# Chemtrade Logistics Income Fund (CHE.UN)



## liquidfinance

I first found out about this stock in November, when I think it was in the thread what dividend stock are you buying.

Having read up on it at the time I decided to make the purchase although was intrigued as to why they haven't converted to a corporation and wondered what effect this would have on them.

Yesterday they released the reults and the stock was up another 2% 
They reported earnings of $2.08 which puts them on a current p.e of 8
The stock is currently sitting at a 52week high (as are many) and this leaves me wondering where it could be heading from here.
Dividend is currently $1.20 per year paid monthly yield 7%


So even at the current price it still looks relatively attractive.

I know others on the forum hold it and would be interestead to here the views on what they think the future may hold for this stock.


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## gibor365

I was following this one for about a month and wanted to buy on small dip, placed couple of time buy limits (that never got executed ...at the beginning below 26, than below 26.40 and so on), but this stock going up and up and breaking all records.
You are right , even current valuations are good...


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## londoncalling

I started buying into CHE.UN.TO since May of last year. Oddly I first heard about this stock from one of the talking heads on BNN. After doing some research I found some excellent analysis on a different forum. At the time it offered a balance of income and value. After doing my own DD i started buying into it slowly. I have an ACB of 14.06 and a YOC of over 8.5%. Currently I have an unrealized capital gain of over 20%. This is the largest holding of my equity portfolio. I had been following this stock for a long time. It only cut its distributions after a fire at one of its plants in Texas a couple years ago. That and the market crash have been the only things affecting this stock. I think the dividend payout is safe. I also like the acquisition they made of Marsulex earlier last year. I am as big a fan of this stock as ARGO is of IPL.UN.TO. Last June I trimmed my position in IPL to add to CHE. So far the cap gain has been the same. However I have increased my yield. However, I do not expect any imminent dividend increase like IPL had done in the same time frame. My only regret in buying CHE was that I didn't let GIBOR know about it in time to get in on the action. One thing I loved about this stock was that it was not in the media spotlight until recently. Stocks like that are great cuz you can buy hold and watch the money roll in. Now I have to watch it a lot closer. I am considering placing some stops on it in case of a stock meltdown. I haven't had much luck with stops due to volatility in recent years. A few alternatives, if you don't think there will be a pullback may be buying into the debenture of this company or looking at CUS (another great stock in the same sector). If you plan to hold it as long as I do then this recent run up will not make that big a difference in 10,20, 30 years. Now that I have been so boastful I hope I don't have to watch this sucker sink like a lead balloon. 

Cheers


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## gibor365

Month ago I did comparison between CUS and CHE and like CHE better...maybe need to check CUS again

OK, checked CUS even outperformed CHE ....


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## humble_pie

*trivia update*

a legitimate concern for investors & would-be investors in che.un is that there is no cloud of commentary an investor can consult.

chemtrade attracts little media coverage & almost no forum or blog interest. So a workmanlike endorsement such as london's just upthread is a major hosanna in media coverage for this chemical manufacturer.

i've even read that chemtrade likes it this way. That the company would, in fact, prefer not to be noticed.

recently i thought i would contact their IR to ask about this seclusion in the silent cloister. He turned out to be a communicative fellow named brian henning, who has served chemtrade long & well over many years.

exhibiting admirable diplomacy, henning did not guffaw when i sheepishly confessed that i am a fan, not of analysts' reports, but rather of newspaper articles & anonymous stock tips posted in obscure forum blogspots.

he alerted me to the transcripts of analysts' questions plus management's replies to the questions that are posted on the chemtrade website after every teleconference. These exchanges could form a little communications cloud of their own, a buzz that would show an observer what are the analysts' principal concerns about chemtrade on a particular date, henning suggested.

it's rare for a company to post the Q & A transcripts on its public website. I wouldn't have looked for them on chemtradelogistics.com unless henning had pointed them out. I did read the most recent one & i did find it helpful.

in other comments, henning said that:

- chemtrade's customers continue to order normally;
- therefore talk of recession has not yet settled out in reality upon themselves as manufacturers & shippers of key industrial chemicals;
- chemtrade has a degree of price protection due to flexibility built into its sales contracts;
- in fact higher prices often mean they can profit from windfall spot sales;
- distribution presently appears to be safe;
- however distribution is not expected to increase in the near future as company plans to use extra $$ to pay down debt.

distribution is presently $1.20, giving chemtrade a healthy dividend yield of 7.60%.


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## gibor365

Thanks HP, very informative.
I have a small position in CHE.UN....the unusual thing how they pay dividends, it consists of 2 payment: regular one (about 67%) and U.S. SOURCE INTEREST INCOME (about 33%)


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## londoncalling

I agree, thanks HP. Hard to believe some would say you are not helpful to this forum :stupid: I also appreciate that you did not indicate that back in September I was "pumping" this sleepy stock... :tongue-new: I appreciate your efforts in contacting the company and sharing your findings here is well. Nice to see that my thoughts are supported by management. I wish I knew of 15 other Chemtrades that I could own for the long term. Not that one should ever fall in love with a stock but this is by far my favorite. I was tempted to add to it during it's recent decline but am already overweight. The thing that I find most amusing about the current thread is that there are only 7 posts about this company in 18 months. I am tempted to seek out the threads on this forum for individual stocks that only have 1 page of posts. :biggrin:


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## humble_pie

bonsoir london, i've been thinking that chemtrade is an illustration of how the little retail investor can do good for himself & even beat the index. There's a thread discussing whether this is possible not far away.

it's easy for the small retail shareholder to slip into or out of thinly-traded che.un. It's much more difficult for a large institution. One of the things i asked mr. henning about was that precipitous drop down to the $14 level a couple of weeks ago, with no news, no rumour, no hint of anything. He replied that the best they could make out was that there was a large seller & the market may have been manipulated somewhat.

