RE:the premium continues to dropI've been following closely, and appreciate everything you have shared. I never thought I would have seen the premium dissipate like this, but should not be surprised after what happened recently with FTN (altho I was on the lucky side of that move).
ENB does have it's headwinds - debt, potential lost business from TMX, Line 5, corporate split. But unless we see full market capitulation, I think we are close to bottom.
Lots to play out in the next couple of years, but I think I'm going to stick with my underwater holdings, and maybe add a bit more if the premium approaches zero. At some point in the not too distant future, when rates stabilize (and hopefully drop a bit), and the above issues play out in a balanced way, I think we'll float again.
I do need to look a bit more into the corporate split, tho. One question is: What will ENS do with their holdings after the split?
Obscure1 wrote: The NAV at today's close should be $10.11 by my calculation which means the premium has now dropped down to 10.68%.
How much lower will ENS go?
It feels like the ENB share price may test $44.70, which is the price that the recent Bought Deal was completed. That means another .35 downside for ENB which all things being equal represents another .15 of downside for ENS. But who knows. As long as weak heads of ENS shareholders continue to punch out shares as about 2x the average daily volume, there is no reason for anyone to try and catch the proverbial falling knife.
At some point, the pros will start buying ENB as the company moves from win to win to win on top of what is already an incredible balance sheet and a teflon moat. When that happens, ENS will quit going down. ENS currently yields 13.94% which is embarassingly high.
The Unit NAV of ENS needs to drop more than $5 per share before the divi on the Common shares gets withheld. That means that ENB will have to drp by $11.36 from it's current price which means ENB would need to trade to about $33 per share.
Could that happen? Yes
Will it happen? Bloody unlikely
At the very bottom of the darkest days in the market in March 2020, ENB only traded down to $34 for a day or two. ENS still paid a divi that month.
So the question I keep asking myself is: "Are things as dark today as they were in March 2020 when the world literally shut down and the April 20 contracts for WTI traded at -$30 per barrel?
With WTI trading above $90 per barrel and with the job market still robust and inflation seemingly under control, I don't see ENB trading back down to $33 per share. I could be wrong, but I would attach a really probability to that happening.
The biggest mistake people in the market make is selling stocks in good companies out of fear when they should be buying.
When is the right time to buy? At the bottom of course, but who the heck knows what the bottom is. I don't. All I know is that ENB is a really good (boring but good) company that has an awesome balance sheet and has proven over and over again that they make good moves. With the new acquisition of the 3 Dominion assets, ENB has moved from being an almost 100% oil pipeline company prior to 2017 to now earning half of its earnings by moving and selling gas to its 7 million customers. That means ENB is virtually bullet proof in terms of predicting and delivering upon its guidance numbers.
The fact that there has only been one question/comment from my series of posts indicates to me that posting any further is a waste of time. If my posts have helped even one ENS investor in their thinking process, it has been worth the effort.
GLTA