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Stick with Canada in 2022, top-performing energy investor says – BNN

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Looking at oil and gas stocks this year? Think small and Canadian, at least according to the world’s leading energy fund manager. 

“Canada is, I think, the place to be in 2022,” said Eric Nuttall of Toronto’s Ninepoint Partners LP. His $950 million (US$752 million) Ninepoint Energy Fund was Morningstar’s top-performing energy-focused fund in 2021, posting a 189 per cent total return that blew away the S&P/TSX Composite Index’s 22 per cent. The second-best performer, Canoe Energy Portfolio Class, is another Canadian energy-focused fund and posted a total return of 101 per cent last year.

Nutall was helped by the overall surge in energy stocks, the best sector in the S&P 500 Index and S&P/TSX last year, and the more than 50 per cent rebound in oil prices as economies reopened and the pandemic receded. The performance comes after a string of difficult — he calls them “soul sucking” — years investing in the oil and gas business. 

“I just thought I had to make it to the other side, then I’d be the last man standing,” he said. 

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Energy investors in 2021 benefitted from what Nuttall called a “disproportionate” increase in smaller-cap Canadian energy companies like Baytex Energy Corp. and Cardinal Energy Ltd., both of which rose over 420 per cent last year. But the fund’s most prescient trade was buying 53 million shares of beleaguered oil sands producer Athabasca Oil Corp. from Norway’s state oil company Equinor ASA in January 2021. 

At the time, Athabasca had US$450 million of debt maturing in February 2022. Its total market value was less than US$80 million. But as oil prices rose and Athabasca’s cash flow improved, the company refinanced its debt, pushing almost US$90 million in maturities out to October 2023 and an additional US$350 million to 2026. The stock gained 600 per cent last year.
 

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Equinor spokesperson Ola Morten Aanestad described the divestment as a “financial investment,” adding that the fund has exited the oil sands industry but remains active in Canada’s offshore oil and gas production.

Athabasca chief financial officer Matt Taylor said in an email that the company’s balance sheet refinancing was a catalyst for the shares. “The stock’s performance and trading volume (in 2021) is reflecting this optimism and we have attracted a number of new investors like Ninepoint.”

Meanwhile, Nuttall is searching for similar deals to boost his returns for this year. But he acknowledges it will be difficult to come up with another Athabasca. 

“That one was special,” he said.

Despite breaking out in 2021, Canadian oil and gas companies trade at lower valuations, an average of 16.11 times their earnings, than their U.S. peers, trading at 21.49, according to data compiled by Bloomberg.

Nuttall said the country’s producers can “force a re-rating” by using free cash flows from higher commodity prices to aggressively buy back shares and boost dividends. That would get the attention of fund managers who have exited the oil and gas industry due to concerns related to ESG investing strategies.

“The commonality of all fund managers is you can be fired by the click of a mouse button in three nano seconds,” said Nuttall, adding that the industry’s returns should leave investors with the fear of missing out. “That FOMO, that performance anxiety, is going to lead to the generalists coming back to the space.”

Nuttall is bullish on crude in 2022 but sees a few potential risks to oil prices. He’s particularly concerned about the potential for a new “vaccine resistant” coronavirus variant that hurts oil demand, and the possibility of larger than expected increases in supply from either U.S. shale oil producers or Iran, if sanctions lift.

The West Texas Intermediate oil price benchmark is currently trading at US$77.69 per barrel on a spot basis, and futures contracts are trading above US$70 per barrel through Jan. 2023.

“If you don’t get the call on the commodity correct, then you’re doomed,” he said, adding that bad calls on commodity prices can sink otherwise smart investments in geographies, sub sectors, resource types or alternatives. 

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Canada's energy patch sees 'significant' boost in investment – BNN

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Investment in Canada’s oil and natural gas industry will rise 22 per cent this year to $32.8 billion (US$26.3 billion) amid higher prices for hydrocarbons, according to the Canadian Association of Petroleum Producers.

The $6 billion gain in investment marks the second straight year of “significant” increases, the oil and gas industry association said Thursday in a report. Spending on Canadian energy is rising as U.S. oil prices surge to their highest in seven years. West Texas Intermediate futures are trading at more than US$85 a barrel and natural gas up about 60 per cent in the last year amid an energy demand recovery from the COVID-19 pandemic.

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Investment in Canadian oil sands, the world’s third largest oil reserves, will jump by a third to $11.6 billion while investment in conventional oil and gas will climb 17 per cent to $21.2 billion from last year.

Still, CAPP warned that Canada is losing out to other energy-producing regions. Canada was viewed as a “top tier” jurisdiction for international investment in 2014, when it attracted $81 billion or more than 10 per cent of global upstream gas and oil investment. Forecasts suggest Canada’s market share has fallen to 6 per cent — a drop that represents more than US$21 billion in potential investment. 

This year’s investment growth will leave the industry about where it was in 2018, before the pandemic slashed demand, Tim McMillan, CAPP’s president and chief executive officer, said by phone.

