Enbridge (Symbol-ENB)..are we getting close to a buy???

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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by StuBee »

Well, now I am really confused!!!

ENB issues 45 million shares at a 2.00$ discount to yesterday's close and today (at this moment) Enbridge is trading up by 1.00$!!! Meanwhile, TRP is trading down by 2.00$!!! :? :?

Perhaps there is some rumour of a positive nature floating around.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by DavidR »

StuBee wrote:Well, now I am really confused!!!

ENB issues 45 million shares at a 2.00$ discount to yesterday's close and today (at this moment) Enbridge is trading up by 1.00$!!!
Perhaps Mr Market believes that a $2billion investment is a vote of confidence that the stock has reached a bottom, so it's heading up
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by Thegipper »

DavidR wrote:
StuBee wrote:Well, now I am really confused!!!

ENB issues 45 million shares at a 2.00$ discount to yesterday's close and today (at this moment) Enbridge is trading up by 1.00$!!!
Perhaps Mr Market believes that a $2billion investment is a vote of confidence that the stock has reached a bottom, so it's heading up
I think you are right today. Still don't understand what this company is up to. They have been doing a lot of creative Goldman Sachs engineering . Not sure it's in the best interests of the small retail investor. ENB has always had a bunch of fan boys on Bay Street.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by AltaRed »

Tend to agree with you on both counts. Seems to have developed this style with the new CEO. Had more confidence with the Daniels team.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by ig17 »

StuBee wrote:Well, now I am really confused!!!

ENB issues 45 million shares at a 2.00$ discount to yesterday's close and today (at this moment) Enbridge is trading up by 1.00$!!! Meanwhile, TRP is trading down by 2.00$!!! :? :?
ENB secondary issue was a bought deal with the banks. I wonder if bank traders manipulated the prices before and after the deal.

Before: short ENB / long TRP to drive down the price of the ENB issue.
After: reverse the trade.

That's pure conjecture on my part. I have no idea what actually happened.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by nisser »

It wouldn't make sense to issue shares at the "bottom"
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by StuBee »

According to the Financial Post, the CFO of ENB is of the opinion that the uncertainty around Enbridge's capital needs has been weighing on the stock price. With resolution at this level, uncertainty has been removed. In addition, a lot of people have been shorting ENB. These poor suckers have been forced to close their positions (which is what they deserve :twisted: ). Hence the share price appreciation.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by BRIAN5000 »

According to the Financial Post, the CFO of ENB is of the opinion that the uncertainty around Enbridge's capital needs has been weighing on the stock price.
CFO must have some options he wants to sell? This seems like pretty short term thinking unless they are trying to drive up the share price for another big dilution? Peter Lynch principle maybe, "idiots" running things.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by Tanstaafl »

I am not sure but I have a small position and added some more at 41.85(stink bid). It seems to have worked and I will hold off adding anymore till things improve or get worse. It just seems odd about the companies activities recently :?:
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by FinEcon »

Whether or not you like the timing and or specifics of any given issue is not relevant, what matters is that you should not invest in pipelines (or REITS) if equity financing bothers you. Based on what's posted above, it seems many here are unaware this is part of the normal course of business for pipelines. don't take my word for it, convince yourself. Go to Google finance and review the balance sheet of your favourite pipeline (ENB, TRP, PPL, KEY). Click annual to shows the past few years and note the ever increasing share counts. It's not necessarily a bad thing. In economics, the answer is almost always 'it depends'.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by AltaRed »

It depends on asset growth rates. A lot of development can be (or should be able to be) financed organically without having to resort to debt or equity financing, and has been over the last 50 years or so. The problem arises with aggressive growth rates which of course can be good if it is truly accretive, but a lot of CEOs get themselves in a race to beat the competition.

The pipelines got themselves in that race as shipping capacity was needed for ever growing volumes of oil and gas. The question now is, just how much extra capacity is needed in the future? Could we end up with stranded capacity aka like TRP currently has in its cross-Canada mainline gas transmission system? I think the pipelines need to trim back their ambitious plans.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by Tanstaafl »

FinEcon wrote:Whether or not you like the timing and or specifics of any given issue is not relevant, what matters is that you should not invest in pipelines (or REITS) if equity financing bothers you. Based on what's posted above, it seems many here are unaware this is part of the normal course of business for pipelines. don't take my word for it, convince yourself. Go to Google finance and review the balance sheet of your favourite pipeline (ENB, TRP, PPL, KEY). Click annual to shows the past few years and note the ever increasing share counts. It's not necessarily a bad thing. In economics, the answer is almost always 'it depends'.

