Why I Doubled My Husky Holding

Friday I doubled my position in Canadian oil firm, Husky Energy (HUSKF.PK), just in time for the hurricane season.

The reasons I added to Husky here are many:

• The dividend was recently cut, sitting now at a conservative C$1.20 per share on 2009 estimated trough earnings per share of C$1.80
• Given the growth in China and emerging economies, I like the outlook for oil post banking crisis
• Husky has very little debt and a great balance sheet
• Given the company's ties with China, capital position, smaller size, and aggressive management, a takeover may not be out of the question
• As mentioned previously, if I'm investing in a commodity that fluctuates wildly, I like to get paid regularly, instead of trading in and out; Husky provides this
• If earnings snap back even close to 2006-2008 levels, Husky should be quick to prop the dividend back up
• I also considered an investment in Crescent Point Energy (CPGCF.PK), however I think Husky offers a better valuation at these levels

Disclosure: long HUSKF.PK

Comments

[Steven Ward:]

Sorry, I don't agree. Crescent is a better choice. Valuation is higher for one good reason--OOIP, original oil in place. Crescent is far more leveraged to oil and has 6 billion barrels of OOIP.
Husky can do well, Crescent will do better over the next 5 years.

Aug 23 01:49 PM

[Alan von Al...:]

I like Husky, have great respect for their management and technical staff. Never bet on "oil in place" Monte Carlo puff.

Aug 23 05:57 PM