Ted's Investment Insights

I wanted to buy another one half position in ENERPLUS RESOURCES (ERF.UN-T OR ERF-N). However it doesn’t want to get down to my buy price.  So, I’m looking at another stock.  Yes I’m deviating from ETFs but one has to hit opportunities where they happen to be.

Right now I’m looking to add a position in PFIZER (PFE-N) one of the largest Pharmaceutical companies in the world.  I bought PFE before at $23.00 and sold it at $27.00 but now it has sold off because they will lose their LIPITOR patent next year.  Already the vultures are in a feeding frenzy to produce and sell this product.  It will mean a significant loss of revenue to PFIZER but it will not be life threatening.  Another product is already adding to profits and a number of additional prospects are in the pipeline.

PFE pays a $0.72 dividend which is well covered by earnings per share of $1.36 and at the current stock price of $17.00 the yield is a respectable 4.18%.  I can live with that, knowing that Pfizer has been around for a long time and will prevail for a long time to come.  The P/E ratio is a decent 12.7 and the company last year earned 50 billion dollars. 

So, as long as I can buy it at less than US$17.25 I’ll grab some.

That’s it for today.  You’ll notice that when I said my twittering would be irregular I wasn’t kidding.

TL

We may see a little weakness in the markets or at least our securities but it should not be too painful.  i60 (XIC-T) is bumping up against it’s upper trend line  and may back up a little from here.  i Energy (XEG-T) should be OK and keep rising with the rising price of oil.  i Materials (XMA-T) is closely tied to gold and other commodity prices and should do well over the next few months also. 

My most recent purchase, Enerplus Resources (ERF-T) is acting well. I’ve only owned it 5 days and already it’s up 5% and meanwhile it pays a monthly $0.18 dividend.  At today’s stock price that amounts to a 9.25% dividend yield. If Natural Gas  prices would only go up Enerplus will do very well. I would like to add to my position and will do so if there is any pullback in the share price.

Another security I am following (also, like Enerplus, NOT an ETF) is Yellow Pages Income Trust (YLO-T) which is a very strong and well diversified publishing company.  The share price right now is about CAD$6.00 and it pays a 13.2% dividend.  Yea, you saw that right. Hard to pass up.  It also pays on a monthly basis so it’s a nice source of income. However there is a fly in the ointment.  Like other Trusts it will revert from a trust back to a regular corporation later this year.  However, the company has stated that it expects to continue paying the same dividend amount.  We’ll see.

That’s all for now.

Ted Lagerway

I am buying a position in my fund portfolio of  ENERPLUS RESOURCES FUND, trades on the TSX (ERF-T) and on the NYSE (ERF-N)  for about $23.00.

The company has just declared its monthly dividend for March 2010 of $0.18 per unit which is payable to share holders as of March 8, 2010 which translates into a dividend yield of 9.1% annually.  Not bad if you consider that the company’s oil and natural gas holdings offer the potential for significant capital gains over the next few years.

The company’s website is: www.enerplusresources.com

I don’t know when it will be over but I’m looking hard at NAL Energy.  At today’s price of $12.60 it pays a 8.51% dividend along with a substantial capital gains potential.  But is it time to buy or will it get a little cheaper still? The market seems to be close to a panic selling bottom, but I don’t want to speculate on that either.  So, I’ll wait till Monday and see what transpires.

It appears as if the current correction has run it’s course.  I have been buying more of the 3 ETFs: i60 CDN Index (XIU-T), iCdn Energy (XEG-T) and iCdn Materials (XMA-T).  This gives me perfect exposure to all the areas I feel will do well from here on, namely Financials, Energy and Mining/Exploration. I may take a position in iCdn Gold Index (XGD-T).  It currently trades at $18.70 and is fairly priced after a heart stopping correction.

In another portfolio I have added to our holding of ING GROEP NV. a Dutch bank, one of the 5 largest in Europe.  It trades in NY symbol ING-N as an ADR (American Depository Share).  Current price is about US$9.40 which is very reasonable. The company used to, but does not currently pay a dividend. Probably it will again soon.

