(Idea) South Bow: Temporary Setback Creates A Buying Opportunity
Editor’s Note: Ideas from HFI Research is a separate paid subscription service from HFI Research. South Bow is not a position in the HFI Portfolio.
By: Jon Costello
Note: Dollar values refer to Canadian dollars.
South Bow Corp. (SOBO:CA) (SOBO) shares have taken it on the chin in recent days after they were hit by the double whammy of a deteriorating energy sector and an oil spill out of the company’s Keystone pipeline.
We received SOBO shares after they were spun off from TC Energy (TRP) on October 1, 2024. We’ve held onto the shares because we like their safe and stable $2.76 per share dividend, which yields a very attractive 9.5% on our $29.00 cost basis and a still-juicy 8.4% on the current stock price.
SOBO shares are currently trading at the lowest level since the spin. The shares traded as high as $39.57 in early March before falling to around $32.67 today.
Source: Yahoo! Finance, April 14, 2025.
The company’s recent oil spill is one factor behind its selloff. The news sent the shares down from $34.40 to $31.00 after it was announced. They have since stabilized below $33.
On Tuesday, April 8, SOBO’s flagship asset, the Keystone pipeline, released 3,500 barrels of oil in a rural agricultural area in Southeast North Dakota.
Source: Associated Press, April 8, 2025.
The spill was quickly contained, but it caused Keystone to shut down, inconveniencing customers. The pipeline, along with SOBO’s other assets, transports approximately 620,000 bbl/d of Canadian heavy crude oil from the Western Canadian Sedimentary Basin (WCSB) to the U.S. Gulf Coast.
SOBO is still investigating the cause of the spill. It expects to restart the pipeline today.