Nuttall's CommentsI rarely do this with him because he's known to shift positions pretty quickly, however, I did make a purchase following this recommendation. It's also interesting that while WCP is the largest holding in his fund, CVE is the only one of his top picks that he owns personally. GLTA
Cenovus Energy (CVE TSX)
Cenovus is actively working on monetizing some of the non-core assets purchased with the Husky acquisition to allow for rapid deleveraging and thus sooner-than-expected return of capital. While Conoco Phillips has announced their gradual liquidation of their stake in the company it amounts to less than five per cent of average trading volumes thus does not present a major overhang. Trading at 3.5x EV/CF at US$70WTI and a 35 per cent free cash flow yield once leverage metrics are achieved I see them meaningfully increasing their dividend while announcing a major share repurchase program. Using a target multiple of 6x EV/CF and US$70WTI we see potential upside of 115 per cent.
TOP PICK
Cenovus Energy
(CVE-T)
May 28, 2021
Ridiculously miss priced. Core focus is deleveraging the balance sheet. Looking strongly at monetizing non-core assets from the Husky acquisition. The stock is trading at 3.5x cashflow at current prices with 35% free cashflow yield. Using a 6x multiple, it can be a double. (Analysts’ price target is $12.75)
OIL/GAS
Eric Nuttall
Price
$9.810
Owned
Yes