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Canadian Energy & Income Trusts ((Merged thread))

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((MERGED with Yogi's thread on Canadian Royalty Trusts))

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Has anyone read the report on Canadian Energy Trusts in Peter Schiff's article on Financialsense?

 

https://www.europac.net/report/download_energy_again.asp

 

In our view, the mega trends that will drive markets for years to come can be boiled down to three:
  • Surging energy prices
  • The Declining US dollar
  • The Global Hunt for Yield.

Fortunately, a single asset class, Canadian Energy Trusts, will allow you to profi t from all three simultaneously. Despite stellar performance over the past few years, the sector has not been discovered by many US investors yet. It is our belief that these investments will deliver many more years of fat yields and handsome capital appreciation. Just as important, they are denominated in the strengthening Canadian dollar, which many experts consider the world’s premier currency.

 

Any opinions on here about these?

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Here's a professionally managed fund...

 

chart ... update : advfn thread

 

An application has been granted for the original listing in the industrial category of up to 13,846,140 trust units and up to 6,923,070 trust unit purchase warrants of Canadian Income Management Trust, of which up to 6,923,070 trust units and up to 6,923,070 warrants will be issued and outstanding, and up to 6,923,070 trust units will be reserved for issuance upon completion of a public offering. Listing of the trust units and warrants will become effective at 5:01 p.m. on Monday, Feb. 20, 2006, in anticipation of the offering closing on Tuesday, Feb. 21, 2006. The trust units and warrants, other than those which have not been distributed to the public, will be posted for trading at the open on Feb. 21, 2006. Each warrant will entitle the holder to purchase one trust unit at $2.60 until Feb. 28, 2012.

 

Canadian Income Management Inc.

C$ Million (Maximum Offering)

7.0% Unsecured Subordinated Debentures

Price: C$100.00 per Debenture

- -

Canadian Income Management Trust

C$ Million (Maximum Offering)

Trust Securities

Price: C$2.00 per Trust Security

- -

Offered in Bundled Units of 1 Debenture and 15 Trust Securities

Price: C$130 per Bundled Unit

Minimum Purchase: C$3,250 (25 Bundled Units)

 

NOTE: TSX Listing: An application will be made to list the Debentures, Trust Units, and Warrants on the TSX

 

income trust universe

 

billions...../ 1997 /1998 /1999/ 2000/ 2001 / 2002/ 2003/ 2004/ 2005/

market cap.. : 18. : 16. : 17. : 21. :. 29. :. 41 :. 76 : 114 : 172 :

no. of funds : 51. : 57. : 58. : 52. :. 62. : 101 : 136 : 173 : 224 :

 

................ : As at Sept.30, 2005

................... ## : MktCap .. Pct

Industrial & Energy 50 : 16.7bn .. 9.7%

Consumer Goods..... 74 : 24.7bn . 14.4%

Utilities & Infra.. 13 : 13.9bn .. 8.1%

Resources........... 7 : 10.3bn .. 6.0%

Power.............. 13 :. 7.6bn .. 4.4%

Total Com'l & Ind. 157 : 73.2bn . 42.5%

 

Oil and Gas........ 37 : 76.6bn . 44.5%

REITS.............. 30 : 22.5bn . 13.1%

TOTAL............. 224 :172.3bn . 100.%

= = = = =

LINKS:

Description ...... : http://www.stockwatch.com...?bid=B-526329-C:CNM...

Sentry Select page : http://www.sentryselect.com/index.cfm?prod...ents&id=131

 

(Unaudited) Date NAVPU

 

13-Jul-2006.. $ 1.54

29-Jun-2006.. $ 1.52

23-Jun-2006.. $ 1.37

13-Apr-2006.. $ 1.77

06-Apr-2006.. $ 1.81

30-Mar-2006.. $ 1.88

 

= = =

 

Check out the NAV before you invest

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Cdn Energy Trusts are right of the top of the top of my “to-buy” list. Having recently gone on sale, they even look better now than Petro-Canada, a longstanding favourite of mine.

 

The better ones are [Toronto/NY trading]:

 

Arc energy, AET-UN

PennWest Growth, PWT-UN

Keyera Facilities, KEY-UN

Canadian Oil Sands Trust, COS-UN

 

With the recent downdraft, dividends from these are high single/double digits again. The large dividend means that even if these get cheaper going forward [highly possible] the payout goes a long way to offsetting paper losses. You can find Cdn Energy Trusts with very high payouts but the underlying share price not as reliable as the above [e.g. True Energy I beleive is paying >20%]

 

Also, take a look at Transcanada pipelines. Not a trust, but this one really is for “grannies and orphans”. Nice little dividend also which I suspect will be raised soon.

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I read this yesterday...

 

http://www.financialsense.com/fsu/editoria.../2006/1105.html

 

Looks like a fantastic opportunity. 10 - 15% yields available, and good potential for capital gains over the long term. Looks like they are already rebounding strongly from giveaway prices. Eg...

