Monday, July 23, 2007

trimmed Petro Canada stake

I have trimmed my stake in the integrated oil and gas company Petro Canada by selling about 25% of my holdings today. I made this decision based on several factors. First, I am up about 30% on PCA in less than one year's time. This stock has run up 45% since March, 2007. Also, oil is now back near it's highs after seeing some lower levels earlier in the year when PCA was trading in the $40 - $45 range. Petro Canada ran up after reporting good earnings, while oil rose; however the anticipation of future earnings power due to higher refining margins sent this stock above $60 per share, which I feel may be slightly overbought.

I could be wrong and the stock could continue upwards now, however their is no shame in taking some profits after a large short term gain. I believe the time to take some profits on resource names like this is when the resource is relatively high and expectations are high for continued strength. Things can change very quickly in markets. I remember, what seemed like just a few months ago, many were calling for $40/barrel oil.

I am usually not a seller of stocks under normal circumstances but I saw this as a great opportunity to take a healthy profit off of the table while the conditions were right (ie high oil, great run, high expectations).

Petro Canada reports their second quarter earnings on Thursday, July 26. It will be interesting to see if the company can overcome the high expectations that the market has built up. This may be one of those earnings reports where the company beats expectations but the stock drops.

I am still holding this company for the long term, and I shouldn't regret locking in some profits in these early stages.


Middle Class Millionaire said...

Hey MG,

I think trimming the position was good move (never any shame in 30% profit). With oil near record highs but gas near record lows are you considering dumping some of your oil profits into some gassy names? I'm looking at a few right now and own GZ and GO.A

moneygardener said...


As you know I'm usually a big cap dividend paying player. With the exception of ECA and CNQ it gets a little thin when it comes to nat. gas. It really has not been on my mind, but is probably a good bet as gas is cheap, esp. if we get a another Wilma, Rita, or Katrina...God forbid.

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