Enbridge Income Fund Holdings (Symbol-ENF)

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JaydoubleU
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by JaydoubleU »

Anybody else still on the bandwagon?

Posted this in dividend increases, but it is worth repeating here. Big drop-down of assets from the mother ship just announced, along with a 12% dividend increase.
Enbridge Income Fund Enters Into $1.76 Billion Transaction With Enbridge Inc. For Natural Gas And Diluent Pipeline Interests
Enbridge Income Fund Holdings Inc. enters into bought deal agreement to sell $337 million of Subscription Receipts to finance its investment in the Fund; 12 percent dividend increase following close of transaction

Enbridge Income Fund Enters Into $1.76 Billion Transaction With Enbridge Inc. for Natural Gas and Diluent Pipeline Interests

CALGARY, ALBERTA--(Marketwired - Sept. 22, 2014) -

Enbridge Income Fund Holdings Inc. (the "Company") (TSX:ENF) and Enbridge Income Fund (the "Fund") announced today that indirect wholly-owned subsidiaries of the Fund have entered into agreements with indirect wholly-owned subsidiaries of Enbridge Inc. (TSX:ENB) (NYSE:ENB) ("Enbridge") to acquire a 50 percent interest in the U.S. segment of the Alliance Pipeline and subscribe for and purchase Class A Units which will provide a defined cash flow stream from the Southern Lights Pipeline (collectively, the "Assets"), for $1.76 billion (the "Transaction"). The Company also announced that to finance its equity investment in the Fund pursuant to the Transaction, it has entered into a bought deal agreement with Scotiabank, RBC Capital Markets and TD Securities Inc. for the sale of an aggregate of 11,100,000 subscription receipts of the Company ("Subscription Receipts") at a price of $30.35 per Subscription Receipt, for gross proceeds of $337 million. Closing of the Transaction is subject to customary regulatory approval, including pursuant to competition legislation in Canada and the U.S. The Company anticipates that the Transaction will be completed in November 2014.

Collectively, the Assets are expected to generate within the Fund cash flow before interest expense of approximately $150 million per year on average over a long term planning horizon. The Company intends to increase the dividend on its common shares ("Common Shares") by 12 percent following close of the Transaction.
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scomac
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by scomac »

JaydoubleU wrote:Anybody else still on the bandwagon?
Yes. :)
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Shakespeare
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by Shakespeare »

$30.35, which is a couple of bucks less than I sold my LRIF holdings.

May pick up 50 or 100 for my TFSA tomorrow, as the latter grows at the expense of the LRIF and RRSP.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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JaydoubleU wrote:Anybody else still on the bandwagon?
Yes, and picked up some more today about 30.80. Had been waiting for a drop to add more...
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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scomac wrote:
JaydoubleU wrote:Anybody else still on the bandwagon?
Yes. :)
With prior trimming of other stocks, ENF is now our biggest holding. Won't be adding.

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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by Shakespeare »

Still shows open at RBCDI.

Fair market price this morning should be $30.35+1 dividend or $30.46.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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100 @ $30.15. Market price is cheaper than subscription price.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by Taggart »

I don't own ENF, and I have enough in the energy sector at present, but I have now added it for the first time to my watch list for future consideration.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by bpither »

Picked it up earlier this year @$25. Enbridge Inc has a 67% economic interest in the fund which will drop slightly.

It's a "tax efficient dividend" income fund - CDN residents are entitled to the enhanced dividend tax credit according to their website - and a little "surprised" that with (almost) annual increases since 2004 - yielding 4.5% with an announced 12% increase for Nov or Dec (upon regulatory approval of the "drop down" assets) - it fell 2.5% in early trading. It had a great run up over the past few months. "Buy on the rumor, sell on the news"?

The market never ceases to amaze me.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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bpither wrote:Picked it up earlier this year @$25. Enbridge Inc has a 67% economic interest in the fund which will drop slightly.

It's a "tax efficient dividend" income fund - CDN residents are entitled to the enhanced dividend tax credit according to their website - and a little "surprised" that with (almost) annual increases since 2004 - yielding 4.5% with an announced 12% increase for Nov or Dec (upon regulatory approval of the "drop down" assets) - it fell 2.5% in early trading. It had a great run up over the past few months. "Buy on the rumor, sell on the news"?

The market never ceases to amaze me.
The drop was likely due to the announced stock offering to fund the asset acquisition from ENB - 11.5M units are being sold at $30.35 to fund the transaction.
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Shakespeare
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by Shakespeare »

Early trading was below that - and includes one monthly dividend.

RBCDI shows the offer is still open, but the market price is a better deal.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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Curious. Those of you holding ENF, do you also hold ENB, and if so, why?
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by bpither »

Pardon my ignorance as I'm not a trader but I assume my fellow posters on this topic sniff advantage by buying ENF @ $30.18 (at the moment) when the 11.5 million units are being offered at $30.35?

How does this work? Will you be able to make a quick profit of 17 cents per purchased unit at some point? Thanks
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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AltaRed wrote:Curious. Those of you holding ENF, do you also hold ENB, and if so, why?
Very good question. I suppose one might feel ENB has better long term growth prospects while ENF is more of a 'yieldco' for those wanting more income now. FWIW, I plan on selling a chunk, if not all of ENB next year - if it's price stays similar to today. Need funds for another purpose and ENB is one of the lowest yielders in our portfolio.

