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

Discuss your favourite picks, broker, and trading or investment style.
Post Reply
DenisD
Veteran Contributor
Veteran Contributor
Posts: 4081
Joined: 19 Feb 2005 01:24
Location: Calgary

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

Post by DenisD »

scomac wrote:Does that make my decision to sell wrong? It would appear so at this juncture, but that could always change.
Just because a decision cost you money doesn't mean it was a wrong decision.
User avatar
Arby
Veteran Contributor
Veteran Contributor
Posts: 3125
Joined: 20 Feb 2005 19:23
Location: Ottawa, ON

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

Post by Arby »

scomac wrote: It is also teaching me that while trimming overweights is still prudent, winning positions should be maintained unless fundamentals have changed for the negative.
I've recently sold a few winning positions based on the question "would I buy this stock today at the current price?". The answer was "no" for those stocks that I sold. The fundamentals for the stock hadn't changed for the negative, but the price had risen so much that the dividend yield was too low for my liking. I felt other stocks would provide a better dividend yield with similar dividend growth potential.
User avatar
Pickles
Veteran Contributor
Veteran Contributor
Posts: 4215
Joined: 27 Sep 2006 09:44
Location: Toronto

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

Post by Pickles »

I sold half my ENB in two tranches:

1. a quarter of my ENB in May 2011 at about $31.25 per share ($62.50 pre-split) and used the cash to swap out some Rogers shares that had done well within my RRSP. I sold these a bit later at a modest profit and bought Fortis for the bigger dividend. Income wise, this has worked well but Fortis did not appreciated in value, as ENB/RCI.B did in the last two years. So, I missed out on a hefty capital gain. But then, one reason I was selling was because I thought I would shortly have too much of my portfolio in ENB and wanted to rebalance.

2. I sold another quarter of original holding of ENB in late December of 2011 at $37 and bought a) BMO at $54.80 (still have this. Current value is $72+) and b) Encana at $17.90 which I sold for $20+ two weeks later using the proceeds to buy IPL.un for $17.32 (I still own IPL; its current value is $26+). This was a much better outcome since I increased my dividend income (and growth in this income) and have enjoyed a nice capital gain.

I have room in my portfolio to buy more ENB without being overweight. The current dividend rate -- 2.82% -- doesn't entice me, so I bought some ENF instead.
Regards,
Pickles
User avatar
Descartes
Veteran Contributor
Veteran Contributor
Posts: 1856
Joined: 03 Nov 2008 09:59

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

Post by Descartes »

Arby wrote:
scomac wrote: It is also teaching me that while trimming overweights is still prudent, winning positions should be maintained unless fundamentals have changed for the negative.
I've recently sold a few winning positions based on the question "would I buy this stock today at the current price?". The answer was "no" for those stocks that I sold. The fundamentals for the stock hadn't changed for the negative, but the price had risen so much that the dividend yield was too low for my liking. I felt other stocks would provide a better dividend yield with similar dividend growth potential.
I went through the same thought process with Methanex a few years ago which I had picked up in the depths of early 2009 ..only to see it eventually double in price after I sold it.
It was a learning experience for me.
"A dividend is a dictate of management. A capital gain is a whim of the market."
BRIAN5000
Veteran Contributor
Veteran Contributor
Posts: 9064
Joined: 08 Jun 2007 23:27

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

Post by BRIAN5000 »

That's a very good point that doesn't get talked about enough when it comes to the sell discipline -- what do you do with the proceeds?


The old saying that the market can remain irrational longer than an investor can stay solvent can also apply in your favour in the sense that overbought stocks can remain so for a very long time.
It seems to me not many people have a cut and dried disciplined sell philosophy and it's mainly guess work. Then you're onto looking for the next Holy Grail which takes up more time. IMHO this is one of the main flaws of DGI and requires more judgement/timing then selling a few shares of an index to rebalance. PITA.

