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    Why the deep freeze is good for your portfolio

    car in the snow21 150x150 Why the deep freeze is good for your portfolioApart from the Olympics, the most popular shared experience these days is talk about the weather. To be specific, the bitter cold that has hit most of Canada – and given rise to the new and now popular term, ‘polar vortex.’ However, there is a silver lining to these snow-filled clouds – and not just for those who enjoy winter sports.

    Demand for natural gas has risen appreciably with the decline in temperatures. And that’s good for investors like ourselves who took a contrary view back in 2011 when the commodity was deeply out of favour. At the time, in North America, natural gas was trading at approximately $1.80 per one million British Thermal Units (BTUs) and producers’ stock prices were depressed.

    But for investors who took a longer-term view, a different picture was emerging. One that held the potential for significant profit.

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    Finding investment opportunities when the economy isn’t handing them out

    iStock 000014863867Medium priv eq banner 300x94 Finding investment opportunities when the economy isnt handing them outLast week, we organized a lunchtime panel with four outstanding financial minds that are part of the pool of talent we have to draw on for the management of client investment portfolios:

    • Maureen Farrow, (economist), President, Economap
    • Tye Bousada, (global equities), President & Co-CEO, Edgepoint Investment Group Inc.
    • Rick Grafton, (energy), CEO, Grafton Asset Management
    • Corrado Russo, (real estate), Managing Director, Global Securities and Investments, Timbercreek Asset Management Inc.

    It was a lengthy and meaty conversation about the state of the global economy, how Canada is faring and what it all means for clients of Newport Private Wealth. This summary won’t fully do justice to the depth and scope of the presentations, but we will try to boil a 90 minute discussion down to a readable blog post for you.
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    When will natural gas prices turn?

    Record warm temperatures made for a comfortable Canadian winter this year. But they’ve caused a chill in the energy market. Particularly natural gas prices which dropped to a 15 year low.

    What’s the cure?

    “Low gas prices” is the standard response from industry experts. Low prices spur demand and cut off supply. It’s just a lesson in economics.

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    Tourmaline Oil hit 2012 production target

    TOU Overview 2012 Kdean Tourmaline Oil hit 2012 production targetFor those who are regular readers of our blog, the name Tourmaline Oil Corp. should be well known. We participated in Tourmaline’s initial capital raise in 2008 and continued to invest through IPO in November 2010 (see our earlier blog posts). Tourmaline is our single largest holding in the Newport Canadian Equity Fund today.

    Tourmaline released their corporate overview presentation last week and it shows a continued path of impressive growth in production levels. Already this year, in the last week of January, Tourmaline achieved its 2012 average daily production target — well ahead of schedule.

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    Tourmaline began trading today

    No matter how long you’ve been in this business, it’s a feeling that never gets old: the satisfaction of identifying, analyzing, investing and then watching a private company come to fruition with an IPO and significant value creation for shareholders.

    i ec93482f497fc94ab65185184c09cac9 oil well for blog(1) Tourmaline began trading today

    Which explains why there was an especially upbeat mood in our office this morning as Tourmaline Oil Corp. began its first day of trading today on the TSX. As we’ve referenced in earlier blog posts, (The
    titan nobody knows
    and Mike Rose: positioned to profit from the great recession) we were participants in Tourmaline’s first capital raise in 2008, along with several follow on private placements.

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    The titan nobody knows

    This morning’s Report on Business in the Globe & Mail has a two-page spread on Mike Rose, the oil patch entrepreneur and CEO of Tourmaline Oil Co. who, according to the article, is “the hottest star in the energy business”.

    Though Rose is anything but a household name, readers of this blog and clients of Newport Partners may remember his name from our blog post last March, Mike Rose: positioned to profit from the great recession.  Rose is an entrepreneur we have been backing for several years as we participated in Tourmaline’s first private placement and subsequent offerings.

    With a two-page spread in the Globe & Mail, our ‘private’ investment is certainly becoming more public — with an IPO likely down the road.

    Here is a link to the article, An oil patch pitching ace.

     

    Mike Rose: positioned to profit from the great recession

    I blogged a couple of weeks ago about the entrepreneurial thinking of money manager, Tye Bousada in my post, How entrepreneurs — and smart investors – really succeed. I was inspired by a New Yorker article written by Malcolm Gladwell, entitled The Sure Thing.

    The premise of the article being that successful entrepreneurs are not really risk takers, as the conventional view suggests. Rather, an entrepreneur’s strength is in “occupying a ‘structural hole’”, a niche that gives him a unique perspective on a particular market” and acting decisively to take advantage of it.

    Here’s a related story of a seasoned entrepreneur who stands to profit from this great recession – not in spite of challenging economic times, but rather because of the turmoil and his ability to take advantage of it.

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