Here is a trade idea I highlighted February 28th on my previous website as Baytex Energy closed the trading week at $3.00. Since then Baytex traded as high as $5.39 giving a 79% return in 6 days!
Link to verify posting dates on my twitter account: https://twitter.com/SetYourStop/status/705809750622085121
Eric went on to say the best opportunities today are in those names perceived as over-leveraged and if he is correct on his call in terms of oil going to $50 many of these oil companies will do well.
In terms of Baytex there are two things:
- A lot of debt in high yield notes that do not come due until 2021 so there is no fear of the company having to refinance in a bad market.
- Bank debt, in which the market is not aware Baytex is in discussion (Eric thinks) with the banks to pledge assets that will secure their line eliminating the covenant.
Eric thinks Baytex will be able get through this downturn without having to impair their balance sheet any further. He also thinks as people get more constructive on oil in the coming months Baytex will be the go to high beta name for Canadian Investors and if his oil call is correct Baytex Energy could be a $6 to $7 dollar stock by year end.
Here is a link to Eric’s appearance on Market Call: http://www.bnn.ca/Video/player.aspx?vid=814539