Enerplus is a Value Trap

In my January 2012 and March 2012 portfolio updates I noted that Enerplus (ERF.TO) was one of the biggest losers. Enerplus has continued its decline since then, with no sign of stopping.

When I bought Enerplus in February 2011 it had good fundamentals and a healthy dividend of 7.1%. That healthy dividend has now bloated to 12.1% as the price has fallen. This is not a sustainable level of cash distribution and, if the dividend is cut, the stock will likely fall again. Time to get out.

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I am selling Enerplus here:

  • Sell ERF @ $18

It is worth noting that David Stanley deliberately excludes former trusts from his Beating the TSX system. I chose to ignore his advice when I adopted his system in October 2011. Oops!

POSTMORTEM

Writing today, 18th May, Enerplus is at $14.00 (down 22%).  This was a great call.

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