Energy stocks find favour with Sionna manager

Kim Shannon seeks companies that are more stable than their peers.

Diana Cawfield 8 September, 2016 | 5:00PM

Low oil prices create buying opportunities for veteran value manager Kim Shannon, president and chief investment officer of Sionna Investment Managers Inc.

"A couple of years ago, when oil prices dipped below US$40," says Shannon, "we started seeing a lot of value in commodities and in the stocks. We began as sector- neutral, so when oil prices and high-quality names dipped below intrinsic value, we started to add to the stocks."

Shannon's investment thesis is that the price of oil will eventually rebound to its marginal cost of production, and that the laws of supply and demand will prevail. The energy sector currently represents 25% of the portfolio of Sionna Canadian Equity Class, which Shannon manages. That's about as high as she'll go, since for risk-management purposes she restricts the fund to a maximum overweight position of five percentage points relative to the sector's S&P/TSX Composite Index weighting.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Boardwalk Real Estate Investment Trust49.89 CAD-1.69
Imperial Oil Ltd30.81 CAD-1.28
PrairieSky Royalty Ltd13.11 CAD-4.86
Suncor Energy Inc38.68 CAD-0.92

About Author

Diana Cawfield

Diana Cawfield  Diana Cawfield is an award-winning writer who has been a regular Morningstar contributor since 2000. Her numerous publication credits include the Toronto StarAdvisor's Edge and Chatelaine, as well as the Canadian Securities Institute's online educational services.