Many Canadian energy companies, similar to their U.S. peers, are paying down debt and returning cash windfalls from oil price gains to shareholders through stock buybacks and higher dividends as investors seek higher returns over growth. Meanwhile, concern about the impact of higher-than-average carbon emissions from Canada’s oil sands prompted some banks and funds to pull investment from the industry in recent years.

“There has been pressure put on the banking industry and through other mechanisms, which is pushing investment to other jurisdictions,” McMillan said.

Investment in Newfoundland and Labrador’s offshore oil industry will rise about 6.7 per cent to $1.6 billion this year, according to CAPP. In comparison, the Gulf of Mexico’s offshore investment is expected to jump 21 per cent to $13.1 billion this year.

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Peloton stock is crashing on reports it's halting production of bikes and treadmills – Yahoo Canada Finance

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The bad news flywheel continues to be spinning in warp speed at Peloton (PTON). 

Shares of Peloton crashed 24% to $24.22 on Thursday after a CNBC report that the struggling fitness company would temporarily halt production of its bikes and treadmills due to sluggish consumer demand. Shares fell below the company’s September 2019 IPO price of $29. 

The company will reportedly stop producing its bikes for two months and treadmills for six weeks. 

A Peloton spokeswoman didn’t return Yahoo Finance’s request for comment. 

“Peloton’s inventory build at the end of last quarter made it clear that they were still operating a supply demand mismatch. Unfortunately, unlike the pandemic, this time supply meaningfully outpaced demand,” BMO Capital Markets analyst Simeon Siegel told Yahoo Finance. 

Siegel has been a long-time bear on Peloton with an Underperform rating on its stock. 

Shares are now down 30% in December amid bad headlines from a product placement in the new “Sex and the City” reboot. One of the show’s lead characters, Mr. Big, suffers a heart attack after a Peloton bike ride at the end of its premiere episode. 

Earlier, Peloton’s stock crashed more than 30% on Nov. 5 after the company said that connected fitness subscribers of 2.49 million was roughly in-line with analyst estimates. The number of workouts on the platform trended lower for the second consecutive quarter. Sales fell well short of analyst estimates, and the company posted a wider loss than expected.

Peloton also slashed its full-fiscal year outlook.

The company sees full-year sales of $4.4 billion to $4.8 billion, down sharply from $5.4 billion previously. Peloton expected a full-year adjusted operating loss of $425 million to $475 million. The company had expected an operating loss of $325 million.

Shares are down 83% in the past year.

More bad news could be right around the corner: Peloton’s earnings release on Feb. 8. 

“We expect that guidance, if given, will be kitchen-sinked at this point and await more color on these various news items on the call,” Macquarie analyst Paul Golding said. Golding rates Peloton at outperform with an $85 price target, which assumes 254% upside from current price levels.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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Normal price corrections in gold, silver, but bulls remain strong – Kitco NEWS

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Welcome to Kitco News’ 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

(Kitco News) – Gold and silver futures prices are trading weaker in early U.S. action Friday, on routine downside corrections after recent good gains that pushed prices to two-month highs this week. The bulls remain in firm near-term technical control. February gold futures were last down $4.70 at $1,837.90 and March Comex silver was last down $0.226 at $24.485 an ounce.

Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Risk appetite has receded this week and that’s been bullish for the safe-haven metals. Inflation fears that are growing have put pressure on paper assets recently—namely stocks and bonds. Technical damage has been inflicted in the S&P 500 and the Nasdaq stock indexes that suggests those markets have put in at least near-term tops. Geopolitics are also in play early this year as the U.S. and Russia are in a stare-down over Russia’s aggression ambitions against Ukraine.

Crypto currencies are also feeling the heat this week, with Bitcoin hitting its lowest level since August.



The key outside markets today see crude oil prices down and trading around $84.00 a barrel. The U.S. dollar index is a bit weaker early today. The U.S. Treasury 10-year note yield is presently fetching 1.792%.

U.S. economic data due for release Friday is light and includes leading economic indicators.

Live 24 hours gold chart [Kitco Inc.]

Technically, the February gold futures bulls have the firm overall near-term technical advantage amid a five-week-old price uptrend in place on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at the November high of $1,881.90. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at the overnight high of $1,843.10 and then at this week’s high of $1,848.50. First support is seen at the overnight low of $1,828.40 and then at $1,820.00. Wyckoff’s Market Rating: 7.0

Live 24 hours silver chart [ Kitco Inc. ]

March silver futures bulls have the firm overall near-term technical advantage. Prices are in a five-week-old uptrend on the daily bar chart. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the November high of $25.54 an ounce. The next downside price objective for the bears is closing prices below solid support at $23.00. First resistance is seen at this week’s high of $24.755 and then at $25.00. Next support is seen at Thursday’s low of $24.125 and then at $24.00. Wyckoff’s Market Rating: 6.5.

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