Increasing stake in Encana

8 Aug 2011 by Jim Fickett.

I made the investment case for Encana in two posts, one in Dec 2010 and one in Feb 2011. I was looking mainly to buy high quality gas reserves in the ground at a reasonable price, and my conclusion at that time was that the share price, about $31, represented a bargain. In the current panic energy shares are particularly hard hit. Encana is down to about $23. So today I added another 1% of the portfolio to Encana.

It is hard to to know how to pace oneself. On the one hand, you don't want to miss a short, sharp dip. On the other hand, if the market keeps going down, you want to have some cash left to take advantage of lower prices. I think investors are still not realistic about how long the recovery will take, and how helpless governments will be over the next decade. So I would guess, though this is only a guess, that we will have another burst of optimism soon, and this drop will be fairly short. Still, I want to keep a measured pace, hence making only a 1% move today.