a very large seller - or buyer - in thinly traded stocks cannot get the trade done in one shot. Often a large order has to sit in the upstairs room for days while the brokers try to cross it. Inevitably, word leaks out. I'm sure the recent large seller of che.un didn't want to let it go in the $14 range, but that was probably the best the brokers could do.

but small investors don't have that problem, so they can slip out well north of 15.50 if they wish.

as for this:



londoncalling said:


> Hard to believe some would say you are not helpful to this forum


i don't believe anyone has said i'm not helpful. What some don't like is my writing style. But they taught us to write bold in J-school because otherwise nobody would ever read us. And what the pumpz don't like is that it's so easy to pop em.

and this:



> I also appreciate that you did not indicate that back in September I was "pumping" this sleepy stock


london i'd never indicate such a thing ! You are not a person who pumps ! There are only a few pumps who have made their way into cmf forum recently. Of this small handful, the majority are naiive amateurs. There's one who may be a professional. The rest of us are just DIY investors trucking along as best we can, don't you think.


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## liquidfinance

Thanks for the informative post Humble. I continue to hold this stock and will be looking to add to my holdings.


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## humble_pie

liquidfinance said:


> I continue to hold this stock and will be looking to add to my holdings.



a huge caveat here is that chemtrade, like all manufacturers of core industrial chemicals/ores/raw materials, is highly sensitive to the economy. I came across one remark that vividly describes the predicament. The writer said he was coasting innocently along in a chemical stock like che.un or dow when the bottom fell out of sulphuric acid but he never knew anything about it.

so another thing i asked mr. henning was whether tracking a global vendor's price for sulphuric acid like alibaba would, over time, bear any relationship to chemtrade's stock price. In other words, if alibaba dropped their price for a shipload of H2SO4, could this be expected to forecast che.un in any rough manner ?

mr henning - ever a civilized gentleman - chuckled gently. No, he said, because chemtrade's prices are mostly locked into very long-term contracts with customers & nowadays these contracts always have some relief for the vendor built in. In other words, if costs go up, most of the increase will be born by the customer, he explained. Whereas alibaba is quoting a spot price, which is an entirely different market.

i agree that owning chemtrade is a bit like having faith in the darkness, but i also believe that mr henning's suggestion of the analyst transcripts posted on their website after each conference call is inspired. These Qs & As are the valuable part of any teleconference. Invariably, the analysts' questions are forward-looking, so any interested party can visit the chemtrade website to see what they are thinking about.


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## doctrine

A quick analysis shows that this is a good company to invest in. Unfortunately they're still an income trust, and based on the type of income, would essentially be fully taxed as there is no eligible dividend component. I would guess this is a good RRSP or TFSA holding, but not very good for a taxable account. I'll keep an eye on them though, especially if they convert to a corporation.


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## alexei

Many have praised the stock in this thread. However, doesn't the company pay more money in dividends than it earns? EPS has been less than dividends paid for the past three quarters. Would somebody provide some clarification please?


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## doctrine

A quick look at their financial report shows they're depreciating/amortizating at double the rate they were last year. Their EBITDA is incredibly high though and up 30-40% year over year, and they are reporting a payout ratio of about 70% of cash flow after taxes and capital expenses. Although you don't like to give companies an easy ride on paying out more than earnings, in this case they seem to be depreciating assets quickly and there is a huge margin for financial flexibility based on their strong income. 

However, I still don't own them because their distributions are almost entirely taxable as interest and are not eligible dividends.


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## Sherlock

Are these types of equities with taxable distributions usually cheaper than stocks with dividends eligible for the tax credit? That would make this attractive for those with room in their RRSP/TFSA right?


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## bettyboop

It was down 3% today and down a dollar or so lately, anyone know why? I've been watching this for ages but it's always too expensive. I'm trying to decide what to put in my TFSA this year. I'm thinking this or maybe DI.UN


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## liquidfinance

Could be a good time to top up.

Results out

http://www.4-traders.com/news/Chemt...s-Solid-2012-Third-Quarter-Results--15504264/


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## obriast

Wondering what everybody thinks about this stock now? Thinking of taking a position in TFSA.


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## londoncalling

still my largest holding. stable company. excellent income. not followed by the talking heads. considered trimming this week to add to Potash corp but soon realized why bother just collect my monthly div and slight growth with little volatility.

Cheers


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## obriast

from a previous post.....the unusual thing how they pay dividends, it consists of 2 payment: regular one (about 67%) and U.S. SOURCE INTEREST INCOME (about 33%)

Is this still true ? Which means withholding tax applies?


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## humble_pie

re US withholding i don't suppose any che dot un shareholder really cares.

quiet-boring-no-talking-heads-decent-raw-materials-business-high-income is great for registered accounts in good times like we've been having past few years.

but as markets inch higher, who doesn't keep a weather eye out


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## liquidfinance

humble_pie said:


> re US withholding i don't suppose any che dot un shareholder really cares.


Exactly with a 7% current yield it doesnt really matter to me what is going to the US Gov. They declare 10c a share and that's whats paid into Questrade TFSA. I've been enjoying this one for a couple of years now. Nothing exciting.. I just keep an eye on the earnings updates and let the income roll in.


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## humble_pie

as best i can recall it was londoncalling who introduced chemtrade to this forum

let's have a big hand now for london each:


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## gibor365

obriast said:


> from a previous post.....the unusual thing how they pay dividends, it consists of 2 payment: regular one (about 67%) and U.S. SOURCE INTEREST INCOME (about 33%)
> 
> Is this still true ? Which means withholding tax applies?


Yes, it's true  CHE.UN paying every dividend in 2 portions, the same I have with PM and HR.UN, but I hold in LIRA, so I don't care too much... also I was told by CIBC rep that I can DRIP only regular portion of dividend..
btw, they didn't cut dividends even in last recession when stock hit $4.8 and yield was almost 25%.... Wish I bought it there......


