stock trade: Eagle Energy Trust

Today, I bought 500 shares of Eagle Energy Trust (TSE:EGL.UN) at $9.25 in my HELOC.

Stock Trade Commentary

I finally recycled my DAY profits into another dividend payer, Eagle Energy Trust EGL.UN.TO 0.00 [N/A]. This is an interesting company: they are operating in good old Texas, they have cash on hand with no debt, and they are 100% oily yielding around 11% with a payout ratio target is 50%. Why then is it trading below its IPO price? I think the answer is simple: they only have 1 asset so far and that’s fine with me as they are on track to grow production and are actively looking to acquire new assets.

Perpetual Energy finally canceled its dividend, it has been long in the making and I wish they did that earlier in the year. What a waste of time dragging it along in stages and triggering violent reactions in the share price every time. The company should not be given up as dead, they have to live within their cash flow and focus on cleaning up their balance sheet. Obviously, they will have to sell some of their non-core assets to achieve that including their gas storage facility which could fetch above $200M. The SP performance has been catastrophic no matter how you look at it, they waited too long for NG prices to rise and NG never did rise. There’s a couple of lessons I learned with PMT and with SKW, I’ll discuss those in the yearly recap a few weeks from now.

What do you think of EGL.UN?