E Split Corp T.ENS

Update

[Obscure1]

I have been busy.

Middlefield found a way to do a Raise while the Premium to the NAV was only 17%.  That caught me a bit off guard as I don't know how they were able to cover the costs without smacking the NAV.  I will reach out to IR to find out how they did it.  I like to sell before a Raise and buy back for a 4% to 5% win.

I bought 11,000 on the dip this morning which raises my cost per share for the position but it still yields 13.2%.  If the share price hangs around this level for a bit, I will try to add to get to the position.

If memory serves, ENS has been running at a cash flow shortfall of $0.80 per year.  ENB announced that they are raising their divi by $0.11 per year.  One ENS share equates to 0.44 ENB shares, which means the annual cash flow shortfall for each ENS share should be about $0.75 per year going forward.  

If ENB can successfully close the 3 Dominion gas distribution deals in 2024 as anticipated and get the necessary downsizing and unforseen costs out of the way, I'm hoping that the deals will allow ENB to increase its dividend a year from now by perhaps 4%.  \If that happens, the ENB 2025 divi would be $3.80 which would be a $0.16 increase. That in turn would reduce the ENS annual cash shortfall by another $0.07.  

It is going to take a few years, but eventually, I expect that ENS will be cash flow neutral based upon paying out a $0.13 monthly dividend. At that point, there is no cash flow risk to owning ENS. 

The share price will still move up and down more than the ENB share price due to the leverage associated with ENS, but in terms of actual cash, no worries! 

What does that mean? 

Unless there is a catastrophic and prolonged crash in the ENB share price which caused the NAV of ENS Unit to drop and stay below $15.00 the ENS dividend will just keep on keeping on.  :)

[Ganyman61]

Great post with alot of useful information. What's it going to take to increase the nav of ens is it simply Enbridge shares rising?

[Experienced]

Nice analysis Obscure One caveat to your scenario is that investors continue to be willing to pay a premium to NAV at current levels.  If that sentiment were to change then the price of ENS would drop.  As a general rule most splits due trade at a premium to NAV but that premium fluctuates.  Not that long ago the premium to NAV for ENS was around 5% if I recall correctly.  A

[Obscure1]

Experienced: You are correct about the Premium to the NAV fluctuating.  Based upon looking at the overlapping charts of ENS and ENB, it appears that the Premium as a percentage of the NAV falls in a couple of different scenarios. 1) When the underlying security (ENB) falls, some ENS investors sell because they get worried about whether the divi will get paid or not which drives down the

[cttglvr]

Thanks Obscure1, Great post as usual. I'm in your camp with regard to Enbridge and ENS. I bought more today at $12.24 although nowhere near the number you did. A clip ftom the press release leaves me a little confused. It states the new offering would be non-dilutive to the common and preferred shares. When issuing that many shares how can it be considered as such? "The Class A Shares

[Obscure1]

Cttglvr: My wife says NO to all of my ideas and my kids think I have lost my mind.  I wouldn't put too credence in to what I say.  I try to share ideas here but everyone has to decide what works best for them.  The "non dilutive" to the NAV should be a set of hard stop rules.  I have to wonder if the rules have stayed in place but the interpretation of the

[Ganyman61]

Informative discussion everyone keep up the the great work.

[cttglvr]

Well Obscure1 I collect antique toys. My wife and kids think I'm nuts until I sell a couple. Then they're shocked at what they sell for. No displays at home...wifes orders...no I'd better say suggestions but I have carte blanche at the cottage :)

[Experienced]

Obscure... Thanks for your response.  Hope it works out for you. I guess all I am cautioning is the fact that the shares are trading at a significant premium to NAV or in other words you are paying more than they are worth. This fact adds an additional component of risk to your investment.  What I look at is the risk adjusted total return when I invest.  Frankly, I am not

[Obscure1]

Experienced:   I have seen your posts on various boards over the years.  I look forward to your posts as they cover a lot of different angles from your experiences working as an investment advisor to fatherhood to the connections that you have made over your lifetime to your views on parenthood and so on.  I think your best attribute is your ability to both throw and take a

[Experienced]

Thanks Obscure....great post!! I don't think of myself as a half full or half empty kind of guy but rather a pragmatic investor.  When I was in the "business" I used to say to my clients that the market is like a pendulum.  About 10% of the time it is overly optimistic and about 10% of the time overly pessimistic and the rest of the time is just normal fluctuations

[Obscure1]

An "atta boy" and a "like" for your post Experienced.  You and I go back a few years on SH discussing the merits and pitfalls of various companies and investment strategies. I expect that you found the ENS board by checking out whatever stuff that I have been posting about. so that you could hold me accountable.  Good on ya.  I thoroughly enjoy your insights and

[Experienced]

lol....what I have learned over the years sparing with you is that it often takes a while before you realize that I have been right all along....lol

[Experienced]

Obscure...seriously...what is the right strategy depends a lot on one's financial situation, investment objectives and tolerance to risk and this is different for different people. The most important thing for everyone is to develop a plan based on these considerations and then stick to it and be disciplined.  Another important thing for success is to keep an open mind even if those