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## gibor365

Just was thinking today to add some CHE.UN shares....checked some fundamentals and got completely confusedAs per TDW
TDW: EPS $1.41; P/E 12.1x 
TMX: EPS $0.94; P/E 19.2x 
Google; EPS $1.41; P/E 11.94x 
Yahoo: EPS $0.94; P/E 17.91x 
P.S. TRI report shows NR
I'm completely confused as TDW and Google shows much better numbers that TMX and Yahoo.... so whom to believe???


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## blin10

i actually sold this thing to buy more pot recently :]


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## doctrine

Believe the quarterly reports..


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## londoncalling

humble_pie said:


> as best i can recall it was londoncalling who introduced chemtrade to this forum
> 
> let's have a big hand now for london each:


a stopped clock is right at least 2x a day...:tongue-new: glad I provided something of value to the forum for all of us to put a hard earned money into.


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## HaroldCrump

A major announcement just hitting the wires.
It'll be interesting to watch the trading tomorrow.

*Chemtrade in talks for $1 billion General Chemical deal - sources*

http://www.reuters.com/article/2013...9Q20131106?feedType=RSS&feedName=businessNews


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## My Own Advisor

Thanks Harold. Might be nice fit for my TFSA in 2014. 7% yield is nice.


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## humble_pie

HaroldCrump said:


> A major announcement just hitting the wires.
> It'll be interesting to watch the trading tomorrow.
> 
> *Chemtrade in talks for $1 billion General Chemical deal - sources*
> 
> http://www.reuters.com/article/2013...9Q20131106?feedType=RSS&feedName=businessNews


i haven't looked yet for followup but it seems from share price there's been no followup ... any updates?


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## Jon_Snow

Nice, I've been a staunch Chemtrade shareholder for many years....


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## HaroldCrump

humble_pie said:


> i haven't looked yet for followup but it seems from share price there's been no followup ... any updates?


No, after an initial jump from $16.98 to $17.11, it settled back to its usual sleepy level of around $17.
The Reuters news story is not a public announcement (yet), just "unnamed sources".
But still...a $700M company acquiring approx. $400M of new book value ought to have moved the share price one way or another.

The Reuters report said a deal is close to finalization, so maybe let's wait for the official announcement.
We won't know the official numbers until then.


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## liquidfinance

Price has been a little sleepy on this one for a while. It's been nice collecting the income so still can't complain too much although I did actually sell a couple of k of this yesterday.


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## humble_pie

liquidfin might i ask why u sold? 

call it sleepy but isn't that what one wants in an rrsp? buy em & forget em?


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## liquidfinance

I just sold partially to fund my car purchase. Nothing at all to do with the company.


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## blin10

why is this sinking, been thinking to start position


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## HaroldCrump

Maybe the news of acquisition is finally sinking in.
Or, there is an upcoming announcement.

I would love to see the details of the acquisition/merger.
The trouble is the company being acquired (General Chemical) is a private entity and we don't have clear estimates of their book value.
The most recent numbers are from 2009, when it was acquired by private equity firm American Securities LLC.

Chemtrade will have to issue equity or debt to finance the acquisition, but I couldn't find any numbers on how much they have to issue and exactly how much net book value they will be acquiring.
I'd like to see that before buying more.

If anyone finds some news or numbers, please post here.


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## humble_pie

HaroldCrump said:


> Maybe the news of acquisition is finally sinking in.
> Or, there is an upcoming announcement.
> 
> I would love to see the details of the acquisition/merger ... If anyone finds some news or numbers, please post here.



HC far upthread i posted some info i gathered from an interview w their IR. He's an outside contract but has been with chemtrade for many years, is intensely knowledgeable in the field, very fair & transparent to talk to. Most hired IRs are salespeople but this man is a true professional. 

i'll send you his phone number & any other contact info i have later today, ok?

... i just remembered, one of the tidbits he told me is that a complete transcript of analysts' & journos' questions plus company's answers is posted on chemtrade website after every teleconference. Such a permanent text transcript is rare & exceptional, i don't know of any other company that does that. If chemtrade held a teleconference right after the merger announcement, u might see some details probed in the analysts' questions ...


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## gibor365

blin10 said:


> why is this sinking, been thinking to start position


I was thinking to add to my existing position.... Any thoughts ? Anyone?


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## londoncalling

Chemtrade is my largest holding and if I were to add now I would be averaging up (something I try to avoid). It is important to value the significance of what was posted above. So far the acquisition is not definite. This creates uncertainty which affects share price. Not knowing the book value of the "acquired" company provides further uncertainty. The positives for this company, IMO, outweigh the uncertainty and may provide a buying opportunity. I have recently learned that transparency and good management mean a lot to an investor. Furthermore, I always assumed contacting management was something that only big $ fund managers/salespeople were capable of to get a handle on management. As a result I thought it was a moot point as they both have a vested interest. Many members of this forum have shown me otherwise. I will not be adding at this time mainly for allocation reasons but I do think this is a good company for anyone to own long term.

Cheers


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## Jon_Snow

Watching this with extreme interest (well, as much as is possible while in Mexico). This isn't my largest holding (CPG, looking at you) but it is a core income producing asset for me.

Please, anyone with insight on this, keep it comin'....


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## doctrine

As stated previously in this thread, the distribution is a non-eligible dividend, therefore CHE.UN is not a recommended hold outside a TFSA or RRSP. 

It's only down about 7% from its recent high and 11% from it's all time high - not really in severe correction territory at the moment.


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## underemployedactor

No, all time high was 20.30, so down over 20%, but yesterday's 5% drop looks to be it's biggest one day drop ever. Looks like they already had a lot of debt so the acquisition, though accretive looks to be adding an enormous amount of additional debt. Makes me a little nervous.


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## HaroldCrump

Well, Q3 results are coming out after market close this evening.
Conference call scheduled for tomorrow.

I guess we will know soon.
Surely, they will reveal more details.

And there will be tons of analyst questions as well.


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## gibor365

HaroldCrump said:


> Well, Q3 results are coming out after market close this evening.
> Conference call scheduled for tomorrow.
> 
> I guess we will know soon.
> Surely, they will reveal more details.
> 
> And there will be tons of analyst questions as well.


