# What's up with HSE (Huskey Energy)?



## Spidey (May 11, 2009)

This one has me stumped. The fundamentals compare favorably to any other energy companies -- fairly low debt, 1.6 times book value, reasonable P/E ratios and cash flow. On top of that it pays a 4.4% dividend, has a foot in China and is partly owned by Li Ka-shing, one of the most brilliant billionaires on the planet.

Despite all that, it is trading at pretty close to the level it was at during the crash. I was scooping up shares at what I thought to be a bargain (probably average price of $29-$30) late last winter but so far - no cigar. I would probably even be adding shares at this point, if this already didn't occupy a fairly significant position in my portfolio. I've heard many experts asked about this company on BNN, but the best they can come up with are vague responses. I'm going to be patient and hang on for the long run, but in the meantime; Does anyone have any insight?


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## dogcom (May 23, 2009)

Going into the strong season for oil I would be a buyer here and would be looking to exit in a few months time. I would not want to hold anything long term with this sovereign debt crisis lurking around which could give nice boosts to the US dollar.


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## FrugalTrader (Oct 13, 2008)

Spidey, I have the same view as you, it seems like a solid company that investors have turned a blind eye to. I have recently added to my position of HSE.


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## el oro (Jun 16, 2009)

This is one of those buy during the Feb./March low and sell in a few months for a 10%+ gain type of oil stocks. I don't know the specific fundamentals but at least you're buying at the right time of year.


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## high octane (Jul 21, 2009)

I recently bought Husky and Suncor just because they haven't took off since March like everything else

I'll watch for this fast 10% gain; swing trading seems be the way to go in this market


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## Berubeland (Sep 6, 2009)

Technical Indicators as per Scotia ITrade are all short term -long term bullish on this stock so i'll cross my fingers for you guys.


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## AdamW (Apr 22, 2009)

*Husky the unloved.*



Spidey said:


> Does anyone have any insight?


I've been a long time holder of Husky both personally and for my clients (3+ years) and have recently been accumulating more.

Like all the integrated players they have had issues with their refining operations (but you've seen the same margin compression from all the major players in Canada and the US) and there have been questions surrounding what they will be doing with their Chinese operations. The company has put out there that they might be spinning that off division but haven't provided much more info on that in the last 9-12 months.

I think that people are just staying away because of the uncertainty right now but at the end of the day, like you said, based on any metric you look at (P/B, P/E, P/S, P/CF, etc ...) this the cheapest stock in the energy space right now.

I'm very happy to take that 4.5% yield, reinvest my dividends, and wait for better days.


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## Dr_V (Oct 27, 2009)

My cursory look suggests that this is a historically strong company, with decent fundamental ratios at the current price, and a nice yield. I would say that it's just a bit too expensive to fit into my Graham screens, so I'm going to sit on the sidelines on this one until it pulls back a bit. (Though, if I were to buy it right now, I wouldn't be unhappy.)

That said, without having looked at the annual report, I do not know anything about the company's proven/expected reserves (which are really key for businesses in this market segment), or how "clean" the balance sheet is.


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## el oro (Jun 16, 2009)

high octane said:


> I recently bought Husky and Suncor just because they haven't took off since March like everything else
> 
> I'll watch for this fast 10% gain; swing trading seems be the way to go in this market


Yup, just take a look at a chart of the big oil companies over the past 5+ years. Buy in the Feb./March low and sell in a few months is easy money. I don't see it changing this year.


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## takingprofits (Apr 13, 2009)

Aside from the market not liking refiners, Husky recently bought a bunch of service stations that became available from the Suncor / Petro Canada deal. According to some pundits, the market thinks even less of the retail side of selling gas than it does of the refining side.

It does look inviting for a swing at this level though there is lots of resistance close by...


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## el oro (Jun 16, 2009)

high octane said:


> I recently bought Husky and Suncor just because they haven't took off since March like everything else
> 
> I'll watch for this fast 10% gain; swing trading seems be the way to go in this market


Another year, another quick 10%+ gain right on cue.


