Husky Energy Inc 2

I am late posting as I spent the day in a boat in the Kawatha's.

I own this stock (TSX-HSE, OTC- HUSKF). It is a nominal investment in oil and gas. I first bought this stock in July 2008 and then some more in December 2010. I have lost 3% per year on this stock. The dividends part of this total return is probably around 2.5%. I have not done well in this investment. I probably paid too much for the shares I bought in 2008, but got the second lot at a better than average price. This second purchase will help my return in the long run.

When I look at the insider trading report, I find that over the past year there has been a net of insiders buying $3.7M. The insider buying equals $4M and there is a small amount of insider selling. The insider buying has been pretty evenly split by CEO, Officers and Directors. For the CEO and Officers, it seems like they are holding on to their stock options. This is a positive.

A lot of insiders get stock options and generally have more stock options than stocks. Also Li Ka-shing, holds a majority of the shares in this company. For information on this investor, see Wikipedia. As far as I can calculate, his share of this company decreased from 88% to 72% over the past year. (See my site for information on Insider Trading.)

There also appears to be 145 institutions that own just under 9% of the shares of this company. This investment is worth some $2B. Husky is worth around $23B. Over the last three months there has been both buying and selling by institutions and they have marginally increased their share in the company.

When I look at my spreadsheet, I get a 5 year median low Price/Earnings Ratio of 9.65 and a high P/E Ratio of 12.84. This is on a current price of $26.23. The current P/E ratio of 12.31 would be about the median over the past 5 years and therefore shows a reasonable price.

On this stock some analysts are using Earnings from Operations (EFO), not Earnings per Share (EPS). Most sites that I have visited are confusing the EFO and the EPS. For 2010, the EFO is $1.43 and the EPS is $1.38. For example, see Globe and Mail’s Analysts Rating page and last year’s EPS is shown as $1.43. However, if you look at the financial statements on the Globe and Mail’s Financials page, you will see EPS for 2010 at $1.38. This is not the only stock this happens to or the only site that confuses these earning types. As if, trying to valuate stocks is not confusing enough as it is!

The current dividend yield is 4.57% and the 5 year median dividend yield is 4.37%. So this also shows a current reasonable price. (See my site for information on Price/Earnings Ratio.)

I get a 10 year median Price/Book Value Ratio of 2.19 and a current one of 1.57. The current P/B Ratio is just 70% of the 10 year median Ratio and this points to a good current price. I get a current Graham Price of $28.28. This is based on the current Book Value and the earnings estimate of $2.13 for the 2011 financial year. The current stock price of $26.23 is some 7% lower. The 10 year median low difference is 23% and the 10 year median difference is 7%. By this measure, the price is reasonable.

When I look at analyst’s recommendations, I get Buy, Hold, Underperform and Sell recommendations. The vast majority of these recommendations are Hold. The consensus recommendations would be a Hold.

One negative comment was about the recent issuing of shares over the past year which diluted the shares outstanding by about 4.8%. One analyst thought that the company had an odd mixture of assets. A number of analyst remarked on the fact that the company has a new CEO. A number of analysts also remarked that the dividend yield is good and they felt that the current dividend distribution was secure. Most felt that the stock price will move up in the future, but its climb would be a long term one and would not happen in the short term.

As I said yesterday, I plan to hold on to the shares in this company that I have. I have never minded that a company I invested in was largely controlled by an individual or a family. Of course, there are pluses and minuses about this type of control.

This company is one of Canada's largest energy and energy-related companies. The Company's operations include the exploration, development and production of crude oil and natural gas. Husky has operations in Western Canada, Eastern Canada, US, China, Indonesia and Greenland. This company is mostly foreign owned. It is listed under TSX Energy Index. Its web site is here Husky. See my spreadsheet at hse.htm.

This company is one of Canada's largest energy and energy-related companies. The Company's operations include the exploration, development and production of crude oil and natural gas. Husky works in Western Canada, in off-shore Eastern Canada and in off-shore China and Indonesia. This company is mostly foreign owned. Industry: Oil and Gas (Integrated Oils) It is listed under TSX Energy Index. Its web site is here Husky. See my spreadsheet at hse.htm.