Advice on VERESEN (VSN.To)
I own 2000 VSN (former Fort Chicago Energy) since 2009 as a “buy and hold”. Stk dropped since May about 20%. Present profit 70%.
Trades presently at $12.50
Dividend 8.7%. No dividend increase since 2008. P/E ratio 40, EPS 0.31.
Veresen announced yesterday 2nd Q results and correction to 2012 guidance. Distributable cash 2012 dropped from $1.05-1.35 to $1.00-1.15. Reason for dropping: decrease in ngl prices and share dilution (issued 20% more shares).
I would like to hold because it’s a good income generator for me but I am worried about the high payout ratio. Analysts seem to suggest that the dividend is safe for the near future. Stk is a Buy at TDW.
Do any of you hold Veresen (VSN) and what is your take on it? Do I need to reduce my position in order to preserve capital and income? If I sell it would mean investing the capital in something with a similar high dividend..
I would appreciate any of your opinions. Thks for help. Pook.
Pat McKeough is a long term value investor; he doesn't concern himself with day to day noise. Things that might look bad in the short term (like dividend cut) might actually be good news for the longer term.
Here is what P.M. had to say about Veresen on May 12, 2012 (his recommendations don't change without a very good reason).
VERESEN $14.40 (Toronto symbol VSN; Shares outstanding: 193.7 million; Market cap: $2.8 billion; TSINetwork Rating: Average; Yield: 6.9%) owns pipelines, power plants and natural gas processing facilities across North America. One of its major holdings is 50% of the Alliance gas pipeline, which runs 3,000 kilometres from Fort St. John, B.C., to Chicago. Enbridge owns the other 50%.
As well, the company owns the Alberta Ethane Gathering System, and Veresen and Enbridge together own 85.4% of the Aux Sable natural gas liquids plant.
In December 2011, Veresen bought the Hythe/ Steeprock gas gathering and processing complex in the Montney region of B.C. and Alberta from Encana Corp. for $920 million. Encana has also agreed to buy most of the facility’s gas under a long-term contract.
In the three months ended December 31, 2011, Veresen’s cash flow rose 15.2%, to $53.2 million from $46.2 million a year earlier. Cash flow per share rose 6.7%, to $0.32 from $0.30, on more shares outstanding. Veresen’s shares yield 6.9%.
To diversify beyond pipelines and gas-processing plants, Veresen continues to expand its power generation business. It now owns hydroelectric facilities in New York State and B.C.; naturalgas- fired plants in Ontario, California and Colorado; and waste-heat plants in B.C. and Saskatchewan.
Veresen is still a buy.
All of our articles are available for republishing as long as you provide a link back to the original article.
Zylon, thks for yr time to look this up and for the link. I hadn't come across Pat McKeough but it seems to be a good source (I am still learning where to research and glad for any expert recommendations).
Originally Posted by zylon
I still wonder if anybody of the CMFers holds or watches Veresen or am I the only lonely owner. P.
I have it looked at it from time to time but have not opened a position as of yet. Partly due to sector allocation (I do not have much, if any, room left for utilities). Most investors prefer to use telcos and pipelines for their utility allocation. It seems to be under performing which could be a warning sign or it could mean a great buying opportunity. I must admit I haven't looked at this one for a few months. I prefer AQN for power, IPL for pipelines and a variety of energy companies for LNG. They seem to be purer plays IMO. A big hangup for me is that I don't see any dividend increases on the horizon unlike the other companies mentioned above which have provided me dividend growth through increases recently. There are a lot of holders of this stock on FWR so you may be able to find more info there. I wish I could be of more help but I haven't paid close attention to it as of late.
Here is a quick link I found on google by a DIY dividend investor blogger
Last edited by londoncalling; 2012-08-14 at 12:06 AM.
Reason: added links
London, thks for links and reference to FWR (that is "Financial Webring Forum", isn't it? I wasn't familiar with this one)
Originally Posted by londoncalling
1. I understand you seem to be saying rather to own individual and clearly focussed companies rather than one that is a bucket of "goodies" as Veresen (VSN) is. I will look into it although for power I own EMA (Emera) and own also IPL. I have "inherited" Veresen from our FA and we are going presently through all the securities in our portfolio to see if they make sense or not and if we should keep them or sell them as some of the portfolio is going into a Discount Brokerage account. One criterion is to to check this forum; if I cannot find a stock or equity mentioned on CMF my alarm bells go off.
2. I am familiar with the spbrunner.blogspot and have read it. However, new to investing I have difficulties to judge how much I can trust her assessments, she seems to be an amateur analyst (that doesn't mean that she couldn't be a good one). Her statements are always very clear and organized.
1. yes it is. It is a great place with many wise and seasoned DIYers. One must be aware that most of the members are in the withdrawal phase so the advice is geared towards people in that stage of their investing cycle.
2. I would agree that one can never truly trust any analysis professional or otherwise. What I do like is that her analysis gives me a starting point by listing the mean and average P/Es yields ROE etc. It is a good starting point(much like a screener). I myself look to that site for ideas for further research as well as FWR and CMF. Once I have a short list I go to the balance sheets and quarterlies. So far I have been directed to IPL from CMF(thanks ARGO) and AM (thanks Dr. ED). Spbrunner gave me info on AFN. I would certainly agree that her analysis is very clear and organized as well as well researched. One always has to do their own DD so they can take full responsibility for their decisions. I got suckered into some bad choices early on because I did not how to do my own followup research. Also don't be too easily swayed by expert opinions or amateur posters. If I had been easily swayed by opinion I would never have bought LIQ which I currently have a 30+% paper profit in less than a year.
Good luck out there Pucki. The more you learn the more you can apply. That being said, experience is the greatest teacher(or maybe its certain members on CMF). There are a ton of helpful people here on CMF that have increased my knowledge, inspired me or decreased my learning time. (early sailors, modest pastry chefs, arachnid superheros, anyone who's name ends in gal,tropic of cancer foliage,tea drinkers, and our local town crier to name a few) This is not an inclusive list as there are many here that have imparted their wisdom upon my feeble mind to which I owe much gratitude but do not have the attention span to remember with my ADHD rattled brain. If I can only apply 1/10th of what has been given to me here I will be highly succesful.
London, thks for your encouragement and sharing with me your how-to-research. I can only say CMF is amazing. Your list of ingenious CMF experts made me smile, though "tropic of cancer foliage" took me a little bit longer. All of those mentioned by you are on my regular reading list. Thks again. Pookie
Originally Posted by londoncalling
Originally Posted by londoncalling
london i love you but don't you think this is going a bit too far.
I would be more concerned that they could simply turn around at any time and dilute me 20% like they just did! Ouch. They must have announced it in May as they immediately pulled back and then came in a bit over 22% from their high before starting back up the hill. You should dig into why they issued 20% more shares and diluted all the existing shareholders - what did they need that money for? Did it go straight into the pockets of insiders, or was it to finance something? If it was to finance something, rates are so low why didn't they borrow? I'm not sure I trust management not to steal 20% of my shares again like they just did.
Originally Posted by PuckiTwo
Interesting - they actually have some decent options open interest on the call side, although the volume is very thin.
My deepest apologies
I was refering to FWR in regards to the withdrawal phase...
Originally Posted by humble_pie
To clarify, CMF has a very diverse membership in all phases of the investment cycle(time horizon).
Last edited by londoncalling; 2012-09-04 at 05:44 PM.