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## HaroldCrump (Jun 10, 2009)

What do you guys think about the latest earnings report?
Profit is down significantly, even with higher oil prices.
It was partly expected because they had deliberately scaled back production, but ended up over correcting.

What do you guys think of their plans to acquire nat. gas properties?

The stock price has suffered a lot recently even with higher crude oil prices.
It's trading at $25 now, well below the $27 - $28 from this spring.

Does it still appear to be a promising company being ignored by the investors?


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## dilbert789 (Apr 20, 2010)

I'm in at $25.05, only for 40 shares though.


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## HaroldCrump (Jun 10, 2009)

dilbert789 said:


> I'm in at $25.05, only for 40 shares though.


What would you value the stock at?
Latest analyst reports are continuing to value the stock at or above $30.
I personally disagree, and apparently the market disagrees too.
There's also no sign of any recent insider activity or any institutional activity.
My average position has been $26 and change.
I wondering whether to continue holding or cash out.
Given their recent loss of production, this stock may continue to languish for years.


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## humble_pie (Jun 7, 2009)

i recall posting on this thread when it started up with a flurry of positive messages re husky several months ago. I was fairly negative. Why get involved with CNOOC. Li ka shing is an old man now, very old indeed, and i've never been a business fan of his son. For a 2nd tier, intermediate sized energy i said i was going for crescent point.

i'd say the same thing today.

i also have interests in cnq, talisman, ensign, trican, arc energy & fort chicago. Of these, talisman is another ho-hum (like husky) & i'm thinking to lever down towards out.


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## DavidJD (Sep 27, 2009)

In TDW's Morning Action Notes for July 30th they post two pages of information on Husky that you may want to check out.

among much more data and info...

Oil & Gas Producers
Recommendation: BUY
Unchanged
Risk: HIGH
12-Month Target Price: C$35.00
Unchanged
12-Month Total Return: 35.4%


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## mario 1 (Nov 6, 2009)

When you can collect a fat dividend why sell at these prices.
I see more upside that down.


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## m3s (Apr 3, 2010)

mario 1 said:


> When you can collect a fat dividend why sell at these prices.
> I see more upside that down.


+1

I'm kind of surprised that the price of oil hasn't sky rocketed considering the BP fiasco

In the past, any oil-related disaster sent the price of barrels through the roof

Only furthers my belief that the price of oil is carefully controlled and manipulated (isn't it convenient that BP had a disaster? btw) and therefore a fairly safe investment


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## humble_pie (Jun 7, 2009)

this stock has lost more than 8% since this thread opened in february, 5 months ago. There was a gap down last week of a dollar or more.

usually not a good idea to hold a 4.5% dividend yield while share price ratchets down by close to the double.

it's the hookup with cnooc that bothers me. Decisions are not being made in the heart of the chinesenationaloveseasoilcorporation in any way that is transparent to western eyes. Plus hse doesn't seem to have solved downstream refinery probs yet.

all this being said, i hafta admit that short-term charts are looking good, but only short-term.


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## Toronto.gal (Jan 8, 2010)

mode3sour said:


> +1
> and therefore a fairly safe investment


You mean oil, not BP, right?

It may not have gone up yet, but can oil go anywhere but up considering the massive BP disaster? The incident has resulted in further global regulations & delay of deepwater drilling; delays in turn, will reduce production so I feel comfortable with oil shares, just not BP, though I was tempted to buy at $28.

Take a look at the picture in link below? As we say, 'a picture speaks a thousand words'. Hmmm, is China really changing from a cycling to a car nation? Car sales there have increased this year by more than 50% and there are still 2 quarters of the year left! I wonder how much oil consumption this translates into and no wonder China Petroleum is buying so many of the world's oil resources, including ours! And this is only China, then there is giant Brazil and India.......

http://www.thetruthaboutcars.com/th...will-last-more-than-20-years-experts-predict/

Any thoughts on GM's upcoming IPO? *Sorry OP for being a bit off-topic.*


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## m3s (Apr 3, 2010)

Toronto.gal said:


> You mean oil, not BP, right?
> 
> It may not have gone up yet, but can oil go anywhere but up considering the massive BP disaster? The incident has resulted in further global regulations & delay of deepwater drilling; delays in turn, will reduce production so I feel comfortable with oil shares, just not BP, though I was tempted to buy at $28.


