The close: Stay in May
Friday, May 30, 2008
If you sold in May and went away, following one of the oldest investment strategies in the playbook, you missed out on reasonable gains this time.
Canada's benchmark index, the S[amp]amp;P/TSX composite index, rose 5.9 per cent during the month, for an annualized return of more than 70 per cent. More specifically, energy stocks rose 10.9 per cent, information technology stocks (mostly Research In Motion Ltd.) rose 9.4 per cent and materials stocks rose 7.5 per cent.
The S+P 500 did not fare as well, but it still paid to be invested in May. It rose 1.1 per cent in May, for an annualized return of more than 15 per cent. There, information technology led the way, rising 5.6 per cent, materials rose 4.8 per cent and telecom services rose 3.7 per cent.
On Friday, the last day of the month for stock market trading, the S[amp]amp;P/TSX composite index closed at 14,714.73, up 137.56 points or 0.9 per cent, largely because of energy stocks. Despite the fact that crude oil, for once, hugged its starting position, Canadian Natural Resources Ltd. rose 2.2 per cent and Suncor Energy Inc. rose 1.7 per cent.
Toronto-Dominion Bank, among the big banks the least affected by mortgage-related writedowns, rose 2.8 per cent. Bombardier Inc. rose 2 per cent, edging toward a multi-year high of $8. BCE Inc. crossed the $35 threshold, as investors grow more confident that a takeover deal of some sort is still going to happen. And Barrick Gold Corp. rose 3.3 per cent.
The Dow Jones industrial average closed at 12,638.32, down 7.9 points or less than 0.1 per cent. There, American International Group Inc. rose 1.9 per cent and United Technologies Corp. rose 1.2 per cent. Bank of America fell 1.7 per cent and General Motors Corp. fell 1.6 per cent.
The S+P 500 closed at 1400.38, up 2.12 points or 0.2 per cent. Dell Inc. was among the big movers here, rising 5.7 per cent after it reported strong first quarter results on Thursday. As well, Monsanto Co., a leading agriculture company, rose 2.9 per cent.
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© Copyright The Globe and Mail
Friday, May 30, 2008
If You Stayed In May...You Made $$$$
Alberta's oil sands Next For Ivanhoe Energy
Friedland changes tack with oil sands entrance
NORVAL SCOTT
Thursday, May 29, 2008
CALGARY — The title of “Canada's nickel prince” wasn't enough for Robert Friedland. Now, he's looking to be an oil baron.
Mr. Friedland rose to prominence when his former firm, Diamond Fields Resources, made a huge discovery of nickel at Voisey's Bay in Newfoundland in 1993.
Diamond Fields was ultimately sold to Inco Ltd. for $4.3-billion, a sale that gave Mr. Friedland legendary status among Canada's miners and helped make him a billionaire.
Now, Mr. Friedland, a successful promoter of long-shot mining projects with a knack for attracting investors to remote regions or complex plays, is looking to make a new underground fortune in Alberta's oil sands, the tarry mix of sand and silt that holds huge reserves of crude.
The bituminous nature and deep location of those resources means the oil is hugely expensive and difficult to extract, placing the region off limits to all but the world's largest energy companies.
Ivanhoe Energy Inc., the Calgary-based company of which Mr. Friedland is chief executive, believes it has a solution that has escaped others.
It has developed an upgrading technology that it says improves the quality of the bitumen on site instead of at dedicated plants, dramatically reducing the cost of both producing and transporting oil sands crude and making it more economically feasible for smaller players to get involved.
Now, Ivanhoe plans to put its technology to the test. The junior company, which has a market capitalization of around $650-million, said Thursday that it will buy three oil sands leases from Talisman Energy Inc. for a total of $105-million, including only $30-million in cash up front. Talisman, which has long shunned any opportunity to become an oil sands player and has had the leases on the market for two years, has the option to buy back into the leases as a minority partner.
On one of the leases, Ivanhoe will build a small, technically advanced project – producing between 30,000 and 50,000 barrels a day – that will upgrade crude more cheaply and use far less natural gas or diluent than other projects, the company said. The project is expected to cost somewhere between $1-billion and $2-billion, depending on its size.
“We couldn't be more thrilled. [This deal means] we're in charge of our own destiny,” said Ian Barnett, Ivanhoe executive vice-president of finance. “We can now [build a project] on a much, much smaller scale.”
The oil sands, putting Canada on the map for both their ambitious scale and the controversy surrounding their environmental impact, seem a good fit for Mr. Friedland.
A larger-than-life figure, his big ambitions have attracted a healthy dose of controversy. He once fought a four-year legal battle with U.S. governments over pollution at a Colorado mine site before reaching a settlement in which he did not acknowledge any personal liability and the governments acknowledged no one was solely responsible for the environmental problems.
Mr. Friedland has proved many critics wrong. A copper and gold project in Mongolia looked like an uphill battle until Rio Tinto agreed to buy a 9.95-per-cent stake in the company developing the mine, Ivanhoe Mines Ltd., for $345-million in 2006. Rio Tinto has the option to raise its stake in the project to 47 per cent by investing $2.3-billion (U.S.) in the Friedland company.
Ivanhoe's heavy-oil technology, dubbed HTL, runs bitumen over a circulating bed of very hot sand, upgrading its quality by burning off the heaviest, least useful part of the barrel, leaving lighter crude in its place.
That's a potential step change in the oil sands, where that processing usually takes place in upgraders that cost billions to build. Downscaling that process to smaller projects, without vast expense, fills a gap in the market, said Chris Feltin of Tristone Capital.
