January 27th, 2012 
Category: 
Yesterday, I sold 2,000 shares of Avenex Energy (TSE:AVF) from my HELOC account.
In at $5.60, out at $5.63, profit= +0.25% after commissions & excluding dividends.
Trade Commentary
My average price for AVF is high given the market we are in. Natural gas prices have corrected significantly yet AVF has not been abused so far. I have a feeling AVF’s price is simply supported by investors looking to capture February’s dividend which will only last until ex-dividend where the stock will get its share of beating. While I like AVF, the upside potential in price appreciation is very limited but the downside is open given its natural gas weighting of 50%. How much am I throwing away? For now, just the dividend of next month ($90) which is a small price to pay if it means buying back in when the price corrects substantially in the next few weeks. Avenex has been a great dividend payer which returned 10% in dividends in the last months. Obviously, this is not profit taking just hedging the downside. Call it indirect market timing if you wish since I plan the reestablish my position as soon as the opportunity presents itself and in 2012 I bet there will be more than one!
What do you think?
My DIY stock portfolio is overweight in Canadian oil producers for a reason. I believe Oil consumption is on the path of growth for the next decade and I intend to take every advantage possible of it:
I came to the exact same conclusion and got out of AVF this week too, and I had nearly the same entry/exit points (only return was the dividend less commissions — not too shabby in the end). With a fairly high gas weighting I was surprised it wasn’t hit, and expect there will be a chance to buy it back cheaper as soon as someone panics.
Not too shabby Potato, I agree as we still got out with a generous dividend. I guess we’re sitting on the same fence now and watching
I have JE and I noticed that the price has rebounded a bit too
Am familiar with JE but never pulled the trigger.
nat gas only contributes to about 5% of Avenex’s revenue, so the fall in the price of natural gas is not too significant in share value. Payout ratio is about 50% so dividend is safe. Earnings come out in late March, and expect them to be very positive, so in the interim if all of you nay-sayers wish to drive the price down, feel free. I will gladly pick up a few more thousand shares at sub $5.50 prices. With all the positives in Avenex’s production, and the price of oil, this stock will hit $7.00 by the end of the year – and giving a 9% dividend to boot.
Wayne, you are truly emotional with your investment. Why do you care what others do with their shares? I for instance don’t care if you buy hundreds or thousands of shares. Are we in a competition of some sort?
Where do you get your 5% figure for nat gas? the O&G division accounts for 71% of revenue and the production weighting is 50% gas with only 22% hedged for 2012. You might want to review your figures.
Holy crap, nice call. AVF got raped on Friday, losing half of my gains in the past couple years. My other winner PEY got raped this whole quarter. AVF at +20% now and PEY at +8%. Good lord.
Looks like I was a little early with my sale but correct nonetheless. It’s time to walk back into AVF this month after I confirm a couple of numbers.
Ray, expect more pain for NG weighted producers, PEY might have to suffer a bit more until we see a turn around in fundamentals for NG.