The problem that after conference call will be to late to Buy or to Sell (depend on the results)


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## HaroldCrump

Yup, the lack of insider knowledge is a problem, innit? :biggrin:


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## gibor365

HaroldCrump said:


> Yup, the lack of insider knowledge is a problem, innit? :biggrin:


Exactly  You can "catch" trend or miss it  Rouletta 
Still if you miss, i don't beleive that CHE will cut dividends....but who knows?!


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## humble_pie

HaroldCrump said:


> Well, Q3 results are coming out after market close this evening.
> Conference call scheduled for tomorrow.
> 
> I guess we will know soon.
> Surely, they will reveal more details.
> 
> And there will be tons of analyst questions as well.




the teleconference will reveal a great deal ... interesting part will come after the big nobs read their already-published remarks, following which the analysts get to pop their questions. Although analysts in canada tend to be severely sheepish, probably because their underwriting divisions are hoping to court new issue business from the companies ...

meanwhile the charts are looking bullish. There were some institutional sells yesterday. Short-term i think the stochastics look bullish, how do others find?

HC are you preparing to go at em with your usual analytic skills? i believe you could even join the teleconference live & ask questions yourself ... failing that friend brian will probably be happy to discuss all points although he's likely to be busy through friday ...

.


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## HaroldCrump

humble_pie said:


> meanwhile the charts are looking bullish. There were some institutional sells yesterday. Short-term i think the stochastics look bullish, how do others find?


I see more buying interest than selling pressure as well.
The lots being offered for sale are all small.
These are all small, retail investors.
I believe the largest single lot I saw up until 12:00 pm when I last checked was 500 shares.

I don't think any of the large funds or institutions is dumping (yet).
There were sales of several thousand shares by some funds (incl. Kevin O'Leary's fund) at the end of last month (10/31), but that was before the acquisition rumors started.

http://quote.morningstar.ca/Quicktakes/owners/Sellers.aspx?t=CHE.UN&region=CAN&culture=en-CA

In fact, I have a bit of suspicion that this mysterious price pressure may be an attempt by insiders or those in the know to buy-in prior to tonight's news release.
Stock is being pushed down to allow some folks to get in below $16.
Stock has been above $17 for most of this year.

The other possibility is an upcoming private placement, bought deal, or new equity issue around this price.

I will read the news release this evening and will try to listen in to the conference call.
I will certainly ask the questions about the acquisition if no one else asks it first.


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## humble_pie

HaroldCrump said:


> I will read the news release this evening and will try to listen in to the conference call.
> I will certainly ask the questions about the acquisition if no one else asks it first.


don't forget, though, that u will need a new & heavily disguised username for chemtrade if u are going to ask any questions each:

something dignified & reliable-sounding, like an analyst, u know what i mean?

not like us harum-scarum rogues in cmf forum


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## gibor365

Oh, man...I'm in big dillema right now... from beginning of the year was planning to add CHE.UN shares to my LIRA .... the price is attractive right now, but with this aqusition I'm just s^%& scared if tomorrow it can fall big %


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## HaroldCrump

Results released....meh

_Chemtrade Logistics Income Fund reports steady 2013 third quarter results_

http://www.newswire.ca/en/story/126...und-reports-steady-2013-third-quarter-results

_*Potential Acquisition Discussions*

Chemtrade confirms that it is in discussions with American Securities LLC regarding a potential acquisition of General Chemical Corp. While discussions are ongoing, no assurance can be given that a transaction will be completed or if completed, as to the terms or conditions which might apply to any such transaction. 

Chemtrade does not intend to make further comment unless or until there is a transaction to announce._

^ More meh


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## gibor365

HaroldCrump said:


> Results released....meh
> 
> _Chemtrade Logistics Income Fund reports steady 2013 third quarter results_


So, looks like no big moves tomorrow until next rumors....


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## underemployedactor

Sounds to me that they're not going through with the acquisition of General Chemical. And it sounds like they could use some accretive acquisitions to boost revenue. I don't like the sound of "Lower volumes on lower prices" either. Not to be negative Nelly on this trust but....


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## humble_pie

i don't believe the language concerning a possible acquisition of general chemical sounds negative. It's what they have to say. It's boilerplate. Even if they would be signing a deal late tonight, nevertheless at 6 pm they would be denying it.

i just went back & read the original Reuters story from HC's link. Those are highly placed leak sources, apparently on the US side, ie the leaks don't appear to be coming from the chemtrade side. Reuters reports that general chemical has been in play since july, so plenty of big firms have been kicking the tires.

poor chemtrade, as a potential buyer they must have been furious that their name surfaced. Of course they're going to zip the lip & speak nothing but boilerplate if anybody so much as asks them the time of day about gen chem.

they say that, as a general rule, the share price of acquiring companies in a buyout usually falls. Perhaps that's what the market has been telling us.

i didn't think their Q3 was so terrible. International was hurt the worst, but if the world price of sulphuric acid tanks, revenues will go down. Distributions still look safe.


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## HaroldCrump

I have no doubt there is an acquisition in the works.
And by the looks of it, the process is at a fairly advanced stage.

The only question is the financial metrics of the deal - how much book value Chemtrade would be taking on, how they are financing it (equity, debt, PP, etc.), and how accretive the acquisition will be.
Income investors like londoncalling will especially be interested in whether the acquisition will be accretive enough to get a distribution increase within a quarter or two.


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## humble_pie

HC i was googling around, saw that Tata of india had bought general chemical in 2008. But i didn't turn up how general chemical then made its way from tata's hands to NYC-based American Securities.

i like this story. Why are u thinking about a distribution increase in a quarter or 2, though? i wouldn't expect to see positive results for at least a year & even then all really depends on the global economy, if there's a recession with no demand for industrial chemicals it's goodbye earnings & increased distribs.


