bizaro86

Disagree. The cost of building an upgrader in N. Alberta is astronomical. I've done the math, and you can rail dilbit to the US and rail diluent back to Canada, and pay for the transportation forever (even using a very low discount rate) with the capital savings from not building an upgrader here and building your coking capacity in the US instead. Also, if the pipelines don't get built (and my sources are cautiously confident on Northern Gateway getting cabinet approval) then the producers will build unit train rail capacity at site. This will eliminate the need for diluent, as the bitumen can be transported undiluted by rail (it doesn't need to flow). This eliminates the cost of securing diluent supply, but locks you into rail transport. Even at a low utility-like cost of capital, upgrading at site in Alberta is not economic, which is why the producers aren't building new ones. Of course, if the government subsidizes it enough, someone will build it. (eg Value Creation in Redwater)

I've discussed this with people whose job it is to evaluate oilsands technology, and the general consensus is that it's unlikely to be economic. Maybe they're one breakthrough away from hitting the big time, but I seriously doubt it. A lot of smart people are working on this, and they don't think Ivanhoe has it figured out. You didn't ask this, but I've looked into their land in Alberta, and my opinion is that it has no value whatsoever at any time in the forseeable future. It is too deep to mine, and too shallow with insufficient caprock for SAGD or other in-situ processes. The regulator is cracking down on these shallow projects, which will at least stop them from dumping more money down an unproductive hole. If the company just had the project I'd short them, but the technology adds a "lottery ticket" like aspect to the stock, which makes it too risky for me to short. Even if it doesn't work if they convince a major to pilot it somewhere the stock will pop.

Calgary, Canada

Did he teach your spouse that too? 8)

Some great blogs that I follow have already been mentioned (oddballstocks, shadow stocks). I didn't see www.otcadventures.com on the list, it's a good one. I am very interested in Canadian small/micro caps. I agree there's a lot of crap, but that also means most people don't bother looking at them, so there are some gems too. A few blogs I've gotten ideas from in the past. http://safetyinvalue.blogspot.ca/ Canadian micro-caps, net-nets http://pettycash.wordpress.com/ Good mix of investment ideas and commentary http://harvestinvestor.blogspot.ca/ Not frequently updated, but have gotten a few ideas from here None of these do daily posts by any means, but it only takes a few good ideas a year. I try and follow as many sources as I can...

There is essentially only one possible buyer for penn west, it's CNQ. The big international companies wouldn't be interested, and the only other Canadians who would buy their assets are too small to swallow pen west. And CNQ never puts companies in play. If pen west sells its because they want to. Unless a financial buyer or private equity gets interested...

Well, we're past the deadline and the three month extension. Would you mind sharing the name of the company and the outcome? Enquiring minds want to know...

I did buy the calls in Canada, I'm not sure if they're available elsewhere. The high dividend depresses the price of the calls.

I kind of like it, although I haven't done too deep a dive on their assets. Basically, they're trading well below their 2P valuation, and they're highly levered (debt to market cap ~2:1) so if they trade at 2P NAV discounted at 10% it'd be about a double from here. There is definite execution risk. I'm long via 2016 out of the money calls, which is a very high leverage way to play this, so its a relatively small position. Goodwill write down doesn't matter imho, and they got an excellent price on the assets they sold, so I'm encouraged by that. Also, royalty assets are the new black in the Canadian oil patch, all my friends who wanted to ask about my companies oil sands assets a few years ago now ask about our fee land assets. So they shouldn't have a hard time selling the next piece of their divestiture program. I also find the reduction in capex encouraging, if I had a spare billion dollars it'd be tempting to buy this and liquidate it piecemeal and/or let the assets produce out in harvest mode.

http://www.berkshirehathaway.com/2013ar/2013ar.pdf Full report is out.

Yes!!! Gold in the women's yesterday, and up 1-0

There are two types of regulatory risk, imo. Project regulatory risk is easier to estimate for someone with domain knowledge. As an example AOS.TO was an easy short a few years ago, because their main project had no chance of being approved for a number of critical reasons (depth of resource, pressure required, proximity to an airport, etc). Macro regulation changes are harder for me to quantify, because they depend on politics. I have occassionally run sensitivities in a model on how much I would expect a given price/tax for CO2 to affect different producers as part of a downside valuation, but I have a hard time predicting actual changes in regulation. If gov'ts worldwide started taxing all petroleum products at $2 per gallon for environmental reasons, that would destroy most O&G economics due to demand destruction. I have no good way of accounting for that, so I usually just put it in my "only buy things with a margin of safety" bucket.