Sometimes people sell for the wrong reasons and it turns out right, lucky. If you sell for the right reasons and it turns out bad you just have to accept it.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
User avatar
Subby
Contributor
Contributor
Posts: 139
Joined: 21 Feb 2005 21:21
Location: Mississauga, ON

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

Post by Subby »

Arby wrote:
scomac wrote: It is also teaching me that while trimming overweights is still prudent, winning positions should be maintained unless fundamentals have changed for the negative.
I've recently sold a few winning positions based on the question "would I buy this stock today at the current price?". The answer was "no" for those stocks that I sold. The fundamentals for the stock hadn't changed for the negative, but the price had risen so much that the dividend yield was too low for my liking. I felt other stocks would provide a better dividend yield with similar dividend growth potential.
Isn't buying a stock and holding the stock considered different at the same price? In other words, I wouldn't necessarily buy a stock at the price I am holding it at for precisely the reason that has been mentioned here due transaction costs, capital gains taxes and of course because not being sure of what to purchase with the proceeds.
User avatar
Peculiar_Investor
Administrator
Administrator
Posts: 13271
Joined: 01 Mar 2005 14:52
Location: Calgary
Contact:

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

Post by Peculiar_Investor »

As discussed in http://www.financialwisdomforum.org/for ... 62#p539762 and judging by the stock price action the past few days, it seems the ENB shareholders are liking the decision to transfer assets into an affiliate and boost dividends. But what about the bond holders? Not so much according to Enbridge Bondholders Lose Ground in Asset Swap: Canada Credit - Bloomberg
Enbridge’s decision yesterday to transfer assets into an affiliate and boost dividends pushed down the price of the company’s C$450 million ($394 million) of notes due June 2023, driving relative yields to 153 basis points, the highest since the securities were issued in 2013. Moody’s Investors Service and Standard & Poor’s reduced their outlooks on the debt to negative on concern the changes will weaken finances of Canada’s largest pipeline operator. Even so, shares of Enbridge rose 10 percent yesterday.
Disclosure: Hold Enbridge Income Fund 22-Jun-17 bonds, which I've always planned to hold to maturity, so I don't watch price movement.
Imagefiniki, the Canadian financial wiki New editors wanted and welcomed, please help collaborate and improve the wiki.

Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

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

Post by AltaRed »

I am losing some faith in this company because new management appears to be taking a decided shift from a blue chip primarily pipeline/utility regulated company to an unregulated conglomerate. It may still be worthwhile holding but not based on original intentions. History has many examples of corporations expanding their tentacles into a wider range of businesses that have not done that well. Think GE. Think the big American oils that moved into all sorts of other things in the '80s (department stores, container manufacturing, etc.). All of them eventually eventually lost their way and had to backtrack and take writeoffs.

I am thinking if ENB Bonds are being place on negative watch, their preferreds will be as well.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

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

Post by scomac »

AltaRed wrote:
I am thinking if ENB Bonds are being place on negative watch, their preferreds will be as well.
Could be interesting as ENB issuance account for 10% of the total preferred share market! :shock:

FWIW as an ENF shareholder this whole tangled mess is a real cause of concern for me. Just how do you "drop-down" $17B worth of assets into a holding company with a $2.3B market cap. It's going to require the mother of all secondary offerings and a boatload of subordinated debt! :evil:
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

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

Post by AltaRed »

Currently, it has a higher Leverage and D/E ratio than TRP. Granted if ENB is successful in downloading all those assets into ENF, it will have a lot of net cash out of that transaction as a result...which will either be used to pay down debt or go on an acquisition spree. The latter is what would worry me.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
Webber22
Contributor
Contributor
Posts: 96
Joined: 09 Jan 2009 18:57
Location: Ontario

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

Post by Webber22 »

Under the plan, Enbridge will transfer ownership of the assets, which are valued at $17-billion, into the fund in exchange for a higher equity stake.
Once the deal is completed, Enbridge will own about 90 per cent of EIF and will keep operating the assets
Under the plan, EIF will issue $600-million to $800-million of equity each year

http://www.enbridge.com/~/media/www/Sit ... .pdf?la=en
User avatar
StuBee
Veteran Contributor
Veteran Contributor
Posts: 2944
Joined: 21 Sep 2010 11:08
Location: SW Quebec

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

Post by StuBee »

Sigh...Sigh

Altared,

You are to pipes/oil what SQRT is to banks...

ENB is 30% off of its high... :shock: close to a 2 year low... :shock: Current yield is 4% :shock: When I search back in my mind to the last time that happened, my memory fails me... :( All this flurry of buying on the buy thread is... disconcerting. Clearly we have gone past "getting close to a buy".

Question: How sensitive is ENB (and TRP for that matter) to oil prices?? I imagine that as long as oil is being consumed, pipes will be filled and if ENB's revenues are "volume dependant" then all is well. Is there any (and how much) oil price sensitivity?