 

http://www.stockhouse.com/comp_info.asp?sy...&table=list

 

Done anyone have any experience of these, or thoughts about their potential? I'm aware of the currency risk, but imagine this could be favourable with the current strength of the pound. I have a few specific questions:

 

1) How to select the best trust(s) - presumably it's not as simple as "higher yield = best" ?!

2) How do I buy them? Selftrade.co.uk looks good for foreign stuff? I'm new to share trading.

3) What is the tax liability on dividend income from foreign equities?

 

I'm thinking of snapping some of these up quick, instead of addiing some more of the Investec Global Energy fund to my ISA. Would appreciate any info on the above points... cheers B)

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3) What is the tax liability on dividend income from foreign equities?

 

If you are UK domicilied (if you and your parents grew up here), then taxable like any other income.

 

If you are not UK domiciled, tax free in the UK if income not remitted to the UK. Taxation in Canada is up to Candian tax law.

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I read this yesterday...

 

http://www.financialsense.com/fsu/editoria.../2006/1105.html

 

Looks like a fantastic opportunity. 10 - 15% yields available, and good potential for capital gains over the long term. Looks like they are already rebounding strongly from giveaway prices. Eg...

 

You need to check out the recent changes being proposed by the Canadian Taxation Authorities to these, a recent mailer from Daily Wealth had a piece about this and why they suggested selling them. Below is the cut and paste from about a week ago, I don't know whether this would afflict UK based investors the same way that it does Americans though.

 

---------------------------------------------------------------------------------------------------------------------------

The Canadian Income Trust Debacle

by Dr. Steve Sjuggerud

 

When individual investors learn about Halloween’s Canadian Income Trust Debacle, they’ll shy away from buying Canadian energy trusts for a while. Today, I’ll explain what happened and share one idea for where investors might go next…

 

Around the office, we’re calling it the Canadian Income Trust Debacle…

 

Investors in businesses structured as Canadian income trusts had a nice thing going the past few years… big cash payouts and nice capital gains to boot. As long as businesses like these paid us 90% of their distributable cash, they weren’t taxed. You could hold these in retirement accounts and earn huge dividends.

 

It was too good to be true… really…

 

In recent years, more and more Canadian companies have been converting to the trust structure to take advantage of the favorable corporate tax situation.

 

The latest high-profile companies to announce their conversion were Telus and BCE – two massive phone companies. Phone companies are a stretch from the intention of the trust law. This week, the Canadian authorities said they’ve had enough.

 

Canada said it loses a mountain of corporate tax revenue every time a company converts to a trust. Apparently, in 2006 alone, more than US$50 billion worth of companies have converted to trusts.

 

So Tuesday night, Canada announced plans to fully eliminate the tax benefits of these trusts by 2011. Instead of no taxes, it appears that Canadians will pay in excess of 30% in taxes. Ouch! Even worse, Canada will likely withhold 41.5% from Americans… said another way, a 7% Canadian dividend will shrink to 4% for Americans, after Canadian taxes.

 

What I prefer to do now is cut and run… and then watch the drama from the safety of being out of my position. If they are worth going back into, we will. But the only way I see them being worth getting back into is if they’re much cheaper.

 

It stinks. The Canadian government just killed billions of dollars overnight.

 

These trusts will probably fall farther in the short term, as investors get angry and leave the sector.

 

Also, no law has been passed yet. So the shares will probably do nothing during this period of uncertainty. And markets hate uncertainty.

 

So where might American dollars go in the future that would have headed for the Canadian energy trusts?

 

When individual investors learn of the Canadian Income Trust Debacle, they’ll shy away from buying Canadian energy trusts for a while. Their brokers will be looking for a place for them to put their money. An easy answer might be, “how about the U.S. version of these things?”

 

My first thought was U.S.-traded energy master limited partnerships (MLPs)… like Enbridge Energy LP (EEP), Enterprise Products Partners LP (EPD), and TEPPCO Partners (TPP). These folks mainly own pipelines in the U.S. They are not taxed, and they pay dividends in the 7% range.

 

Once investors hear about that tax-advantaged 7% yield in an energy pipeline, the sale is made.

 

If I’m right about this, you can now beat ‘em to it.

 

Good investing,

 

Steve

--------------------------------------------------------------------------------------------------------------------------

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the serious threat of a change in tax law has caused these stocks to plummet.

 

assuming it goes through, the stocks may not climb back to prior highs,

because investors will want a higher yield on existing royalty shares,

becuase their tax priviligese will end in 2011

 

i am watching the charts, and may nibble on a few

 

some charts are here: http://www.advfn.com/cmn/fbb/thread.php3?id=13079166

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hammered.

thnx to that proposed change in the tax law.

thank Gawd, I sold out earlier because I thought CNM was too expensive relative its nAV

 

anyone who holds, should consider selling, and buying individual royalty trusts.

that gap between price and nav will close somehow.

if it closes by the trusts rising, then you will do better with the trusts themselves

(on a geared basis- since CNM.un includes an element of gearing)

 

some Individual trusts here: http://www.advfn.com/cmn/fbb/thread.php3?id=13079166

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Guest Guest_longjohn_*

Anyone know how to buy CanRoys as part of a British pension?

 

I used to own them as part of an IRA when living in the US.

