CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

RE:RE:RE:Thank you Nawar, PM123

[Kherson]

Posted March 13, 2014...LOL...

pm1231 wrote:

Thanks Peterm, Nawar - happy to contribute....although I will probably stick to writing articles for seekingalpha.com in the future (at least there I get paid for my insights without having to grind my teeth reading some of the posts)...:-)

As for Canexus - it was no fluke that pretty much everything we predicted materialized:

a) CEO was fired for incompetence - nothing more
b) Dividend had to do with future cashflows and are sustainable despite the temporary payout ratio.  Moreover a mentioned - the BOD will revisit the dividend once the contracts are closed and NATO starts producing (as they confirmed on the call).  That said, after todays call - I have higher confidence this will not be an issue as it seems they are pulling out all the stops to get NATO live. 
c) There might be some delays with NATO - but manageable.
d) They did the 'mea culpa" for last year's performance and are looking forward

All our insights over the last few days were based on comprehensive research - there are rarely flukes for professional traders like myself - just a well laid out investment thesis that can survive a dart board. 

My final recommendation - pick up as much stock at these prices.  You will not see this kind of dividend yield (10%+) with upside potential for the foreseeable future.   It will start inching upward over the next few days as we approach ex-dividend.   If you hold long - you get paid to wait for price appreciation. 

As for the conference call - I liked:

a) That the BOD was decisive - I thought they were spot on and to the point.   I don't particularly care for CEO's that cheerlead to pump the stock.  Again - this is a long term hold and this interim CEO gets it.    They also had a "go to green" plan to get things back on track with NATO.

b) They are locking in long term contracts versus fee-for-service - this will lock in future revenue streams irrespective of the decision on keystone XL - what I would have liked to ask on the call was how long they are locked in with the clients to date - but its safe to say likely beyond 2015.

c) I do not believe cashflows beyond 2015 have been factored into this share price.  With marginal capex beyond 2016 and pure cash being generated from NATO assumming they close remaining capacity at long term contracts - there is longer term potential for a price target north of $7 (if you can hold for 3-4 years).

Best of luck.