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Canadian hedge fund manager Steven Palmer rarely talks about stocks that he is buying, but he did mention accumulating shares of junior energy firm Primary Petroleum Corp. in his latest commentary to investors.

"Evidence is building from work done by several New York Stock Exchange-listed companies that the Bakken shale oil formation extends south into Montana from Alberta," says the manager of the AlphaNorth Partners Fund which turned in a 160 per cent return in 2009.

"The Bakken has been one of the hottest investment themes in the Canadian energy patch in recent years as land value alone for Bakken exposure has skyrocketed in Alberta," wrote Mr. Palmer, who is also president and chief executive officer of Toronto-based AlphaNorth Asset Management Inc.

"It is quite possible that this scenario will also play out in Montana and that Primary will benefit greatly as it has acquired a sizable land position [in that state] Investors are quickly catching on to the potential of this company as the share price and volume have increased considerably in May."

Mr. Palmer, meanwhile, expects more volatile markets over the summer months with "no meaningful upside in the broader indices."

There remains considerable skepticism for equities as evidenced by recent data from Bank of America Merrill Lynch, which recently reported that flows by U.S. investors into equity funds have been negative since January, 2009, while fixed income flows have been in excess of $300-billion (U.S.), he said.

"This is one of the several data points which supports our view that retail investors remain underweight in equities and they will drive markets higher when they ultimately reallocate from fixed income investments offering trivial returns to equities in the longer term."

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