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Canadian Oil Sands, Penn West Energy Protected on the Downside

wsigler,

Who can't claim the 15% credit back in the US? I was unaware of that. Considering that MOST investors get the 15% back, and are not double taxed, then this is apples to appples vs. some other tax advantaged cash flow/dividend investment.

Second, how is the theoretical net lowered by a match in DUG? Would you please explain the numbers? Are you saying that the opportunity cost of the 50% position is eating into yield? I don't see how the yield gets knocked down to 5.5 or 6%.

Matching your investment with a 50% position in DUG (i.e. for $100K invested in the basket, 50K goes into DUG - which yields ~2%) would cause the investment to be market neutral - extracting dividend yield. At that point, your yield is contingent upon whether or not the trusts lower distributions.

thx for your input.
Aug 04 13:59 pm |Rating: 0 0 |Link to Comment |View article
Canadian Oil Sands, Penn West Energy Protected on the Downside

Thanks. Check out the "my website" link by my name to see this trade in more detail. I have been cooking over the trade for a week & I want people to poke holes in it (and give me 5 stars). Some of the language is NWS. IBC (linking site) has some of the best content and advice in this market - bar none. It has changed the way I invest, it features dozens of high caliber contributors - often with differing points of view.
Aug 04 12:29 pm |Rating: 0 0 |Link to Comment |View article
Canadian Oil Sands, Penn West Energy Protected on the Downside

You can pair PWE/PGH/HTE and PVX against a 50% position in DUG to keep your principal (in theory) market neutral, while extracting ~ 15% dividend yield. If you are betting on oil going up, don't do DUG and get 15% + upside in the stock price.
Aug 04 11:33 am |Rating: 0 0 |Link to Comment |View article

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