# CSE and HNY (ETF)



## ACS (Jun 10, 2015)

Hello all, 

First post here (yay). Love the forum. 

Okay here is my question: 

I have been reading about these two securities. Both are on sale now, have high yields, are high volume and overall seem promising. I am a bit of a newbie investor so my question is why are these so unloved right now? HNY has a 15% dividend! Who would not want that? Shall I dive in? Anyone else own these two? 

1) CSE (Capstone Infrastructure Corporation) based in Toronto

http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=CSE-T

2) and HNY (Horizons Natural Gas Yield ETF)

http://www.stockhouse.com/companies/bullboard/t.hny/horizons-natural-gas-yield-etf

ACS


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## doctrine (Sep 30, 2011)

CSE is cheap because a majority of their income is under pressure (Cardinal NG power plant due to new contract, Bristol water due to regulator cuts). Their business plan is to sustain the dividend out of debt for the next few years before business improves. Used to own but sold out at $4.40 ish because I figured capital loss when investors saw the bad news hit the financial reports, which has started coming in recently. And the news has actually gotten worse on revenue/earnings, so I wouldn't get back in either. 

HNY seems like a bad idea all around; it contains nat gas futures contracts with options strategies and pays a distribution out of gains which aren't really materializing. Unless you think North American natural gas is going up in a big way and in the short term, you should avoid. Nat gas fell well below $2 a few years ago and arguably there are more supply risks now.


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## ACS (Jun 10, 2015)

Thank you for the insightful and detailed response. 

When I saw the dividend yields I became interested yet skeptical. Glad to see my intuitions were correct. 

ACS


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## londoncalling (Sep 17, 2011)

I hold CSE and am currently underwater. I bought at just under 4.00 and am down over 20%. At the time I bought it was just before they had renewed another expired contract. It was uncertain they would renew at all. They did renew but at a lower than expected rate. I knew management had planned to take on further debt to maintain the dividend. I expected further downside (5-10%) but not to the 20% I currently experience. At the time of purchase I planned to hold this up to 5-7 years or even longer. Check out Contra the herd's Benj Gallander's analysis for a contrarian view. I am still holding but not adding as I see better opportunities elsewhere.

Cheers


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## ACS (Jun 10, 2015)

londoncalling:

Yeah suffice to say I am not going to invest in either of these. 

I will check out the analysis though.

Thanks as well.

ACS


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## My Own Advisor (Sep 24, 2012)

My experience has been anything nearing 7% yields is becoming unsustainable. Anything over 10% has a big "danger" sign on it!


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## doctrine (Sep 30, 2011)

They clearly have to borrow for at least two years to pay it. Why not just cut or suspend the dividend for two years? The stock probably wouldn't have fallen by more than it has now if they announced it a year ago, especially knowing the net asset value would be maintained and debt would be lower. It's still not too late to do it as cash flows only dropped in December. It might actually be a case of a stock price going up after a cut.


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