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3 top picks from Sprott Asset Management’s Eric Nuttall

Sprott fund manager Eric Nuttall

Eric Nuttall is a portfolio manager with Sprott Asset Management. His focus is oil and gas stocks.

Market outlook
Energy stocks are being battered by continued uncertainty surrounding global economic weakness. Oil stocks are already discounting a very low oil price that is below replacement costs, a trend that is totally unsustainable. With the Energy Index only 10 per cent from its trading range in late 2008/early 2009, investors are expecting the worst offering upside in anything but the worst case scenario.

Past picks: August 16, 2011

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Legacy Oil and Gas
Then: $9.99
Now: $5.46
TR: -45.35 per cent

Painted Pony Petroleum
Then: $12.50
Now: $7.98
TR: -36.16 per cent

Open Range Energy
Then: $6.56
Now: $12.86
TR: +96.04 per cent

Total return average: +4.84 per cent

Top picks:

Legacy Oil and Gas
Most recently bought July 13 at $5.00.

Legacy trades at only its proven reserve value meaning the market is ascribing no value to 31 million barrels of probable light oil reserves and a further 83MM barrels of risked light oil possible reserves; the stock could double and would still be below its high of 5 months ago.

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Whitecap Resources
Most recently bought July 12 at $6.19.

A soon-to-be dividend payer, at $80 oil Whitecap could pay a highly sustainable $0.50 dividend reflecting a current yield of over 8 per cent.

Athabasca Oil
Most recently bought July 10 at $11.48.

Results of an unconventional oil sand pilot and a possible joint venture agreement are expected in the coming weeks, providing an exciting catalyst; reserves + cash are worth $12/share so investors are getting 2 million net acres of oil and gas acreage and 3 billion barrels of an unproven play for free.

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