# EGL.UN.TO - Eagle Energy Trust



## Chigu (Aug 6, 2009)

I hold this stock, bought in around at $9.94, it's currently at 11.25 right now and pays a healthy divided. When I bought it I really didn't have an exit strategy, i was just planning on letting it drip for the next few years, and sell when I need the money for other things (it's in my TFSA). But currently, I do have a 12.8% gain on it, and not sure if I should just sell and take my gains, or just continue dripping it. 

Any thoughts on if this stock is overvalued, just right, or still has legs would be appreciated thanks!


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## PMREdmonton (Apr 6, 2009)

A 13% gain on an equity is really peanuts.

I would continue to hold it unless either it no longer fits the criteria that lead you to the stock or something better came along and this is your worst holding. I would usually dissuade selling any issue unless you definitely thought it was either now too high and due for a pullback or you had something better to buy and this is your worst holding.

You have to remember that selling winners too early is the most common mistake made by investors.

If you really wanto to protect most of your gains set a stop loss order at 10.93 or so.


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## gibor365 (Apr 1, 2011)

I also bought EGL.UN at 9.90 and with same reasons as OP  I also think that when you DRIP you get discounted price. I'm not going to sell as yield is excellent and company has no debt ... also I noticed that if it one or 2 days down, next day it will go up even stronger.... I'd like to add to my position, but I hold it in TFSA and I'm out of cash....


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## londoncalling (Sep 17, 2011)

Make a plan and stick to it... Reasons for selling may differ but just because it had a quick run I would not sell unless you know it is going to have a pullback or you know longer want to own the company... In your initial post you seem not to want to do either but have just experienced a blessing of a short run up. Be glad you bought it when you did and sit back and enjoy the ride. If you had planned on holding it for a few years and sold now I am almost certain the return in 3 years will be much higher than 12.8%. Like PMREd mentioned unless you have a better place to allocate those funds or intend to rebalance your portfolio then the reason to sell is only fear of not locking in a profit. I own this one as well, however at a higher price, but I bought it for the yield and a potential spike in the price of oil. If oil goes parabolic I may sell, otherwise I plan to hold for a long time. Buying is always easier than selling.

Cheers

Edit: I am currently going over the company's 2011 financial information. Most of the news is quite positive. One thing that I have potential concern with, which Chigu and gibor probably are not concerned about, is that 60% of its holders have chosen to DRIP their distributions. To me that would equate to a share dilution of 5.598% this year(60% X yield of 9.33%). Is a 60% unit holder DRIP outrageous? Is this a cause for concern for me? Currently their payout is 50% on an $88 WTI price so there should be some room for dilution and either growth in assets and revenue or an increase to distributions. In the short term this should only spur growth but long term it could be an issue. At what point should I become worried about the dilution through DRIPs. Obviously, if the company were to pay out the funds as distributions the cash would be gone but at what point does it effect the value of my shares?


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## gibor365 (Apr 1, 2011)

*Like PMREd mentioned unless you have a better place to allocate those funds* this is exactly the point! What I gonna buy if I sell?! I like also LNV, was trading it last year, now it's going down, but I'm not sure that LNV will do better than EGL (who has also twice higher yield)...


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## 604_Snooze (Jan 7, 2012)

If I hold this stock in TFSA, is there any tax I have to pay?


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## Chigu (Aug 6, 2009)

604_Snooze said:


> If I hold this stock in TFSA, is there any tax I have to pay?


By Definition a TFSA is a (TAX FREE savings account), so you don't even have to worry about taxes on dividends or capital gains etc. No bookeeping required. I hold it in my TFSA, and synthetically drip it.


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## gibor365 (Apr 1, 2011)

why EGL.UN dropped sharply today..? looks like Q3 financial results were not bad…
http://www.theglobeandmail.com/globe-investor/news-sources/?mid=ccnm.20131108.201311080910142001


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## gibor365 (Apr 1, 2011)

EGL.UN announced sale of Permian Properties for $US 140 Million and discontinue Primium DRIP (no diluted shares anymore) ... Thus, book value jumped, guys have a lot of cash to cover 16% dividend.... What is your opinion? 
https://www.tdwaterhouse.ca/markets-research/markets/index.jsp


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## Eclectic12 (Oct 20, 2010)

Chigu said:


> By Definition a TFSA is a (TAX FREE savings account), ...


Point of clarification ... the TFSA is Canadian tax free ... which for a Canadian stock/trust, means tax free.

