels, earnings should increase approximately by a minimum of 20% in the next quarter even with no increase in production (which is the forecast). Even with no production growth for the next 2-3 years, this company is already making a lot of money. With a proved and probable reserve life of around 15 years and a resource reserve live of 98 years, this is the kind of company you want to own if you believe that peak oil has been reached i.e. you are bullish on the long term price of oil.
Quadra MIning Ltd (T-QUA, copper producer)
I bought Quadra at $26.09 after it released some good quarter end numbers ($1.38 adjusted EPS). If the earnings are extrapolated out for the year, it works out to a very attractive P/E ratio of less than 5. There were some upward pricing adjustments to the Q4 prices and production is expected to remain steady throughout the year, so the $1.38 probably represents the high point in earnings for the year. The very low P/E ratio provides cushion should the subsequent earnings decrease.
I also wrote the June $26 call options (against my stock position) for $1.65 as even though I’m bullish on copper stocks, the recent run up in the stock makes me think there’s going to be a pull back. As a result of the call options that were written, my effective purchase price is $24.44. If the stock doesn’t pull back and the call option gets exercised at $26.00, my profit is $1.56 over 5 weeks, this works out to almost a 6% return non-annualized. If the options expire worthless, most likely I will write another call option as I’m not as bullish on base metals as I am on oil and gas.
Destiny Resource Services (T-DSC; oilfield services):
I bought Destiny at $4.05 as a natural gas play. With natural gas prices high, the demand for the service companies should increase. The last time natural gas prices were high, Destiny traded in the $8-10 range. The company recently purchased a US company which so far hasn’t been accretive to the earnings, as drilling activity continues to increase this should add to earnings. The US company will also help to reduce the seasonality that results from the concentration of business in the Canadian north.
BCE Inc (T-BCE, N-BCE; Telecom)
I bought BCE at $38.25 purely as an arbitrage on the friendly takeover bid.
Summary of current positions (in order of dollars invested):
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| Company | Symbol | Sector | Position | Paid | Strike |
| BCE Inc | T-BCE | Telecom | Long Equity | $39.71 | |
| Quadra Mining Ltd | T-QUA | Copper | Long Equity | $23.03 | * |
| Destiny Res. Services | T-DSC | Oil and Gas Services | Long Equity | $4.05 | |
| * effective price of covered call position after deducting option premium | |||||
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| Trading History and Portfolio Returns: | |||||||
| Date | Company | Symbol | Position | Paid | Strike | Sold | Return |
| 21-Jul | Nexen Inc. | N-NXY | Long Calls | $5.00 | $35.00 | $0.00 | -100% |
| 21-Jul | Nexen Inc. | T-NXY | Long Calls | $2.95 | $36.00 | $0.00 | -100% |
| 21-Jul | Petro-Canada Inc | T-PCA | Long Calls | $3.50 | $52.00 | $0.00 | -100% |
| 21-Jul | Petro-Canada Inc | T-PCA | Long Calls | $4.35 | $50.00 | $0.00 | -100% |
| 16-Jul | BCE Inc. | T-BCE | Long Equity | $38.25 | $38.48 | 1% | |
| 1-Jul | Petro-Canada Inc | N-PCZ | Long Calls | $5.80 | $50.00 | $6.95 | 20% |
| 30-Jun | Nexen Inc. | T-NXY | Long Equity | $39.37 | $40.36 | 3% | |
| 27-Jun | Petro-Canada Inc | N-PCZ | Long Calls | $4.10 | $50.00 | $4.70 | 15% |
| 27-Jun | Petro-Canada Inc | T-PCA | Long Equity | $49.98 | $55.13 | 10% | |
| 23-Jun | BCE Inc. | T-BCE | Long Equity | $38.25 | $37.24 | -3% | |
| 17-Jun | Toll Brothers Inc | N-TOL | Long Put | $2.25 | $22.50 | $2.55 | 13% |
| 13-Jun | CV Technologies Inc | T-CVQ | Long Equity | $0.68 | $0.51 | -25% | |
| 11-Jun | Toll Brothers Inc | N-TOL | Long Put | $3.00 | $22.50 | $3.30 | 10% |
| 6-Jun | Toll Brothers Inc | N-TOL | Long Put | $9.70 | $30.00 | $10.20 | 5% |
| 16-May | BCE Inc. | T-BCE | Long Calls | $0.50 | $38.00 | $0.80 | 60% |
| 16-May | BCE Inc. | N-BCE | Long Calls | $6.50 | $30.00 | $8.60 | 32% |
| 14-May | Amerigo Resource Ltd | T-ARG | Long Equity | $2.19 | $1.91 | -13% | |
| 9-May | D R Horton Inc | N-DHI | Long Put | $5.60 | $20.00 | $5.45 | -3% |
| 21-Apr | Petro-Canada Inc | T-PCA | Long Equity | $44.82 | $48.10 | 7% | |
| 21-Apr | Agrium | T-AGU | Long Equity | $65.55 | $70.35 | 7% | |
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