DSB

Canadian Oil Sands, Penn West Energy Protected on the Downside

wsigler,

Who can't claim the 15% credit back in the US? I was unaware of that. Considering that MOST investors get the 15% back, and are not double taxed, then this is apples to appples vs. some other tax advantaged cash flow/dividend investment.

Second, how is the theoretical net lowered by a match in DUG? Would you please explain the numbers? Are you saying that the opportunity cost of the 50% position is eating into yield? I don't see how the yield gets knocked down to 5.5 or 6%.

Matching your investment with a 50% position in DUG (i.e. for $100K invested in the basket, 50K goes into DUG - which yields ~2%) would cause the investment to be market neutral - extracting dividend yield. At that point, your yield is contingent upon whether or not the trusts lower distributions.

thx for your input.

Canadian Oil Sands, Penn West Energy Protected on the Downside

Thanks. Check out the "my website" link by my name to see this trade in more detail. I have been cooking over the trade for a week & I want people to poke holes in it (and give me 5 stars). Some of the language is NWS. IBC (linking site) has some of the best content and advice in this market - bar none. It has changed the way I invest, it features dozens of high caliber contributors - often with differing points of view.

Canadian Oil Sands, Penn West Energy Protected on the Downside

You can pair PWE/PGH/HTE and PVX against a 50% position in DUG to keep your principal (in theory) market neutral, while extracting ~ 15% dividend yield. If you are betting on oil going up, don't do DUG and get 15% + upside in the stock price.