# Question re Whitecap Resources -WCP



## jargey3000 (Jan 25, 2011)

I have 1000 shares bought @ approx. $17 (before the fall!) just sitting there. Thinking of buying another 1000 at current levels ($9-$10) to cut my average cost almost in half. The funds will just come out of Hi-Int SA, so no big deal. Do you think this is good move - or fool's game to chase price down? appreciate comments.


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## james4beach (Nov 15, 2012)

I think it's generally a bad idea to "catch a falling knife". If you look at the chart, WCP is making a series of lower highs and lower lows since 2014. That's a pretty bearish price pattern but the same can be said of all stocks in oil & gas.

WCP is one of the better energy stocks I've seen. It's fallen back to its 2013 level, while others (even the sector XEG) have fallen much lower, to all time lows.

So it could be a good sign that it's held up well. However to buy this, you have to fundamentally be bullish on the recovery of oil. If you're bullish on oil, then this could be a better stock that most in the sector.


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## jargey3000 (Jan 25, 2011)

tks j4b - Generally speaking I agree re trying to catch the knife. Re oil recovery sentiment, I'm in the : "Is it WHEN or IF"? camp... I think IF it recovers, just as many people (experts) will see it coming as did when the price dropped...


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## hboy43 (May 10, 2009)

Hi:

People who don't like to catch falling knives: The folks happily buying say TCK.B in the say $30 to $60 range a few years back for ACB of say $40. Price going up, no bloody hands here, this is GREAT! Me with very bloody hands: TCK.B ACB currently $10.26. Now who is in better shape here? ACB $40 or ACB $10? Some will argue better still don't own TCK.B at all. Fair enough. Spend your investing career in GICs if you have to.

I look at it differently. I have at least 5 positions that look like this. Sure it is possible that it will be different this time and the investing sun will never shine again, but maybe 2 or 3 will be a 3 or 5 bagger to compensate for the 1 or 2 that go bankrupt. If investing is buy low, sell high, I am sitting at $10 in a $4 to $60 range. Average this kind of thinking over enough positions, and I like my chances. 

It is not necessary for every buy to make money. It is not necessary for every position to make money. The only number that matters is the average CAGR of the whole portfolio. The best way to do this is to buy low(ish) and sell high(ish). It can be uncomfortable in the short term, where short term can be years.

As to the particulars of Whitecap, I have no insight.


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## jargey3000 (Jan 25, 2011)

just had a look at TCK.B (don't own any).... wow! that's an ugly 5-yr chart!


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## OnlyMyOpinion (Sep 1, 2013)

jargey3000 said:


> I have 1000 shares bought @ approx. $17 (before the fall!) just sitting there. Thinking of buying another 1000 at current levels ($9-$10) to cut my average cost almost in half. The funds will just come out of Hi-Int SA, so no big deal. Do you think this is good move - or fool's game to chase price down? appreciate comments.


Avg cost will not be 'almost half' though. If you buy another 1000 shares at $9.00/sh your ACB will be reduced to $13/sh for the 2000 shares.... still quite a hurtle to get over.
I would not spend more money trying to 'fix' an earlier buy. If I was inclined to think the oil sector was undervalued and deserved more of my money, I'd buy in elsewhere.


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## OnlyMyOpinion (Sep 1, 2013)

hboy43 said:


> ...Average this kind of thinking over enough positions, and I like my chances....


The challenge can be, a) having enough money to do this, and b) maintaining the desired diversity in your portfolio if you have had to put substantial amounts into propping up under-water positions.


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## 1980z28 (Mar 4, 2010)

jargey3000 said:


> I have 1000 shares bought @ approx. $17 (before the fall!) just sitting there. Thinking of buying another 1000 at current levels ($9-$10) to cut my average cost almost in half. The funds will just come out of Hi-Int SA, so no big deal. Do you think this is good move - or fool's game to chase price down? appreciate comments.


If you believe in WCP,just wait until the price(market starts to reverse to add)

I chased FM from 14 to 3 ended up with 20000 shares,sold 15000 last week,still hold 5000 shares,,If you have access to cash to keep in the game you can come out on top at some point,I had to leverage to stay in the game,after 3 decades I can handle the ups and downs,but you have to be able to loose what you have in the game as there is no guarantees as I have learned over all the years ,,I will still add to my holdings as is needed,one house is sold and the other is ready for my retirement,will use the sold house for my investments going forward 

As we get get older it is family and health first


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## CPA Candidate (Dec 15, 2013)

I think 2016 will be harder on these companies that 2015 was. Really the entire industry is in slow motion bankruptcy. They are surviving off the fruits of previous investment.

WCPs budget is based on $50 WTI in 2nd half 2016. That's optimistic. They are only confirming the dividend for Q1 2016 after that it is reviewed regularly.

I wouldn't sell your position, but I wouldn't buy more either.


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## blin10 (Jun 27, 2011)

you will never buy at the bottom, therefore if you feel very comfortable with the company I would buy more... but I, for example, would averaging down in top banks/telcos/pipelines/utils and not in small oil companies


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## james4beach (Nov 15, 2012)

CPA Candidate said:


> Really the entire industry is in slow motion bankruptcy.


I agree, and that's an important thing to consider.

When catching a falling knife, you run the risk of buying one of the losers which will never recover and could go bankrupt. Think of the US financial crisis for instance. Many US lenders and banks failed and the equity became worthless. Some of them recovered, but most never got back to their previous prices.


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## 1980z28 (Mar 4, 2010)

I am positive going forward

If you look down the road 3 to 6 months,save your money

If you have 10 years buy now and going forward,collect div`s along the way


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## doctrine (Sep 30, 2011)

WCP may be cutting or reducing its dividend in the first quarter, so if you're itching to buy you might want to wait until then. They are fortunate enough that if they do cut their dividend, they have enough cash flow to basically maintain production at the current oil price, although probably not below $30. I think WCP would be very attractive with no dividend right now - they will pay $226M in dividends next year at the current payout as compared to $150M in their entire 2016 capital program, so lots of flexibility.


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## jaybee (Nov 28, 2014)

jargey, I own 400 shares with an ACB of about $12.00. I've been debating whether to add more, but I think I'll just add more by dripping...

If\when oil rebounds this one will do well in my opinion.


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## newfoundlander61 (Feb 6, 2011)

With WCP trading at $3.86 as of this post is this company a likely take over target? I owned it at one time but sold in the $12 range, good thing.


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## dubmac (Jan 9, 2011)

newfoundlander61 said:


> With WCP trading at $3.86 as of this post is this company a likely take over target? I owned it at one time but sold in the $12 range, good thing.


I watch WCP with some interest. I found this article - which doesn't answer the question but is still somewhat interesting. According to the Altman-Z score (whatever that is!) the company will go backrupt within 2 years. Not sure whether I agree with that or not. I'm not that well informed.


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