No it doesn't bother me, pipelines and utilities are always issueing debt and equity to fund expansion. I had sold off enbridge last year as I had thought it had gotten way ahead of itself. I usually buy and hold but had some doubts. Lucky guess who knows, starting buying back in at 41.85 to 43.75, doubt I will sell again for now. Just wished I had picked up some more BNS at the sametime. Oh well.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by Shakespeare »

Enbridge to buy Spectra Energy in $37-billion deal - The Globe and Mail
The combined entity would have a pro-forma enterprise value of about $165-billion and a diversified asset base including crude oil, liquids and natural gas pipelines, terminal and midstream operations, regulated utilities and renewable energy.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

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I do like the bump in My / Their stock today. :D
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by AltaRed »

Shakespeare wrote:Not sure I like this. Empire building?
Me neither. At the very least, it will be a colossus with no real ability to move the needle on any given project or two. Forget double digit returns going forward. There could be some synergies due to connecting and/or intersecting systems but it seems mighty unwieldy to me.

Edit: Added "digit"
Last edited by AltaRed on 06 Sep 2016 17:04, edited 1 time in total.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by StuBee »

AltaRed wrote:Me neither. At the very least, it will be a colossus with no real ability to move the needle on any given project or two. Forget double returns going forward. There could be some synergies due to connecting and/or intersecting systems but it seems mighty unwieldy to me.
Forget double digit returns I guess you meant?

When I first saw the head line, I was not impressed... However, Enbridge has done its due diligence (A. Monaco claims they have been undergoing a strategic review of their business for two years now...) Also, Spectra is complimentary to ENB and this merger is moving them away from oil and towards natural gas. (As an aside, it appears that Westcoast Energy is coming back to Canada. Spectra is a spinoff (in 2007) of the natural gas part of Duke. Duke had previously purchased Westcoast Energy...). ENB has seen the "writing on the wall". It is hard to build new oil pipelines. The NEB is not even able to hold its hearings!!

The merger will (allegedly) prolong the 10%+ dividend growth rate into the early 2020's. We can also expect (surprisingly) a 15% spike in the dividend as early as next year.

All the above been said, I think that going forward, we should not expect anything spectacular in the way of growth for the individual shareholder. OTOH I am happy (and satisfied) with the foretold dividend growth.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by StuBee »

Added. According to a research note from NBF, before the merger Enbridge is roughly 75% liquids and 25% NG (I am excluding their roughly 5% power segment). After the merger they will be 50:50. NBF considers this development (i.e. the merger) to be a positive one.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by AltaRed »

Probably when it comes to hedging their bets vis-a-vis climate change. There will be synergies for sure, but some of Spectra's assets are mature and unlikely to grow (more likely to shrink). As it is for all pipeline companies of course. Not to single out ENB or Spectra.

My main point is I just don't believe double digit growth going forward from this mega-entity. It is too hard to move the needle year after year.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by Sensei »

Hi,

From a totally selfish point of view, the idea intrigues me. I don't own shares in ENB, but own shares in SE which jumped 13 + % yesterday. The thought of selling all my SE crossed my mind, but maybe not.

In an all share transaction, and as a minor point, I wonder which shares owners of SE will get, ENB Can or ENB US?
Cheers

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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by Shakespeare »

I wonder which shares owners of SE will get, ENB Can or ENB US?
Would you like your pie in grams or ounces?
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by nisser »

Enbridge definetely gets a better end of the deal here. Having said that, I sold all of what I had in SE this morning as I continue to think ENB is too expensive.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by nisser »

Shakespeare wrote:
I wonder which shares owners of SE will get, ENB Can or ENB US?
Would you like your pie in grams or ounces?
Would you like your pie in grams or would you like to pay extra to have it in ounces is more appropriate ;)
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by Shakespeare »

nisser wrote:
Shakespeare wrote:
I wonder which shares owners of SE will get, ENB Can or ENB US?
Would you like your pie in grams or ounces?
Would you like your pie in grams or would you like to pay extra to have it in ounces is more appropriate ;)
I don't think so. The shares are the same whether traded on Toronto or New York, and the purchase will be all-stock.

From the G&M:
Terms of the agreement announced Tuesday call for Spectra shareholders to receive 0.984 shares of the combined company for each Spectra share.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by StuBee »

A rather odd spike in ENB in the last minute of trading (on the TSX). Up by close to 1.50$ and 80 million shares (close to 5 Billion$) traded :shock:. 10% of their market cap (excluding Spectra...) :shock:. Somebody wants in!!!

Perhaps it is because ENB has suddenly become much bigger (as of today) and ETF's (specifically those limited to Canadian equity) are forced to increase their position in order to respect their fund's definition.
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Re: Enbridge (Symbol-ENB)..are we getting close to a buy???

Post by AltaRed »

Hard to know but good to see it. It may be more clear tomorrow.

ENB has been a laggard for the past ~2.5 yrs, just back to where it was 4Q14 and nowhere close to its 2015 peak, albeit all the pipelines had gotten ahead of themselves back then.
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