Added more todayENS is disproportionaltely down vs ENB again today.
At the current price, ENS is yielding 13.5%.
It can get frustrating holding cash while waiting for times when fear grips investors. The frustration just makes the payoff sweeter when you can buy granny stox like ENB at a discount.
IMO, the decision to buy ENS when fear sets in depends upon two factors:
The first consideration is the direction of ENB. What do I think will happen to the ENB share price going forward. Is it more likely to go up or down in the short term. If I think there is more downside in the coming days or weeks, it is better to wait. I also have to ask myself if I think the ENB share price going to go back up in the next year. The 12 month concensus target of analysts on the street is over $56. Forty years of investing in the market has taught me that I can't pick the top of the bottom. What I can do is decide whether I like ENB as an investment or not. I don't love ENB on a total return basis as it has reverted back to being a granny stock. However, ENB management has proven over and over again to be smart cookies. I think that fear has gripped the market and holders of ENB and ENS in particular generally over react to fear because older investors like myself are typically more afraid of losing what we have than being greedy. After saying that, forty years of investing has also taught me that the real money is made by having cash on the sidelines waiting for times when fear grips the market. Buying high quality companies like ENB during times of fear invariably generate outstanding returns when greed starts seeping back into the market.
Greed brings me to the second factor. ENS is a leverage play on ENB. A drop in the share price of ENB typically creates approximately double the loss for ENS shareholders. The same goes for gains in the share price of ENB. Yield also comes into play. ENB currently yields 7.8% while ENS yields 13.4%. The extra 5.6% yield offered by ENS matters when it comes to paying bills.
The two factors (direction of ENB going forward) and (fear vs greed) are inter woven. There is no right or wrong answer as all of us have to make decisions based upon our own circumstances.
When the premium on ENS get too high (over 20%), you know that Middlefield will be doing another share issuance which typically causes the ENS share price to get smacked so it is best to back off and wait. When I see days like today where fear is over cooked in ENS vs ENB, it feels like an opportunity, but that is just me.