What we have here is a failure to communicate

I wrote recently about my failure to stick to my own Investment Process by failing to take profits on Canadian Oil Sands (COS.TO) when the price rose.  Well, I had an opportunity to redress this failure when the price rose again yesterday. I had most recently bought COS at $18.25.  I was able to sell yesterday at $20.27 (an 11% increase).

  • SELL COS @ $20.27

There was another problem though.  I instructed my Financial Adviser to sell around 30% of my holdings (my strategy is to trade around a core position, the core being the 70% that I did not plan to sell).  My Financial Adviser sold the entire position (oops!).  I take some responsibility for the communication breakdown because I did not emphasize the fact that I wanted to sell only a portion of my holdings.  However, I did communicate the number of shares to be sold in an e-mail and again in a follow-up conversation.  Mistakes happen, but not the same mistake twice.  We will not repeat this.

So, should I undo the error right away and jump back into COS?  Maybe not.  Before I assume that I need to rebuild my core position I need to do a little fundamental analysis to ensure this is the best energy stock for me.  Perhaps this error provides an opportunity.  Plus, I was always a little leery of the former income trusts, like COS and Enerplus (ERF.TO).  Maybe I should look at Husky (HSE.TO) or Suncor (SU.TO).


Over the weekend I took a look at all the major Canadian oil companies and Canadian Oil Sands is still the best value in terms of IRR and dividend yield.  I felt that the stock was likely to take a dip after last week’s run up so I asked my Financial Adviser to place a buy order at $19.70.  The price did indeed fall on Monday and I was able to buy back my core position for $0.57 less than I sold it for.  A profit (or, more accurately, an avoided loss) of almost 3%!

  • BUY COS.TO @ $19.70

For added luck, the stock rose again after my trade was executed, closing at $20.57, for a further profit of over 4%.  If we had never sold the core position we would have made only 1.5% today.


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