To all of you who are (finally) loading up... Cheers :wink:

StuBee :(
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
BRIAN5000
Veteran Contributor
Veteran Contributor
Posts: 9064
Joined: 08 Jun 2007 23:27

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

Post by BRIAN5000 »

Loading up may be the best way for short term profits how about long term? Maybe some distribution between the three quasi-utilities, Telephone, Power and Pipeline?
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

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

Post by AltaRed »

ENB and TRP are not directly affected by oil (and gas) prices, but they could be eventually if shipping contracts are not renewed and some space goes wanting. TRP has that situation currently on their gas system to some degree and hence one reason to convert part of that gas system to oil as part of Energy East. It is not a foregone conclusion that toll revenue could fall off if things don't turn around. Part of that will depend on how much the National Energy Board allows TRP and ENB to recover their costs on unused space and how much falls on the backs of ENB and TRP shareholders. I am not close enough to know current trends/patterns/thinking in tariff design.

So, yes, shipping revenues could fall off eventually though as we know, oil production continues to increase out of Western Canada, the world and the USA is still addicted to oil AND many volumes are stlil being shipped by rail. I thus see little to no risk on oil volumes in existing pipes for some time to come, perhaps a few decades. I am not so sure what will happen though if/when Kinder Morgan and/or TRP gets to build their new pipelines. There is a risk factor.

Regarding 'close to buy', I guess that depends partly on how current valuations compare to those of perhaps a decade ago. Pipeline valuations overall got way ahead of themselves for a number of years and they are now reverting, I think, to familiar territory. I have to think that P/E of 13-18 or so would be fair valuations though the E part is likely skewed because of recent rapid growth in assets. Someone who has year 2000-2005 valuations data might be in a better position to comment. My hunch is that pipe valuations are now probably 'reasonable' but I would not say they are cheap in the historical sense.

I would probably consider adding a bit of TRP at these levels but ENB still looks rich to me, at least on the pipes side. A lot will depend on the growth of their other businesses, especially power.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
brad911
Veteran Contributor
Veteran Contributor
Posts: 1150
Joined: 29 Jan 2007 16:45
Location: London ON
Contact:

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

Post by brad911 »

My data (I track back to 94 in my own spreadsheets) shows that ENB last traded near these levels in 1998-2003. That being said the avg P/E during that time frame was ~15.5x which is quite cheaper relative to where we are today.
P/B was ~2x
Payouts ~61%
Dividend growth was quite average during the period (~7.5%) and BV growth was decent as well.
ROE was in the 12-14 range

I've been buying mostly due to allocation in my portfolio. I don't see it as significantly over valued or under valued; simply just fair value.

Important to note that yields went to 5.9% (96) and 7.3% (95) with 1999 showing 4.9%. Take note of what was happening to interest rates at that time and decide how appropriately valued you believe ENB is at present levels.
Triage Investing Blog - A Source for Value & Dividend Investing and Business Fundamentals
User avatar
StuBee
Veteran Contributor
Veteran Contributor
Posts: 2944
Joined: 21 Sep 2010 11:08
Location: SW Quebec

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

Post by StuBee »

Thanks for all of your insight.
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

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

Post by AltaRed »

Dug a little deeper. Canadian production may not fall off at all in 2016/2017. From http://navigator.oilsandsreview.com/listing the oil sands projects (other than Shell Peace River) listed as Construction will come on stream. CNRL Horizon has 125kbpd to come on stream as does Suncor Fort Hills with another 160kbpd, and maybe another 100kbpd of in situ/SAGD from a variety of producers. That is more than a 10% boost to overall Canadian production.

With most other producers trying to spend enough capex to hold off material declines, I don't see any near term decline in the next few years at least. By then, I foresee a balance in global supply/demand and enough to keep existing pipelines full for some time. The wild cards for keeping pipelines full may rest with how/when/if Kinder Morgan Trans Mountain and/or Energy East projects get built by circa 2018-2020.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
JaydoubleU
Veteran Contributor
Veteran Contributor
Posts: 3103
Joined: 13 Sep 2007 22:52

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

Post by JaydoubleU »

"Enbridge Willing to Grow Through Acquisitions"

http://business.financialpost.com/news/ ... quisitions

I found these statements intriguing. Any speculation as to what might be on Enbridge's radar?
Last edited by JaydoubleU on 03 Dec 2015 20:15, edited 1 time in total.
2 yen
Veteran Contributor
Veteran Contributor
Posts: 4116
Joined: 09 Apr 2005 09:15

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

Post by 2 yen »

JaydoubleU wrote:"Enbridge Willing to Grow Through Acquisitions"

http://business.financialpost.com/news/ ... quisitions

I found these statements intriguing. Any speculation as to what might be on the Enbridge's radar?
Well I did notice they have picked up some renewables lately.

http://beaconenergynews.ca/energy-news/ ... or-us200m/

Glad to see they are looking to the future, although this may just get dropped down to ENF so that ENB can use it as a future financing source, as Alta Red has pointed out.

