Harvesting Harvest Energy Trust, Biovail and Those Loonies

Harvest Energy Trust, HTE, has dropped like a subprime mortgage lender, and there's not a lot of news about it, bringing its yield in the TGTBT neighborhood of over 16.80 percent.

While Canadian politics have made dividend payouts on a whole group of energy trust securities taxible, then not taxable, and now maybe taxible again by 2011, there does not seem to be a great reason for the HTE wild ride, apart from the drop in the price of oil, and perhaps the related issue-- the dollar are historic lows against every currency, including the Canadian Loonie. At such great yields, HTE could be a place to store cash for yields while markets transition, but perhaps not without trailing stop loss orders so you'd get your marbles back in case the Loonie move against you.

Biovail Corporation, BVF, is another Canadian company that kicks off Loonies. BVF is a maker of medications that focus on "central nervous system disorders, pain management, and cardiovascular diseases," including several household name brand drugs, such as Wellbutron for depression, Vasotec for hypertension, and Zovirax for Herpes (73% market share). The recent conference call was positive, and promising on balance, offering a bright outlook for the company's activites for 2008.

While Wellbutron has slipped by nearly half ($168m vs. $302m for 2006), and still faces generic competition, the balance of the company's portfolio of drugs appears to be mixed to up, and it's efforts to create new medications sound sustainable (I know, this an a metrocard get you a ride if the card is charged). R and D is up, and includes efforts to bring about another drug to treat sexual malfunction drug, which sounds profitable if not life saving, given the demand for those other purple solutions. The Loonie issues was raised, and the company responded that building plants is a long term planning issue, not so much a currency trader. When asked if they have any promising projects, the company did not want to suggest there were any dramatic events on the horizon, but there were deals on the calendar.

All in all, it yields better than 8 percent, it trades below it's 200 day moving average, and it's PEG ratio is 1.28, which beats a poke in the eye. BVF also has no debt.

Will the company trade up, and will this outsized dividend remain high and dry so I won't have to watch it (with a trailing stop loss order)? As the actor Jon Favreau told wise-cracking partner Vince Vaughn in one of their films: "I don't know, I'm not Columbo...", but it's looking sustainable.

Jim Cramer panned BVF a few days ago in his shout out "Lightening Round", stating that he's not thrilled by the market for generics, but at greater than 8% with a modest PEG ratio, no debt and a consumer who may be more and more price concerned for '08 and '09, he could be a bit to flip (it happens) about Biovail as a place to park while markets works through the worldwide fallout from subprime decline and ongoing American real estate market woes.