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## HaroldCrump

Yup, it would make sense that the titans of Indian industry like the Tata group own these types of companies as a vertical integration strategy.
The Hinduja Group - another industry heavyweight - own Houghton International which is similar space.

As for Chemtrade buying General Chemical, it is a diversification move for them.
General Chemicals does a few things they do not, and gives them customers in slightly recession-proof sectors like food and beverages.

And yes, if there is a global recession in 2014 (as some are predicting), all bets are off.
The distribution increase is speculation on my part, assuming the acquisition is accretive.

It would depend on how much net FCF Chemtrade is getting out of this deal.

I am not able to join the conference call going on right now.
If you (or anyone else) is on it, please post some highlights here.
I will listen to the recording later.


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## gibor365

HaroldCrump said:


> And yes, if there is a global recession in 2014 (as some are predicting), all bets are off.
> .


Who is predicting and why?


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## humble_pie

i arrived late to the teleconference, what was being discussed was the closure of the Vale blast furnaces, leaving only one running for the time being.

not a squeak from the analysts about a possible acquisition. If a question had been aired before i arrived, chemtrade had already stated in its press release that it would not be able to respond. As is standard, the lip is zipped on deals in progress.

at any kind of critical conference, i always listen less to the words being spoken, more to the tiny, partly-hidden indicators. Hesitations, coughs, indifference to some topics, unexpected micro-silences in the language flow, all these tell a story of their own.

this am, the chemtrade nobs were on top of everything. Quiet, smart, transparent, never ostentatious, always full of confidence, they knew their business cold.

chemtrade's special twist is searching out marketing situations where they can share cost risk with each customer. Brian Henning had explained this to me months ago. Low global chemical prices therefore tend to not damage chemtrade severely; revenues may decline but margins remain stable.

across all executives who spoke this am, the response mode to every question was a calm, low-key, friendly proffering of detailed information. This was not an executive team recovering from a failed acquisition attempt. This was a team that sounded, i thought, as if it had the world by the tail.

i bought 200 more shares, which was all the cash i had available in rrsp. Now i'll get to see how the story unfolds.

if chemtrade does acquire general chemical, the big elephant on the tanker ship is going to be re-structuring the debt, as HC said.


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## gibor365

humble_pie said:


> i bought 200 more shares, which was all the cash i had available in rrsp. Now i'll get to see how the story unfolds.


I got a bit nervous  so bought just 100 more yesterday just before close at $16.... wish I'd buy more


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## HaroldCrump

gibor said:


> Who is predicting and why?


You know...talking heads.
We don't have to look very far...


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## gibor365

HaroldCrump said:


> You know...talking heads.
> We don't have to look very far...


Why to pay attention on those  ... many were predicting "end of the world" every year....
imho, after last Recession, Feds and European guys will be much more prepared to possible recessions .....


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## Jon_Snow

Knew I should have bought more than 200 shares when this tanked a few days ago.

Now own 700 shares total. I'm done, except to watch the distributions roll in. :tongue-new:


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## londoncalling

This boring little stock sure has been interesting as of late. Every fibre of my being wanted to buy more shares yesterday but as we know I am already heavily overweight on this one. Could have been a great trade had I followed my gut. I appreciate the insight of such informative members as Humble and Harold. I personally don't see a distribution increase in the foreseeable future but I hope you are right Harold. If previous acquisitions are any indicator this deal would also be accretive but would take sometime to be reflected in the share price. A deal of this size may throw this little darling into the limelight and onto analysts radar. I would have mixed feelings should such happen. I like my sleepy stocks better when they doze silently as opposed to snoring loudly enough to wake the neighbours.
Cheers

Cheers


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## HaroldCrump

londoncalling said:


> A deal of this size may throw this little darling into the limelight and onto analysts radar.


Once this deal is done, it will make the company's market cap > $1B.
That threshold opens up an entirely new world of limelight and scrutiny.
More analysts start looking into it, it starts showing up on many stock screeners, it becomes eligible for many mutual funds, etc.

You are right - that is a subject of mixed feelings.

I did not buy in the last two days either, although I was tempted more than once, for the same reason as you londoncalling - I didn't want to average up.

There is a small chance that if/when that deal is finally announced, there may be an opportunity to buy this below the $15.75 level it hit in the last few days.
Esp. if they decide to finance it through a PP or bought deal below $15.75.


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## humble_pie

i averaged up but i already had 1100 shares so 200 more didn't really make much difference in rrsp.

what i liked about what i heard in the teleconference yesterday was how comfortably the chemtrade execs handed off the questions from the analysts to each other for discussion. 

i didn't hear any big egos or loose talkers. I heard a group of knowledgeable managers all outlooking outwards, all painstakingly monitoring & optimizing every leg of their business, all pulling smoothly together as stewards of an interesting - if overlooked - company.

i'm hoping they acquire general chemical. They look ready for the big time.

this thread might be putting too much emphasis on one small company at the expense of shining a light on many equally deserving others. However i'm happy to try to contribute to it, because the thread has become a model for how individual stock discussion can rapidly help so many members of cmf forum.

btw guys, it was liquidfinance who created this cool thread. Big show of hands each:


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## HaroldCrump

humble_pie said:


> btw guys, it was liquidfinance who created this cool thread. Big show of hands


*liquidfinance*, you deserve this:


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## humble_pie

quotes are saying that the deal is still cooking.

chemtrade VP leon aarts looks to be a kindpin, as wendi would say.


_LEON AARTS
Vice President

Mr. Aarts joined Chemtrade in 2005 with 20 years experience in sales, marketing and operations in industrial chemicals. From 1995 to 2005 he held various management positions with General Chemical’s industrial chemicals, water treatment and sulphur products businesses. Prior to General Chemical, he was with Chemtrade’s predecessor companies of Marsulex and CIL in engineering, financial analysis and supply chain roles. He has a Chemical Engineering degree from University of Waterloo and an MBA from Schulich School of Business at York University._


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## HaroldCrump

I remember Marsulex. I used to have shares in it.
Chemtrade acquired it in 2009 or 2010.


