Chinese offer $10.08 per share for Daylight Energy

Subject to approvals, China’s Sinopec is buying Daylight Energy (DAY.TO) for $10.08, which closed at $4.59 CDN Friday. Here is another example, like Petrobakken, where Mr. Market doesn’t know what something is worth, but another industry giant does.  I feel sorry for those who bought at $11.74, the 52 week high. You win some and you lose some.

My friend Mich won big on this one.  He bought near the market close on Friday 1000 shares–that is a one day return of over 100%!  My returns are far more subdued.  I will make 8.8% return on capital at risk on this deal.  It helps me, because my current position was in the BIG RED.

But I’m not that happy, because this is Canada’s future, and I don’t think we should sell our assets to foreigners at enterprise value but at a significant premium.  But hey, it will bring capital into Canada and it will create jobs, and so I am happy about the short term help it will bring.

While this is 2.2 billion dollars and it seems like a lot of money, it fits into the larger meta-narrative:  The international trading scheme, whereby US consumers buy goods from creditor nations which in turn  lend the money back to the US government,  is unravelling.  This asset purchase is a rebuke of the US dollar, just as the dumping of $56 billion in treasury notes by foreign creditors.  We should expect more of this and as suggested by Zero Hedge, it is perhaps the beginning of the end of the US dollar:

Of course, there is a far simpler explanation [for the dump of 56 billion in US treasury debt]: the dreaded D-day in which foreign official and private investors finally start offloading their $2.7 trillion in Treasurys with impunity (although not with the element of surprise – China has made it abundantly clear it will sell its Treasury holdings, the only question is when), has finally arrived.

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