Topic: How To Invest

Hi Pat: I would be interested in hearing your thoughts on Eagle Energy Trust. Thanks in advance.

Article Excerpt

Eagle Energy Trust, $11.43, symbol EGL.UN on Toronto (Units outstanding: 18.0 million; Market cap: $205.9 million; www.eagleenergytrust.com), is a recent new issue. The trust first sold units at $10 each in November 2010. The initial unit sale raised $149.5 million. Eagle used some of this cash to buy a 73% stake in the Salt Flat field, a light-oil property in south-central Texas, for $127.1 million. The trust now plans to continue developing the Salt Flat field, and acquire further properties in the U.S. Eagle believes it can buy properties cheaper in the U.S. than in Canada. The company believes that it has, with the help of its legal advisors, created a “mutual fund trust.” This business structure makes it exempt from Ottawa’s tax on income trusts, which came into effect on January 1, 2011. The trust is now paying a monthly distribution of $0.0875 per unit, for a 9.2% yield. Under its “mutual fund trust” structure, 40% to 50% of its 2011…