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## londoncalling

I bought in after the Marsulex deal. I was torn b/w Chemtrade, Marsulex and Canexus prior to my purchase. I was still in the learning phase while deciding amongst the 3. Need to get back to the books as lately haven't chosen nearly as well. :hopelessness:


Cheers


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## humble_pie

the first thing i think about when contemplating a company is What kind of people are the directors & officers? are they trustworthy? are they competent? does their background show that they have experience in this kind of business?

only after that do i look where other people usually start, by examining the numbers.

the way i see it, the numbers tell their own story, but on a delayed basis.

any company and/or its sector can fall on hard times. If investor has confidence in the managers, they will be the best persons to know how to repair & restart the business. If investors have no confidence in the calibre of the managers, then investor should not be in the stock ...

is why i like the people at chemtrade. They could just as easily be running a laundry business. Or a space platform.


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## phrenk

Its a done deal.

http://online.wsj.com/article/PR-CO-20131204-905983.html?dsk=y

Chemtrade announces acquisition of General Chemical, strengthening and expanding its existing platform 

-- Purchase price of US$860 million representing a transaction multiple of 
7.8x LTM EBITDA (7.2x including US$10 million of expected cost synergies) 

-- Chemtrade pro forma LTM Revenue and EBITDA of approximately $1.3 billion 
and $255 million, respectively 

-- On a pro forma LTM basis: 

-- The Transaction is approximately 17% accretive to DCPU 

-- Payout ratio reduced to approximately 50% and distributions maintained at 
$1.20 per unit per year 

Chemtrade intends to finance the Purchase Price through a combination of: (i) US$1.0 billion syndicated senior secured credit facilities consisting of a US$600 million term loan and a US$400 million revolver with a US$150 million optional accordion; and (ii) an approximate $300 million equity raise.


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## humble_pie

hey. We smoked it out, 3 weeks ago, dinnint we?

i like the financing, although plenty new debt. Smallish secondary share offering means low dilution.

somebody should tell brian henning that chemtrade has a whole gaggle of fans here in cmf.


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## HaroldCrump

Stock is up nearly 10%.
Conference call coming up in 20 mins.


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## Jon_Snow

Oh yes.... Investing is really fun sometimes boys and girls. :encouragement:


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## Canadian

Does anybody know what the price per share will be for the equity offering? I've been eying this one for a while. Kicking myself a bit today.


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## My Own Advisor

Dammit. I didn't want the price to go up. I wanted some for the TFSA in 2014. Stop buying it CMFers!!!


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## londoncalling

I like this news as well. New 52 week high. Should have played my hunch but Chemtrade already makes up over 15% of my equity holdings. Let your winners run!


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## Gumball

I was looking to buy more shares on a dip as well, but hey I cant complain!


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## londoncalling

A nice climb today for Chemtrade. up 5.89% on this news.

http://www.theglobeandmail.com/globe-investor/news-sources/?mid=cnw.20140107.C7459


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## Jon_Snow

Easily in my top 5 favourite holdings - just wish I had bought more in the $17 days...


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## Canadian

I keep missing opportunities to start a position! :hopelessness:

If the price pulls back when the new offering is issued I'll pull the trigger.


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## gibor365

Jon_Snow said:


> Easily in my top 5 favourite holdings - just wish I had bought more in the $17 days...


 same story  increased my holdings at $16 in mid november....wish I'd buy more


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## birdman

The companies year end results are out and look good. Hope to see a pop in share price on Monday.


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## livewell

frase said:


> The companies year end results are out and look good. Hope to see a pop in share price on Monday.


The results came out yesterday after close. Up 1.3% today so a small pop. Looks like they have successfully integrated the large acquisition of General Chemical from Jan 2014. This is one of my favorites a very well managed business.


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## Gumball

one of my favs as well - extremely good management and a nice steady eddy in my portfolio... I had a feeling the integration of GC would go well..



livewell said:


> The results came out yesterday after close. Up 1.3% today so a small pop. Looks like they have successfully integrated the large acquisition of General Chemical from Jan 2014. This is one of my favorites a very well managed business.


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## gibor365

Anyone buying at current prices?


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## Gumball

gibor said:


> Anyone buying at current prices?


Hey Gibor, a little late in answering your question from a few weeks back, I am DRIP-ping this stock and hoping to add to it in the near future.. I just added to my position in CN rail, and not enough powder dry right now to pull the trigger on this one as well, otherwise I would have already done so..... still Long CHE.un


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## Gumball

Hey Fellas. Wondering if anyone has a theory as to why this stock is getting hit last few days? Perhaps the DOW/Dupont merger will affect them negatively? Or is this stock just feeling the pain of the commodities in free fall combined with their Q4 guidance??? Im really just curious as to what it could be? anyone care to guess?


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## londoncalling

Probably a bit of both, but more emphasis, IMO, should be placed on sentiment and guidance. Still a great stock.

Cheers


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## londoncalling

Just made another acquisition. Ended the day up 2.43%

http://www.chemtradelogistics.com/m...are-in-a-board-supported-plan-of-arrangement/


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## Gumball

still happily dripping this stock, hope to add to it if there are any opportunities in the near future..

Every year they publish a presentation for investors on their website titled "Growth & Yield" but I don't see the one for 2016 - does anyone know where I can find it, or did they stop doing it? You can see they do a yearly annual meeting and the growth and yield, however I don't see the growth and yield for '16.

http://www.chemtradelogistics.com/main/investors/presentations/


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## Gumball

just thought id give this thread a bump here in the dog days of summer...another solid quarter and their recent acquisition has been coming along nicely..

http://www.newswire.ca/news-release...ts-2017-second-quarter-results-639718053.html


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## robfordlives

Anyone know why this got hammered today?


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## gibor365

robfordlives said:


> Anyone know why this got hammered today?


