Enbridge Inc ENBOF

A trading strategy to consider

[Obscure1]

First off, this strategy only applies to ENB shareholders that dont have a much lower cost base as selling obviously triggers a capital gain

As a side note, you might consider triggering a capital gain before the rate jumps to 66.7% next month if you are in the fortunate position to be up more than $250,000 on your ENB investment.   

Here we go:

* Take advantage of the higher ENB share price now.  Who knows WHEN (not IF) ENB will be triggering its $2.75 billion at-the-market offering at some point
* Use the proceeds to pick up ENS shares which are currently trading at a 1.9% discount to the NAV which equates to $49.42 per share for ENB
* Collect the $0.13 divi payable to ENS holders as of the close next  Wednesday.  At current prices,  you can grab 4.3 shares of ENS for each share of ENB that you sell so you would get 4.3 x $0.13 = $0.56 for each ENB share that you convert into ENS shares
* When ENB does execute its at-the-market deal, the ENB share price will likely take a hit whilie the ENS share price will barely budge (ENS shareholders are asleep at the wheel as they typically use a "set it and forget it" strategy for cashing in on its high yield as the monthly divi has never missed a beat
* When the inevitable dip in ENB happens, sell your ENS which won't dip and use the proceeds to buy ENB at a discount.

If ENB doesn't push through its at-the-market offering right away, you could pick up as many as three divi's from ENS (May/June/July) at the equivalent of $0.56 per divi or $1.68 per ENB share that you sell before ENB goes ex-divi again.  

If you are asking yourself why I would disclose this strategy, the answer is that I already have this position ON.  I don't stand to profit or lose from anyone else using the strategy as ENB is a highly liquid stock. 

[ecolo101]

Thanks for the info, I decided this am to use coming dividend in June to get a small exposure to EnB via ENS. it is a smart approach to use less cash and get the monthly dividend. if the next equity raising sends the SP lower than maybe it would be time to get the shares instead. glta dyodd