2 yen
User avatar
StuBee
Veteran Contributor
Veteran Contributor
Posts: 2944
Joined: 21 Sep 2010 11:08
Location: SW Quebec

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

Post by StuBee »

ENB has just announced the issuance of 2 Billion$ of shares from treasury (at 40.70$ per share :shock: ). Purpose: funding of capital projects. This represents (my back of the envelope calculation) a 5% dilution of their common share float :shock: . Now why did they pick a 52 week low to issue shares? Is there something else going on???
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33399
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

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

Post by AltaRed »

I suspect they have a cash flow need in the next several weeks and that is all it is. They also seem to have developed a relatively callous approach to their shareholders and debtholder with the change in CEO not so long ago. Time will tell.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
ig17
Veteran Contributor
Veteran Contributor
Posts: 3418
Joined: 21 Feb 2005 20:54

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

Post by ig17 »

StuBee wrote:Purpose: funding of capital projects.
Not according to Bloomberg.

http://www.bloomberg.com/news/articles/ ... quity-sale

"The funds will be used to pay short-term debt, the company said."
User avatar
StuBee
Veteran Contributor
Veteran Contributor
Posts: 2944
Joined: 21 Sep 2010 11:08
Location: SW Quebec

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

Post by StuBee »

ig17 wrote:
StuBee wrote:Purpose: funding of capital projects.
Not according to Bloomberg.

http://www.bloomberg.com/news/articles/ ... quity-sale

"The funds will be used to pay short-term debt, the company said."
According to the Globe and Mail (and similar wording is present in ENB's press release):
“Proceeds will be used to pay down short term indebtedness pending investment in capital projects,” Enbridge said in a news release late Wednesday.
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle
User avatar
Descartes
Veteran Contributor
Veteran Contributor
Posts: 1856
Joined: 03 Nov 2008 09:59

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

Post by Descartes »

Interesting interpretation of the announcement above:
yah! more capital projects (which means more growth)! vs. boo! they are so in debt they've got to issue shares in this crappy financial environment.

Here is the actual quote (note there might be 7 million more shares as an option):
CALGARY, ALBERTA--(Marketwired - Feb. 24, 2016) - Enbridge Inc. (TSX:ENB) (NYSE:ENB) today announced that it has entered into an agreement with a group of Canadian and United States (U.S.) financial institutions (the Underwriters), to issue 49.14 million common shares (the Common Shares) from treasury, on a bought deal basis, for gross proceeds of approximately CDN$2 billion (the Offering). Proceeds will be used to pay down short term indebtedness pending investment in capital projects. The equity raised through the Offering is expected to be sufficient to fulfill equity funding requirements for Enbridge's consolidated commercially secured growth program through the end of 2017.

Enbridge has entered into an agreement with RBC Capital Markets, Credit Suisse, BMO Capital Markets, CIBC World Markets, Scotiabank, and TD Securities as co-lead underwriters to issue 49.14 million Common Shares, on a bought deal basis, at CDN$40.70 per share for distribution to the public in both Canada and the U.S. Closing of the Offering is expected to occur on or about March 1, 2016. Pursuant to the agreement, the Underwriters have an option to purchase up to an additional 7.371 million Common Shares by providing notice to Enbridge at any time within 30 days of closing of the Offering, to cover over-allotments, if any.
Personally it smells like an attempt to pay down short-term debt and those capital projects are just those things they've already promised during much more favorable times.
I am happy I've never bought into this company, I've never been able to get behind their market valuation, ..but it has worked for some people so far.
"A dividend is a dictate of management. A capital gain is a whim of the market."
Thegipper
Veteran Contributor
Veteran Contributor
Posts: 3477
Joined: 14 Mar 2015 16:58

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

Post by Thegipper »

To many things going on. First we get the restructuring into two different companies . Now we get the equity issue with some questions about it's intent. Throw in a pile of preferred shares and debt . I solved my anxiety by selling my ENB position.
Post Reply