Yours Truly, I have more or less done that for years. We financed a major home reno from a Heloc, and other life related items rather than increasing the mortgage. Then I deduct the interest against investment gains. After the market run up the Heloc is empty, and I am paying whatever advances the bank allows me on the mortgage each year. If there is a major market downturn I can borrow the money back instantly to invest. Of note: we got the Heloc in winter 2010, a year after the meltdown. The drawback is the flexible interest rates (its 3.75%) but it looks like the BofCan wont raise rates until the Fed does, and judging by the "disinflation" numbers that isn't happening soon. From what I understand, if you use your HELOC to invest, you cannot use it at the same time for other stuff like home reno. Or I should say, you can do that, but you won't be allowed to deduct your interest. You can deduct interest only if your HELOC is use as an investment vehicle only. Am I right on this? You can only deduct the portion of the interest used for investments. So if you have a 100k heloc and 50k is stocks and 50k is a new kitchen, you can only deduct interest on half. The proportion holds for the life of the loan too, so you can't pay back 50k and then start deducting it all. I assume the Uccmal actually sold investments to pay for the renos, then borrowed money on the HELOC to buy new investments, thus making the interest tax deductible. Interest on debt for home renos isn't tax deductible in Canada, whether borrowed on a heloc or any other way.

It's more like adding a bond position. Assuming you have enough equity in your house that returning it to the bank isn't likely, or you have a recourse mortgage (in Canada) then any downside from owning the house you already have. A house with a mortgage is more like owning real estate equity and owing debt. Since owing debt is equivalent to being short a bond, paying it off is equivalent to buying a bond.

I think the facts of the situation matter. I recently sold a couple of rental condos I bought out of foreclosure in 2009 in Canada. My IRR on them is in Packer/Ericopoly range, and I'm taking the money and putting it against my personal residence mortgage, where the before tax IRR will be <5%. Mortgage interest in Canada is not tax deductible on a personal residence, and my mortgage only has 2 years left until renewal, so those arguments don't apply here, but do in the US. My wife will sleep better with less personal debt, and that's a good investment, imo. We also have undeployed cash in our brokerage accounts, so adding more to them without high conviction ideas doesn't seem likely to be a winning strategy. If it was still 2009 where I was buying bargains left right and center on margin my opinions would probably be different. If you have tax deductible long term debt and high conviction ideas, I'd use the high conviction ideas. Otherwise, I'd pay down the debt.

Looks like a great find! Any thoughts on the quality of the management? G&A consistently at 3.5MM per year seems pretty high for a company that has as its business renting out real estate anad collecting ~15-16MM of rent per year.

At 71, you have 3 choices for an RRSP. 1) Take a lump sum distribution and pay tax on the full amount 2) Convert to an annuity 3) Convert to a RRIF. This is exactly like an RRSP, except that you must withdraw (and pay tax on) a certain amount of the balance every year. The amount varies by age, at 71 its 7.38% of your account value. So if you have a 2,000,000 RRSP, you will have to take out 147,000 when you are 71. However, you can use a self directed RRIF, which has all the same allowable investments. If you want to hold 100% leaps in your 70s, you can. The table of mandatory withdrawals is here: https://www.woodgundy.cibc.com/wg/reference-library/topics/retirement-planning/rrsp-maturity-options/rrif-minimal-withdrawal.html

I think there are two possibilities here, depending on your confidence and the amount of time you have to put into this. You could probably build a reasonable quality portfolio using cheap ETFs, rebalance once a year, and do nothing else. The alternative choice is to replace ETFs with individual securities. This requires much more work, as you'll have to monitor the securities, but offers them the potential for a greater return. I do a mixture for my father-in-law, where the base of the portfolio is ETFs, and I replace with individual securities when I believe there is better value. For example, I sold some of his REIT ETF and bought pure industrial reit aar.un on Toronto. I think its better value than the REIT index, and especially like the long duration of their leases and mortgages. Article below has a more detailed look. http://seekingalpha.com/article/1746802-pure-industrial-reit-safety-at-7-percent-yield

I run a portfolio for my father in law with a similar set of goals. A diversified set of well selected income securities is how I've chosen to go about it, outside of ETFs as mentioned above. I pick individual issues, and leave them alone. A couple of choices include TY.P, a pref on a closed end fund. Coverage here is massive, and it trades a 12.5% discount to face value. Current yield is 5.7%. Interest rate risk due to perpetual nature, but if it meets the portfolio goals and you have a long time horizon, it might work. Other choices include UMH.PR.A and ELS.PR.C, both prefs from mobile home park REITs. I also have a number of Canadian income securities in this portfolio, things like INN.DB.G and PMT.DB.E, things where I think the coverage is good and the 7% YTM is attractive. As mentioned above, small positions in higher risk income securities isn't unreasonable, if they're uncorrelated and you like the underlying. I have a small SSRAP position in this portfolio, if you like SHLD. Another position I have in small size is EE.DB in Toronto. 35% yield to maturity, 50% discount to face value. It's a small E&P where the senior lender is looking to reduce exposure, and the debt is nearly due. However, their recent production not yet publicly reported (except through the Alberta gov't system) is decent, and they have reasonable asset/income coverage. I think its highly likely to work out. I own this one myself also (much larger position than in my Father in laws account) as I really like the risk reward here.

This article says the store closing didn't have its lease renewed. It also mentions the owner is Fort Dodge Realty associates of Hoffman Estates, Ill. It seems like an odd coincidence to me that the owner of the store is headquartered in the same small city on the outskirts of Chicago as SHLD. Anybody know whether this is actually a SHLD subsidiary, and they're just saying lease renewal for PR/employee reasons?