When someone was saying how horrible BP stocks were at $30 I said I would easily buy just to see if it would jump back up for a quick sell. At the time I was watching the skies over Huntsville and not too focused on stocks

But yes, I meant oil in general not BP

Gas was $1.50/L just a few years ago and I see no reason for it not to go back, other than pure manipulation. If they can orchestrate the the price of oil like that I'm comfortable that oil will do well. We would have to rebuild society for that to change


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## humble_pie (Jun 7, 2009)

both oil & gold have dipped down & are laying low in response to current bout of deflationary fears, i believe.


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## HaroldCrump (Jun 10, 2009)

mario 1 said:


> When you can collect a fat dividend why sell at these prices.


You have to keep an eye out for the payout ratio too, I'd say.
It's sitting at 80% now, which I believe is too high for a company of this type.
For a utility or bank, it's ok but not these guys.
I'm prolly going to watch for Q3 results and then figure out which way to go.
In the meantime, let's see if they manage to catch up on their production targets and their natural gas property acquisitions.


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## Doug Out West (Apr 25, 2010)

I'd wait until they writedown Tucker Lake as that project is going nowhere


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## Jungle (Feb 17, 2010)

Shares down again, oil down right now.


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## HaroldCrump (Jun 10, 2009)

These guys must be really dumb!
Stock has been trading above $28 for quite some time.
Depending on crude prices sometimes it's even gone into the $29 range.
What were they thinking doing an IPO for $27.05?

Li ka Shing must have completely lost it if he's coming up with these numbers.
Why can't they give him Prozac three times and day and let him sleep through the board meetings?

As expected stk's dropped well below $27 because of this insanity.
Did they think they won't find any buyers at $28 and above?
Or maybe the investment banks doing the bought deal want to keep major chunk of the shares for themselves so they arm-twisted the management into offering such a ridicolously stupid price.

Regardless, this just further proves the incompetence of the management.

A few months ago, they passed a resolution (which I voted against, btw) giving the company the option to issue dividend in the form of shares instead of cash.
I think there is way too much equity dilution going on, maybe as a way to couch their underlying problems and cash flow position.

Time to look for an exit, IMHO.


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## Jungle (Feb 17, 2010)

For a while there the share price was hoving around $25 and then it jumps to like 28-29 with that new unrest in the middle east. I have held on and bought at $25 one year ago. 

I might have had the same or better retuns just index investing.


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## Financial Cents (Jul 22, 2010)

HSE will come back. They have some MAJOR projects coming online in a few years. In the meantime, enjoy the dividends 

From their website:

"The Sunrise Oil Sands Project, located 60 km northeast of Fort McMurray, will use Steam Assisted Gravity Drainage (SAGD) technology. Husky estimates that Sunrise contains 3.7 billion barrels of proved, probable plus possible reserves (0.13 billion barrels proved, 1.9 billion barrels probable and 1.7 billion barrels possible, of which Husky has a 50 percent working interest ), as of December 31, 2009. Capital cost for Phase I (60,000 barrels per day) is estimated at $2.5 billion, down from the earlier forecast of $3.8 billion to $4.0 billion under the original design plan. Under current regulatory approvals, production is expected to ramp up to 200,000 barrels per day once all phases have been built and are operational in the 2020 timeframe."


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## dubmac (Jan 9, 2011)

Is this stock a "buy"?
I know that one must do DD etc etc.
I am starting to consider nibbling here - anyone expect it to drop further?


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## Financial Cents (Jul 22, 2010)

I like HSE long-term. Short-term, it's going to have some pain; raising cash, etc. to finance MAJOR multi-billion dollar projects. However (and maybe I'm WAY off here) but don't you want to BUY stocks when they are low and have been beaten-up (unnecessarily) a bit?