Our current year, 2010 will likely not be as volatile as the one just past, but nevertheless should offer some profit opportunities.  While I still believe the next three years are going to be more like a normal bull market, there will be some interesting action in the meantime.  Times to take profits and re-deploy capital.

My main thrust will continue to be with ETFs which allow an investor to participate in an attractive sector without the tedious and often futile process of stock selection.

That’s all for now. 

CU

To expedite my anticipated and possibly increase my expected 20% Average Annual Compound Rate of Gain  (AACRG), I have divided my allocated investment into 4 equal positions.  One position is now invested in i60 ETF (XIU-T).  The other three will invested in the same or other ETFs as the market dictates.  Some on my watch list: iShares Gold Index (XGD-T), iShares Materials (XMA-T), iShares Silver Trust (SLV-N), Japan OTC Equity (JOF-N), Power Shares Energy (OBE-N).

Markets have been treading water these past 3 or so months.  However, I expect things to heat up again soon and I want to be ready before that happens. Still, I want to adhere to my policy of moving into trends which will be profitable but not carry too much risk.

My system of moving into a trend as it gets started and moving out when it matures has been generally profitable without much risk. When markets trend down I usually just invest in Money Market Funds.  My indicators have been pretty accurate in showing trend changes. When markets are trendless we sometimes get false signals and we must allow for that. 

Yes, you might say, but what about gold?  With i60 I own Barrick Gold, Agnico Eagle, Gold Corp. and several others all world class gold producers. 

Well, what about financials?  In i60 I own 6 of Canada’s largest banks none which ever needed, asked for or were offered any bailout money.  None of them.

And what about mining. Of course.  i60 holds some of the largest  mining companies in the world,  same with agriculture, technology firms and industrials.

One thing I really like about i60 is the liquidity.  On any given day at least a million shares are trading.  Some days as much as 5 million.  That sure takes care of my needs.

But I still have my eye on US Natural Gas (UNG-N) At $10.00 it is still cheap but probably won’t stay that way. So, that is another ETF I watch closely.

There are others and I’ll mention those later.

TL

MY SYSTEM

As promised, here are some projections I have developed to help me make my investments decisions. These projections are based on maturity sometime during the year 2013.  Obviously there are many reasons why these projections may fail. Wars, natural or man-made disasters and many other events may derail the economy and our equity markets. Nevertheless  we all know how resilient markets can be and how quickly they can recover from temporary setbacks. 

US Natural Gas (USG-N)  shows the greatest potential gain but also presents the greatest potential risk.  Natural gas has had a bumpy ride so far this year due to over supply and reduced demand.  However, sooner or later the demand for natural gas will pick up and as the supply picture improves, so will the price.  Still UNG has it’s own problems, mainly because it has grown too big too soon.  But that too may soon reverse and than it could become a real dynamo.

MY SYSTEM IS VERY SIMPLE.  It basically mimics the system I used when successfully running the CAPP program for Pacific Western Financial Corp.  The main difference is that I now use ETFs instead of mutual funds and my indicators are also different. But the idea is the same: “Be invested when the markets are going up and be in safe Money Market Funds when markets fall.” It means a very low risk but still very profitable approach to investing.

The idea is to maximize profits when the market is in an uptrend and avoid losses when markets go down. 

Now there is a new tool available to increase profits by investing in “BEAR” funds when the maker trend changes from up to down.  This is a new angle which I have only used on a trial bases. I’ll soon be able to use it when our markets go through a real correction.  Meanwhile I’ll mainly focus on the positive side and try to maximize profits investing with a bullish bias.

This study is meant as an addendum to my essay “Crazy Markets” of last October. 

Ted Lagerway

November 3, 2009 

I’m buying Precision Drilling (PD.UN-T). The company is doing well, a strong player in the oil patch around North America.  Best activity is currently in northern BC. Things appear to be picking up with higher oil prices.  Natural Gas is so cheap now it must be bottoming out as most producers are losing money at these prices. P/E ratio is only 3.1:1 which is also a major plus. 

Good luck,

Ted Lagerway

September 8, 09