A US dividend paying stock on the other hand, is Canadian tax free but the last I read, it still subject to the US gov't/IRS 15% withholding tax on dividends.

There's been some rumours the Canada/US tax treaty would be updated to add the exemption the RRSP enjoys in this respect, but so far, I haven't seen anything saying this has happened.

Cheers


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## doctrine (Sep 30, 2011)

gibor, it's a big sale, but it's also nearly 70% of their actual production! I'd rather invest in a company that doesn't have to grow to support a dividend. Who knows what they're going to do or buy with the $140M. They are paying $35M+ a year in dividends. That is going to be a tough challenge with only 30% of their production left and just $140M in cash. Most companies with twice that capital would have trouble supporting that dividend.

I just don't see how it is possible. Compare with this: LRE.TO has more than 10 times the pre-sale production of EGL.UN (and as much as 14 times by next year), but only has to pay out 2.3 times as much in dividends. Which is more sustainable?


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## gibor365 (Apr 1, 2011)

This is probably why EGL.UN already announced dividends for next 3 months... after this sale they have book value close to $9 ... also EGL has Total Debt/Equity 0.36 and LRE 0.76
May EGL.UN be takeover target?


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## doctrine (Sep 30, 2011)

I doubt it - they're not the only oil and gas company trading at a discount to book, but what I do know is that dividend will eventually disappear.


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## HaroldCrump (Jun 10, 2009)

I don't know this specific company, but in general when companies do large asset sales like this, the proceeds are often used to buyback shares, which reduce future dividend liability.
Or, they do it under pressure from activist investors.


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## 604_Snooze (Jan 7, 2012)

Gibor or any investor, are you guys still holding this?


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## londoncalling (Sep 17, 2011)

Still holding. Still under water. Including the 11% drop today.


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## gibor365 (Apr 1, 2011)

londoncalling said:


> Still holding. Still under water. Including the 11% drop today.


Yeap.... me 2  however i have very small position (as for majority of small caps I hold) and good thing that I never averaged down....


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## Addy (Mar 12, 2010)

Eclectic12 said:


> Point of clarification ... the TFSA is Canadian tax free ... which for a Canadian stock/trust, means tax free.
> 
> A US dividend paying stock on the other hand, is Canadian tax free but the last I read, it still subject to the US gov't/IRS 15% withholding tax on dividends.
> 
> ...


Interesting. So just to clarify, are you saying if you hold a canadian dividend paying company in your TFSA you do not pay taxes on the dividends, but if you hold a US dividend paying company within your TFSA the US gov't/IRS will charge me a 15% withholding tax on those US based dividends?

If this is the case, I'm getting screwed... I keep my Canadian Dividend paying stocks outside my TFSA because I only pay 10% income tax on the dividends anyway. I keep the US companies inside my TFSA and RRSP.


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## gibor365 (Apr 1, 2011)

Addy said:


> If this is the case, I'm getting screwed... .


 Yes, you are


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## londoncalling (Sep 17, 2011)

gibor said:


> Yeap.... me 2  however i have very small position (as for majority of small caps I hold) and good thing that I never averaged down....


my oil and gas allocation is currently 5% of portfolio much less than most Canadian index funds. Have some wiggle room here to get more shares of some quality energy stocks. EGL was very speculative for me at the time. down on a lot on share price. down some with divvies. expecting to be under water for a long time. Div is unsustainable. They will have to liquidate assets ad cut the divvy. Whole sector is down as we all know. Waiting for a bottom before I make any more energy plays


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## gibor365 (Apr 1, 2011)

Today EGL.UN is up almost 20% 


> Eagle exited the third quarter in a strong financial position, with $69.5 million cash on hand, no debt and a $61.6 million unused credit facility.


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## gibor365 (Apr 1, 2011)

Looks like last EG.UN report was pretty solid..
https://www.tdwaterhouse.ca/markets-research/stocks/stocks.jsp?country=ca&symbol=EGL.UN&language=en

stock is up almost 40% YTD and 60% in last 3 month...
What do you think?


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## londoncalling (Sep 17, 2011)

http://www.reuters.com/article/brief-eagle-energy-sees-2017-production-idUSASB0B5AE

This news sent the stock down 26% this morning. I just happened to be home this morning to see the double digit daily red in my account. For a moment I considered putting in an order to purchase as a short term trade. Probably a good thing I am not able to trade during market hours. Still holding a large loss on a tiny position.

Cheers


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