Earlier this year:

"Calgary, Alberta – Husky Energy Inc. (TSX:HSE) recorded a 42 percent increase in 2010 cash flow compared to 2009. The Company reported a 58 percent improvement to fourth quarter cash flow compared to the same period of 2009. Net earnings in the quarter were higher by 19 percent compared to the third quarter 2010 on the strength of higher light oil crude prices, improved refining margins and settlement of the Terra Nova re-determination process."

My take:

Yield is over 4%. Company has tons of assets in the South China Seas. Good mixture of oil and gas. They will likely get a stock listing in Hong Kong, which will bring in new investors but drive up price. These guys are partners with BP. Say what you will about BP, but they have tons of free cash and there's few better partners in the world in the energy sector than BP.


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## alphatrader2000 (Aug 18, 2010)

$1.2 billion offering @ 27.05 would put lots of short-term pressure.


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## dilbert789 (Apr 20, 2010)

alphatrader2000 said:


> $1.2 billion offering @ 27.05 would put lots of short-term pressure.


Yes, with the amount that husky dropped the other day(5%) it would keep the market cap value close to where it was before this announcement.


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## Jungle (Feb 17, 2010)

Really what is up with this stock in the last while?


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## HaroldCrump (Jun 10, 2009)

Jungle said:


> Really what is up with this stock in the last while?


You mean in addition to the dropping price of oil, fears of global recession, prospects of reduced demand from emerging countries, the sky falling, the world ending, etc?
You should consider yourself fortunate that you don't own Suncor, instead.


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## cannew (Jun 19, 2011)

Very true Harold, but if you do own HSE you are probably getting around 4% dividend.


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## Yudansha (May 14, 2011)

HSE has been part of my core dividend portfolio for awhile. I am hoping oil will crash even more to dca a little more.


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## dotnet_nerd (Jul 1, 2009)

Thread bump.

Anyone think Husky's a good buy at this point? It's sharply lower today down 3.36% to 24.15


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## Nemo2 (Mar 1, 2012)

(Last) Sold Husky, (at a loss), 26 months ago @$26.42......personally, I'm very leery about ever buying into it again.


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## doctrine (Sep 30, 2011)

I bought HSE today actually at $24.50. Their 2011 cash flow was north of $5 a share, and even after every expense including depreciation and capital expenses, they were only paying out 60-70% in dividends. They replaced their proven reserves at a rate 180% of consumption in the last year. And finally, they own refineries, including in the mid-west, and are getting full value for refined products even as North American crude prices fall, and although are getting less money for Alberta crude, also have operations in oil rigs that get Brent prices. 

Just my opinion. My shares from last year are down about 5%, so it's a wash with the dividend, and I get to average down a little more. My quarterly dividend will be close to $100 a month now. They're probably not going to raise it, although seeing how they paid $1.73 in dividends in 2008 before the oil price dropped, I feel that if oil did rise to $150/barrel again (WTI) that we would see a higher dividend based on their incredible cash flow.


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## Jungle (Feb 17, 2010)

Been holding this one for almost two years, I doubled up when it dropped to the lows back in the fall. DRIP the dividend, it goes up and down with the other oil stocks. Our position is really not that big.


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## Spidey (May 11, 2009)

This appears to be a classic "patience of Job play". Although I'm underwater on this one I'm content to hold and collect the dividend until the market finally sees the value that Asia's wealthiest man seems to see. Insider buying and no selling over the past year which is rare for energy companies.


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## Jungle (Feb 17, 2010)

They found more oil, up to 600 million barrels 

http://www.theglobeandmail.com/repo...big-oil-find-offshore-canada/article14540511/

Stocks up 4.5% on this


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## AltaRed (Jun 8, 2009)

Plain silliness to have stock react to a 'find'. Cash flow from any development would be circa 5-10 yrs away.


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## My Own Advisor (Sep 24, 2012)

Agreed. Just adds to their pipeline of long-term production. Thanks


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