Archive for August, 2005

Deals in the Oil Sands

August 3, 2005


Two big deals in just one-week highlights the international attention that Alberta’s oil sands are attracting. Yesterday, French oil giant Total SA (NYSE: TOT) announced that it is paying C$1.35 billion for Deer Creek Energy Ltd. (TSX: DCE), to obtain a controlling interest in the Joslyn oil sands project. Just the previous day, Texas-based Kinder Morgan Inc., agreed to buy Terasen Inc. (TSX: TER, formerly BC Gas) for its pipeline assets to move crude from Alberta.

The increasing interest in the oil sands makes my decision to sell a portion of my investment in Canadian Natural (TSX: CNQ) look dumb (I still think it was the right move. Oil might just as well have gone to $30 instead of above $60). Since my sale, CNQ has risen an impressive 57%.

Note: A follow-up on yesterday’s post on investing in commodities: As if on cue, RBC has announced the availability of Series 2 of the commodity-linked notes. (Thank you, Jason).

Sgt. Smokey Smith, Canada’s last surviving winner of the Victoria Cross, passed away in Vancouver. We owe the many freedoms we take for granted to brave men and women like Sgt. Smith. May he rest in peace.

Investing in Commodities

August 2, 2005


A column in today’s Financial Post (also available here) mentioned the RBC Principal Protected Commodity Linked Note, through which Canadian small investors can get exposure to a basket of commodities. The note takes a long-only, equally weighted position in the following commodities: oil, natural gas, lead, copper, aluminium, nickel and platinum. It provides a 125% exposure to the commodity basket and 100% principal protection if held to maturity in 5 years. The note is inexpensive as the only fees paid are the 3% commission to selling agents.

Since, the minimum investment is only $1000, the note provides a great way for small investors to invest in commodities, which are poorly correlated with stocks and bonds. It’s too bad that the Post saw it fit to run a story today on an investment product that closed on July 26, 2005. Well, I am hoping that RBC will soon issue another series of these notes.

Investing in India

August 1, 2005

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The Globe and Mail newspaper’s Report on Business ran yet another column on investing in India. For people not following the India story, the Bombay stock index has been hitting all-time highs recently. The column mentioned the Excel India Fund and “two closed-end funds that trade on the NYSE” (IIF and IFN for those interested).

The best part of the column is the following quote from a money manager: “How specific does an investor want to get? [Country-focused funds] are fantastic when the market’s hot and they’re really horrible when the markers are not. There’s nothing the manager can do about it”. In other words, it is best to stick with a broad emerging markets fund like the EEM.