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Shakespeare
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by Shakespeare »

Those of you holding ENF, do you also hold ENB, and if so, why?
I consider ENB the main holding, which is why I sold all my ENF earlier this month.
OTOH, the current price is a (small) bargain relative to the subscription receipts.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by bpither »

AltaRed -

I own both. Principally for the income.

Enbridge has a great long term record of returning value to shareholders via divvy increases and share appreciation. I would imagine every pension fund has it. I've owned it for a very long time and its been pretty much my top performer next to TD Bank.

Bought ENF in Feb because I thought it was an unappreciated income growth asset with a 5.4 yield and a 5% compound annual growth rate of the distribution/now dividend since 2004.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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AltaRed wrote:Curious. Those of you holding ENF, do you also hold ENB, and if so, why?
I do not - ENF is my only "pipeline" holding. I purposefully didn't buy ENB, knowing that I owned the income producing side instead.

When I got into ENF, the rest of the pipelines I was looking at seemed overpriced at the time. ENF was trading at a lower multiple, and sported a higher yield than others. I figured there was growth potential in there, and have been proven right so far.
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Shakespeare
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by Shakespeare »

Well, it's still open at RBCDI and the stock is trading well below a fair price on the market for the offer ($30.46 including the monthly dividend).

Looks like the underwriters mispriced it and may have to eat the loss.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by AltaRed »

Shakespeare wrote:Looks like the underwriters mispriced it and may have to eat the loss.
They might but I would guess they will likely hold for awhile hoping to get the price for the shares they have underwritten. I have watched a number of stocks over the years that go through these undersubscribed offering issues. Often at Level II quotes, one will see a huge Ask volume* at the subscription price for perhaps weeks until it clears..... OR as you say, they capitulate and lower their Ask to market prices to clear their inventory.

* Of course, there is no guarantee all these Ask volumes at the subscription price are from the underwriters themselves. They could be other investors who thought they could flip their subscriptions for a profit themselves. Watch for Ask volumes and prices (and institution names) that show up on the first trading day. In this case, watch for institution 2 (for RBCDS) http://www.cdcc.ca/members_en to see if there is a huge Ask from them on trading day.

Added: Or for the more cynical of us, those who have RBC DS accounts may be getting phone calls from their UCS recommending ENF in a big way.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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AltaRed wrote:Curious. Those of you holding ENF, do you also hold ENB, and if so, why?
No. I only hold ENF. I sold out of ENB entirely a year or more ago on valuation concerns.

IMO, ENF is a much better value and has plenty of growth prospects as long as ENB continues to drop down legacy assets such as this.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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scomac wrote:IMO, ENF is a much better value and has plenty of growth prospects as long as ENB continues to drop down legacy assets such as this.
That IS the big question... I really don't want a Bell Aliant type stock BUT if I am considering COS yet again as an income stock, ENF should be on that list. I've been a fence sitter on this for some time.
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JaydoubleU
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

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Curious. Those of you holding ENF, do you also hold ENB, and if so, why?
Same as Scott. I sold ENB last year (I think) on concerns over the valuation.

I was looking at the holdings of CDZ sometime last year and noticed that a top holding was ENF. When I looked into it, I saw that it was trading roughly at 1x book, and the P/E was much lower than any of the others in the energy infrastructure space. With a yield of 5.8% (at the time) and dividend growth to boot, it seemed like a good idea.

I continue to avoid most others in this sector (recently sold IPL) because of valuation, but hold onto ENF for the income. And I was pleasantly surprised by the size of the increase---was not expecting 12%! At the closing price of $30, that's a projected yield of 5.1%.

Not a bad investment at all.

I might add that I liked ENF because of its diversification: liquids transport and storage, NG transmission, and also "green" power assets; this was my first foray into alternative energy.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by SQRT »

I would be a little surprised if the total returns to ENF surpassed ENB for the long term given the fact that ENB effectively controls ENF and decides which assets are transfered down. Yield can be higher at ENF of course but you would then expect growth to be lower then ENB. Don't know much about it though so I could be missing something.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by Shakespeare »

I would be a little surprised if the total returns to ENF surpassed ENB for the long term
So would I. That's why I consider ENB, not ENF, to be a core holding.
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Re: Enbridge Income Fund Holdings (Symbol-ENF)

Post by AltaRed »

SQRT wrote:I would be a little surprised if the total returns to ENF surpassed ENB for the long term given the fact that ENB effectively controls ENF and decides which assets are transfered down. Yield can be higher at ENF of course but you would then expect growth to be lower then ENB. Don't know much about it though so I could be missing something.
I think folks like Scomac and Jay saw the light on the extreme overvaluation of ENB and hopped over to ENF with its relatively cheap financial metrics. I would not be surprised to see ENF outperform ENB in the relatively short term, e.g. 5 years. Indeed, it would be interesting to compare the Total Return of both of these over the 5 year period ending 2018. In this case, market timing might be everything.

Perhaps over the next 10-15 yr period ENB should outperform, for various reasons including what you have stated, but because all pipes are ridiculous at the current time, their forward performance has got to stall for awhile.

Note: I sold off some of my ENB holdings a few years back because of its metrics AND oversize in my portfolio. I have kept the rest (as well as a pref) as part of my buy and hold philosophy. I think I missed the ENF boat.
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