“These projects aren't big enough on their own to justify their own upgrader, so this fits a niche opportunity and has big cost advantages,” he said, estimating HTL crude could cost $15 less per barrel to produce than oil extracted with steam-assisted methods.
Beyond Ivanhoe Energy and the oil sands, Mr. Friedland also runs Ivanhoe Mines, a $3.4-billion Toronto Stock Exchange-listed company. He was travelling Thursday and wasn't available for comment.
As befits Mr. Friedland's reputation as a player with a global eye, Ivanhoe Energy has also recently created subsidiaries targeting HTL opportunities in Latin America, China, the Middle East and North Africa as it tries to lever its technology into opportunities in those regions.
Those subsidiaries, which will aim to be self financing, will concentrate on seeking agreements with state-owned companies, said Ed Veith, Ivanhoe executive vice-president of upstream.
With files from reporter David Ebner in Calgary
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Thu, May 29, 20081:24 PM New Analyst Reports for CASTILLIAN RESOURCES CORP, ROMARCO MINERALS INC, TALISMAN ENERGY, and FORBES ENERGY SERVICES LTD - Marketwire
Tue, May 20, 20085:12 PM
Wed, Apr 30, 200811:47 AM
5:01 AM Talisman Energy Reports $1.2 Billion in Cash Flow Solid Operational and Financial Results - CCN Matthews 5:00 AM Talisman Energy Reports $1.2 Billion in Cash Flow Solid Operational and Financial Results - Marketwire
Fri, Apr 25, 200810:58 AM
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Mon, Apr 14, 20088:02 AM Talisman Energy Inc. Conference Call - CCN Matthews
Tumbling oil sends TSX lower but bank stocks limit losses TheStar.com - Business - Tumbling oil sends TSX lower but bank stocks limit losses
Tumbling oil sends TSX lower but bank stocks limit losses TheStar.com - Business - Tumbling oil sends TSX lower but bank stocks limit losses May 30, 2008
Sliding oil prices sent the Toronto stock market lower yesterday, but losses were moderated by gains in the financial sector even as more big banks released earnings showing much poorer performance than a year earlier.
Toronto's S&P/TSX composite index fell 111.45 points, or 0.76 per cent, to 14,577.17. The TSX Venture Exchange was down 19.65 points to 2,628.6 while the Canadian dollar was ahead 0.08 of a cent (U.S.) to 101.1 cents as Statistics Canada reported that higher commodity prices helped boost the current account surplus to $5.6 billion in the first quarter, up from $3.96 billion a year ago.
N.Y. stocks advance
Lower oil prices also helped send New York markets higher, as did a government report that the economy grew at a faster pace than had been estimated. The Dow Jones industrial average rose 52.19 points to 12,646.22. The Nasdaq composite index gained 21.62 points to 2,508.32 and the S&P 500 index advanced 7.42 points to 1,398.26.
Financials lend support
After a shaky start, the TSX financial sector provided support, rising 1.2 per cent with nearly all banks in the group ahead despite more writedowns connected with U.S. mortgages – with one notable exception.
CIBC fell $1.39 (Canadian) to $69.46 after a second-quarter net loss of $1.11 billion, down from year-ago net income of $807 million. The quarter included a loss of $2.48 billion on writedowns of structured credit.
Royal Bank of Canada said its second-quarter net income came in at $928 million, down by 27 per cent from a year ago, impacted by higher provisions for credit losses in its U.S. banking business. RBC shares were ahead $1.07 to $50.53.
National Bank of Canada added 68 cents to $53.08 as its second-quarter profit fell 29 per cent as it booked $73 million in losses related to asset-backed commercial paper.
Kate Warne, Canadian market specialist at Edward Jones in St. Louis, Mo., says the generally positive showing in the financial sector showed that "people are getting more comfortable that the writedowns are sort of part of the normal business cycle and it's something you don't worry too much about."
Energy stocks slide
The TSX energy sector moved down 2.8 per cent as oil prices dropped $4 (U.S.) as concerns about global energy demand and strength in the dollar countered a government report showing the biggest decline in U.S. stockpiles since 2004.
U.S. crude settled down $4.41 at $126.62 a barrel. Crude prices have risen more than 42 per cent since early December.
"It's not too surprising you're seeing a lot of volatility with the kind of price increase we have seen over the last few weeks," Warne said.
EnCana Corp. lost $2.46 (Canadian) to $88.41 while Suncor Energy moved down $2 to $66.89.
Gold pulls back
Gold pulled back as the U.S. dollar strengthened on the possibility that the U.S. Federal Reserve will have to increase interest rates to deal with inflation fuelled by high energy prices.
The August bullion contract in New York closed down $23.30 (U.S.) to $881.70 and the TSX gold sector retreated 3.7 per cent with Barrick Gold down $1.57 (Canadian) to $38.77 and Kinross Gold Corp. faded 61 cents to $19.45.
The base metals group pulled back 2.4 per cent as Teck Cominco Ltd. dropped $2.20 to $47.41.
TSX decliners beat advancers 922 to 640 with 233 unchanged as 337 million shares traded worth $6.9 billion.
Tin drops most ever
Tin, used in cans and for soldering, fell the most ever on the London Metal Exchange as investors and analysts judged the metal's jump to an all-time high this month was excessive.
Zinc fell to its lowest in more than two years.
"It's just the case of the market getting too far ahead of itself," said Neil Buxton, managing director of GFMS Metals Consulting.
Tin for delivery in three months closed 11 per cent lower at $21,050 (U.S.) a tonne after slumping as much as 13 per cent, or $3,000.
From the Star's wire services
