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Number Cruncher

Unearthing value in the energy sector Add to ...

What are we looking for?

What the pros are buying for their funds.

Checking out their top holdings can be a way to get stock ideas or do research on a fund.

We look at Dynamic Dividend Advantage Fund at dynamic.ca.

 

More about the fund

 

The $302.1-million Canadian dividend and income equity fund has been managed by Cecilia Mo at CGIC Ltd. since late 2011.

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Formerly known as Dynamic Dividend Value Fund, it gained 9.8 per cent for the year ended Nov. 30, 2012.

Ms. Mo, who looks for undervalued securities with at least a 2-per-cent yield, has been finding opportunities in the energy sector.

Within the past three months, she bought shares of Enerplus Corp. after it became “oversold” when it cut its dividend.

Some U.S. health care stocks that have struggled on concerns about drug patent expiration are also attractive, she said.

“Names like Johnson & Johnson are trading at almost all-time lows in terms of multiples [to earnings]. … People don’t realize that the company can cut costs.

In the case of J&J, you still have a consumer business that is very strong.”

 

What did we find?

 

A stellar return from a chemical manufacturer with a 6.5-per-cent dividend yield.

Canexus Corp., a low-cost chemical producer serving the pulp and paper market, gained 31.3 per cent in the 12 months to Jan. 2.

Its stock is attractive because of the stable cash flow from its base business, but the growth opportunity comes from the development of its rail-car terminal in northern Alberta to ship crude oil, Ms. Mo said.

Her target is $11.50 a share by 2014.

She also likes Black Diamond Group Ltd., which provides camp accommodations for oil-sands workers.

Its shares retreated last fall on concerns that Suncor Energy Inc.

would be cutting back on its capital expenditures, but Black Diamond has long-term contracts and has diversified into providing lodging to employees in other sectors such as the mining industry, she added.

Her 12-month target is $24 a share.

The manager is also a fan of oil and gas producer Trilogy Energy Corp.

She bought its shares after a severe pullback last year because the company missed production forecasts in a depressed gas market.

Trilogy is still compelling because it has “one of the best assets in the Duvernay shale gas play,” she said. Her one-year target is $35 to $36 a share.

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Top holdings in the Dynamic Dividend Advantage Fund at Nov. 30, 2012

Company Symbol $ Price (Jan. 2) 52-wk high $
Canexus Corp. CUS-T 8.64 8.68
Inter Pipeline Fund IPL.UN-T 23.45 24.39
Cineplex Inc. CGX-T 31.77 32.5
Valeant Pharma. Int'l VRX-T 59.96 60.76
Amica Mature Lifestyles ACC-T 9.26 10.01
Intact Financial IFC-T 64.36 65.19
Black Diamond Group BDI-T 20.29 23.79
Northern Property REIT NPR.UN-T 31 33.84
EnerCare Inc. ECI-T 8.18 10.04
Trilogy Energy Corp. TET-T 29.89 37.9

Globe Investor

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