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So I bought three stocks recently under book value

June 12, 2009 – Comments (4) | RELATED TICKERS: ENT , LYG , HTE

So I shifted my portfolio around a bit and I bought three things. Here's my reasoning on each stock:

The first stock is called Enterra (ENT), it's a Canadian trust with mostly natural gas dealings. The reasoning behind it was first, it dropped almost 7% today after a rally (I've been watching it for a few days now). Second, natural gas is terrible right now, and as an energy stock, I think it can do somewhat better as winter approaches. I wanted to make a natural gas play, so I suppose this is it. I've looked at UNG, but I don't really understand ETFs all that much.

The second is Lloyd's (LYG), I feel almost guilty for buying banks, but again it's a big name (*cough*, Bear Stearns *cough*) and second, it's about half of book value. While big name banks are still risky, I feel that if you haven't collapsed by now, you've either got some Arthur Andersonian accounting going on, or you'll pull through and do better in the next couple of years.

The third stock is Harvest Energy Trust (HTE), it was something that I sold and made a profit on and then decided to rebuy after realizing they are still under book. Oh, and they pay a dividend. I have a couple different Canroy picks now that are all under book, so I think I'm going to hold them and possibly wait until 2010 or 2011, and see how the canadian trust laws work out.

According to Wikipedia, here's the status of Canadian Royalty Trusts and the tax laws: 

"The tax status of Canadian trusts is to change in 2011, according to a proposal made by Jim Flaherty, the Canadian Finance Minister on October 31, 2006. Commencing in 2011, trusts would be taxed like all other corporations, at the full 31.5% rate; this would remove the advantage for which they were set up in the first place. Share prices of the trusts dropped immediately after the announcement, which was dubbed the "Halloween Massacre." What prompted the move was that the trusts were costing the Canadian government upwards of $500,000,000 each year in lost revenue.

As of early 2008, the Canadian Liberal Party had drafted a counter-proposal which would allow the trusts to continue at the 10% tax rate previously allowed. This could happen if the Liberal Party were to win the next election, and was being strongly supported by energy interests in western Canada, as well as other groups."

 Yes, I suppose I do have somewhat of a Canroy obsession (I own PGH, PWE, PDS, HTE, & ENT). I guess they just make the most sense to me as oil & natural gas plays.