_The Fund expects 2017 fourth quarter aggregate EBITDA (a non-GAAP measure that is defined in the Fund's management's discussion and analysis) for its Water Solutions & Specialty Chemicals (WSSC) and Sulphur Products & Performance Chemicals (SPPC) segments to be approximately 20% lower than the fourth quarter of 2016. This is a change from the indications made in the third quarter that aggregate EBITDA from these segments should be similar to last year.

Mark Davis, President and Chief Executive Officer of Chemtrade, said, "Similar to our comments at the end of the third quarter, demand for our core products remains strong. We had expected additional strength in WSSC to offset some weakness in SPPC, but that strength failed to materialize. Although these estimates of the Fund's fourth quarter earnings are subject to our year-end audit, we believe an update of the probable level of earnings is appropriate."

Additionally, the Fund updated the status of its North Vancouver chlor- alkali plant. In November 2017, Chemtrade announced that the plant underwent an unplanned interruption that would last approximately two weeks and negatively impact EBITDA by approximately $7 million to $8 million, the majority of which would be realized in the fourth quarter of 2017. The outage at this plant was slightly longer than initially expected, but the financial impact was as anticipated. The plant is currently running well and is expected to do so until a planned outage in April 2018._


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## Gumball

7% yield looks tempting here...


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## robfordlives

I own this and don't understand why it hasn't participated with the US euphoria. Shouldn't their sales be way up the last few years given all the locations in the US???


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## Eclectic12

Lots of investors assume a Canadian listing = Canadian business ... without digging any further.

Or they comment on BNS as being a Canada only company tied almost exclusively to the Canadian market despite one third or so of their revenue coming from Latin America.


Cheers


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## robfordlives

Eclectic12 said:


> Lots of investors assume a Canadian listing = Canadian business ... without digging any further.
> 
> Or they comment on BNS as being a Canada only company tied almost exclusively to the Canadian market despite one third or so of their revenue coming from Latin America.
> 
> 
> Cheers


Sentiment is one thing but revenue has not grown very much at all


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## Eclectic12

Sorry ... euphoria bit made me think it was about US investor sentiment instead of the published financial numbers.


Cheers


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## robfordlives

7 year low on this stinker. I have held for years and recent logic to hold was:

-Booked $65Million for legal provision due to price fixing lawsuit. Under IFRS they cannot back likely recovery of an indemnity they have on this which they guided could be $25Mil
-Management guided to much stronger 2nd half of 2018 versus 2017 2nd half
-Management guided to much stronger 2019 versus 2018
-Payout ratio in the 60% range so dividend secure?

Something smells here though.


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## londoncalling

still holding this one. My cap gains have disappeared but I believe the payout is fine. will hold but won't be adding.


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## SixesAndSevens

chemtrade pukes...9 years of gains wiped out within weeks.


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## doctrine

The market is severely punishing companies that perform poorly. Market premiums are being blasted. Even good results sometimes only mean treading water. Bad news like Chemtrade released after a few bad earnings reports means meltdown.


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## robfordlives

Yet another Canadian company that has destroyed wealth by doing a US acquisition. The General Chemical acquisition was a disaster as Chemtrade has been sued to oblivion shortly thereafter doing the acquisition. This thing should have had a spectacular rise the last decade what with GDP growth during that time. Also very suspicious that this was plummeting the last couple weeks - clearly insiders were trading before this litigation reserve was increased was made public. Time to clean house


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## londoncalling

http://www.chemtradelogistics.com/m.../chemtrade-settles-main-class-action-lawsuit/


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## agent99

londoncalling said:


> http://www.chemtradelogistics.com/m.../chemtrade-settles-main-class-action-lawsuit/


Site down? Hopefully just a technical glitch.


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## SixesAndSevens

anyone still holding?
any hope of a recovery soon?
market seems to have lost interest....


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## birdman

Unfortunately I have 1000 shs and am down 50%. My worst performer and really don't even like looking at it albeit I do read the 1/4ly reports. The only saving grace is that I had it perhaps 6-7 yr ago and sold at a good profit. Was in my cash account originally and after I sold and repurchased it later I put it in a TFSA.


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## londoncalling

I still hold a large position below my purchase price but am still up based solely on the distribution and dividends. I do not expect a recovery soon. I am monitoring closely. The Quarterly reports should provide insight into what's been done and needs to be done. It could go sideways, slowly recover or take another massive drop. How do you like that for in depth analysis. :nevreness: Barring a further decline I will decide whether or not I want to hold the position, average down or exit over the next few quarters.


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## robfordlives

I keep hanging on to the shares I have....sadly it is in my TFSA so it really hurts. I keep thinking if they can get clear of these ongoing lawsuits and demonstrate some operational efficiencies they will be in the clear. Even say a 20% bump to prices earlier in the year would be great given the massive distribution on top. But again last quarter they increased the legal reserve by $40Mil. Allegedly they may recover something via an indemnity on the General Chemical purchase but I'm not holding my breath. How the CEO continues to keep his job is a mystery to me.


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## Gumball

robfordlives said:


> I keep hanging on to the shares I have....sadly it is in my TFSA so it really hurts. I keep thinking if they can get clear of these ongoing lawsuits and demonstrate some operational efficiencies they will be in the clear. Even say a 20% bump to prices earlier in the year would be great given the massive distribution on top. But again last quarter they increased the legal reserve by $40Mil. Allegedly they may recover something via an indemnity on the General Chemical purchase but I'm not holding my breath. How the CEO continues to keep his job is a mystery to me.


I too remain a shareholder and am hoping for a recovery. I have no plans to sell.
In their latest quarterly report I beleive they stated this was the last contribution to their legal reserve...going forward hopefully this is the end of it and they can focus on their business...


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## Emjay85

Anyone buying at current levels? The divi is pretty juicy and the company seems relatively stable.