 

Now I'm back in the UK and working for a company that will make a 5% of salary pension contribution.

 

My recollection of UK pension rules is seven years out of date. It's basically that you can only buy funds and you can never cash out - only take an annuity.

 

OK, I can live with the annuity rip-off but I'd sure like to have CanRoys working for me than UK fund managers.

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hammered.

thnx to that proposed change in the tax law.

thank Gawd, I sold out earlier because I thought CNM was too expensive relative its nAV

 

anyone who holds, should consider selling, and buying individual royalty trusts.

that gap between price and nav will close somehow.

if it closes by the trusts rising, then you will do better with the trusts themselves

(on a geared basis- since CNM.un includes an element of gearing)

 

some Individual trusts here: http://www.advfn.com/cmn/fbb/thread.php3?id=13079166

 

Further to my earlier post Oct 10, I bought a nice large block of COS for C$26.50 during the sell-off (Ive wanted to own this particular one for years and feeling very clever right now!).

 

The thing is some of these trusts only exist because they're a trust, other trusts are good businesses in their own right and will convert back to regular corporations. Regardless of the legal form, IMHO, COS's Syncrude assets will be snapped up by one of the other interests in the project (Petro-Can?).

Have a look at www.cos-trust.com

 

Looking at the whole trust sector, it appears that money in this sector is flowing into the 'good' trusts. The five I've listed may do very very well, PennWest is another good one.

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I think it outrageous that their governement, to receive extra tax revenue, has wiped off billions more off individuals savings, investments and pensions. It demonstrates ignorant, short-term, narrow-minded thinking and is typical of someone who works in the state sector for the IR or treasury, has no real experience the way markets or business works and cannot look at the bigger picture. State incompetence costs its people a fortune, yet again. This story should go in the Canadian Bumper Book Of Government Waste.

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I think it outrageous that their governement, to receive extra tax revenue, has wiped off billions more off individuals savings, investments and pensions. It demonstrates ignorant, short-term, narrow-minded thinking and is typical of someone who works in the state sector for the IR or treasury, has no real experience the way markets or business works and cannot look at the bigger picture. State incompetence costs its people a fortune, yet again. This story should go in the Canadian Bumper Book Of Government Waste.

 

According to the beeb it was the Conservatives and they reneged on an election promise made only 10 months earlier B)

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Anyone know how to buy CanRoys as part of a British pension?

 

I used to own them as part of an IRA when living in the US.

 

Now I'm back in the UK and working for a company that will make a 5% of salary pension contribution.

 

My recollection of UK pension rules is seven years out of date. It's basically that you can only buy funds and you can never cash out - only take an annuity.

 

OK, I can live with the annuity rip-off but I'd sure like to have CanRoys working for me than UK fund managers.

 

You need to open a SIPP with a broker that deals in Canadian shares. I use www.epml.com as a SIPP provider and www.sucden.co.uk as a broker. You can trade just about anything under the sun in a SIPP, definitely anything listed on on any stock exchange in the world.

 

If your company makes a 5% contribution to a pension, it most likely makes it to a set provider, not to the SIPP of your choice. What you need to do is wait for a while until the employer contribution has built up some fund with the provider, and then transfer the funds to your SIPP. You have a legal right to transfer your pension fund to any other provider or SIPP at any time, and nobody can stop you from that. Employers will normally say they will only pay into the plan provider by their chosen provider, but nobody can stop you from transferring afterwards. I sweep my Standard Life pension account clean once a year and transfer it to my SIPP.

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You need to open a SIPP with a broker that deals in Canadian shares. I use www.epml.com as a SIPP provider and www.sucden.co.uk as a broker. You can trade just about anything under the sun in a SIPP, definitely anything listed on on any stock exchange in the world.

 

If your company makes a 5% contribution to a pension, it most likely makes it to a set provider, not to the SIPP of your choice. What you need to do is wait for a while until the employer contribution has built up some fund with the provider, and then transfer the funds to your SIPP. You have a legal right to transfer your pension fund to any other provider or SIPP at any time, and nobody can stop you from that. Employers will normally say they will only pay into the plan provider by their chosen provider, but nobody can stop you from transferring afterwards. I sweep my Standard Life pension account clean once a year and transfer it to my SIPP.

 

Thanks very much for that. It looks like an excellent strategy.

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(Repeated from monthly comments section...)

 

I have just bought 500 unit of Enervest (EIT.UN - http://www.stockhouse.ca/comp_info.asp?sym...amp;table=list). All the income trusts are on a tear today - up 5%+. Gutted I missed the bottom earlier this week, but my TD Waterhouse account hadn't been fully set up... grrrr. Still, locking in a 14% yield will do me, and hopefully some growth as the current discount to NAV retracts, and oil resumes its relentless long-term march up. Nice little play on the Canadian $ whooping sterling as well.

 

These income trusts are also on my list of "potential things to invest my as-yet-fictional STR fund into".

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I think these things will get hit by (more) tax-oriented selling.

 

I will be looking to buy just before Christmas, when my gold shares will be alot higher (I Hope),

and I can cash some big gains, and raise money for these

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