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## SixesAndSevens

Emjay85 said:


> Anyone buying at current levels? The divi is pretty juicy and the company seems relatively stable.


earnings are falling QoQ...company is not stable.
dividend is a mystery....i don't see how they can sustain this dividend.
i vaguely very vaguely remember that their dividends come from some sort of a swap derivatives or selling futures options.
that is how they are able to keep paying a fixed dividend every month year after year.
there is some complexity in the dividends that deserves further investigation....

either way i am not buying here.
i already have a position...so just holding on.


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## humble_pie

SixesAndSevens said:


> dividend is a mystery....i don't see how they can sustain this dividend.
> i vaguely very vaguely remember that their dividends come from some sort of a swap derivatives or selling futures options.
> that is how they are able to keep paying a fixed dividend every month year after year.
> there is some complexity in the dividends that deserves further investigation...




wondering if you could provide something other than "vague" memory to back up this claim though

trading derivative products to generate the cash flow required to pay promised dividends characterizes many investment products today. More & more companies join the crowd every year.

but to the best of my own memory, chemtrade is not among these.

one school of analysts is even recommending CHE dot UN as a buy. These analysts believe the dividend is sustainable. TD securities has a long math dissertation on this issue.

of course, if chemtrade cuts the dividend, stk could/would plunge to new lows. $4, anyone?


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## SixesAndSevens

humble_pie said:


> wondering if you could provide something other than "vague" memory to back up this claim though


my memory isn't as good as it used to be....i believe it was an analyst on BNN several years ago (2011 to 2013 or so) who explained this..
he said the company used swaps with banks and has collared futures on the underlying commodities to generate a steady income stream which is used to pay the dividends.
he said the quarter to quarter operating earnings are not reflective of the sustainability of the dividend....they manage to keep the dividend steady and fixed because of the derivatives....

i would like to find that link to...i will search on BNN and stockchase if i can find it...
so much has been scrubbed from the internet these days...try finding anything on BNN from more than a couple of years old...

i will try...



> of course, if chemtrade cuts the dividend, stk could/would plunge to new lows. $4, anyone?


if dividend is cut, i will sell at the spot price....
not worth holding...eventually it may recover somewhat...but it seems to me that the $20 days are gone never to return again...


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## humble_pie

SixesAndSevens said:


> my memory isn't as good as it used to be....i believe it was an analyst on BNN several years ago (2011 to 2013 or so) who explained this..
> he said the company used swaps with banks and has collared futures on the underlying commodities to generate a steady income stream which is used to pay the dividends.
> he said the quarter to quarter operating earnings are not reflective of the sustainability of the dividend....they manage to keep the dividend steady and fixed because of the derivatives....
> 
> i would like to find that link to...i will search on BNN and stockchase if i can find it...
> 
> eventually it may recover somewhat...but it seems to me that the $20 days are gone never to return again...




thankx for reply ... your memory looks pretty amazing to me!

the methodology you're describing - based on what an analyst said on BNN - could indeed be used to generate payments that chemtrade could distribute as dividends.

in fact, now that you point it out, i would imagine that such a commodity futures trading practice, based on the commodities which chemtrade is in the business of buying, transporting & selling, would be a mainstay of the company's entire operation, not just its dividends payable division.

hedging actual shipments with futures trading would be an excellent form of insurance against price swings or ships that might deliver late, would it not.

please don't worry about finding the BNN link

yes the $20 days do seem gone forever, among bullish analysts one sees "targets" in the 12-15 range


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## gardner

Chemtrade Logistics Income Fund issued some 6.50% Convertible Debentures. I think they convert at $15 or so -- the price was $15 around Oct last year. I haven't looked at TDDI to see of they're fully allocated, but I was considering picking up a couple of grand as part of my fixed income.


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## robfordlives

Yet more disappointing guidance from this company. I don't understand how there is not some kind of management shakeup at this point? US booming economy the last decade and this doesn't participate at all? CEO oversaw two disastrous acquisitions one of which has saddled them with MULTI YEAR material lawsuits and settlements.


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## humble_pie

the real scare - the only scare - is that they'll cut the dividends


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## robfordlives

They claim the lawsuits are nearly all behind them so that will be one tailwind gone. They are trying to divest some of their assets to reduce debt but no update on that in several months now. Payout ratio has gotten pretty high at some points in the last decade. Yes any kind of cut would devastate the stock as seems as though people only hold it for the yield. Must be nice to be a CEO of a company noone pays much attention too and can keep your job despite horrid performance.


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## Raggedy Dandy

Well, it finally happened. 50% haircut on the distro, and down 30% today, which was already taking a kick in the gut.


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## londoncalling

Q3-2022-News-Release.pdf (chemtradelogistics.com)

Chemtrade has finally had a decent quarter. Anybody still holding?


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## Raggedy Dandy

londoncalling said:


> Q3-2022-News-Release.pdf (chemtradelogistics.com)
> 
> Chemtrade has finally had a decent quarter. Anybody still holding?


They were a good holding of mine for just over 10 years as I started my dividend portfolio. Sold everything that day back in March and haven't looked back. It's like catching up with a bad ex-girlfriend from high school - was fun at the time, but haven't missed much since.


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## londoncalling

Sometimes you marry that bad ex GF. 
Still holding. Annual return of just around 5.5% all due to the yield which is below the average market return over that time frame. I have made back my initial investment through dividend payments but that comes at the price of opportunity cost. In 2011 it was my largest holding but I have never added to since. Currently only makes up 1.6% of equity portfolio. Don't expect much from it aside from the yield. If the SP pops I may consider dumping it at some point.


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## MrMatt

londoncalling said:


> Q3-2022-News-Release.pdf (chemtradelogistics.com)
> 
> Chemtrade has finally had a decent quarter. Anybody still holding?


By the time the bad news came out, it was too down, so it was pointless to sell.


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## Emjay85

londoncalling said:


> Don't expect much from it aside from the yield. If the SP pops I may consider dumping it at some point.


My thoughts exactly. Been holding for the sake of holding. If price comes back above 10 or 11 bucks a share I'll probably pitch it. Not holding my breath on that though....


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