Tourmaline Oil (TOU, Financial) was a key holding in the McElvaine Value Fund 2020 Q4, accounting for 9.4% of net assets. The fund manager, Tim McElvaine, highlighted Tourmaline's position as Canada's largest natural gas producer, benefiting from low operating costs and a strong infrastructure base, which supports significant free cash flow generation.
"TOU is Canada’s largest natural gas producer. I realize TOU operates in a commodity business. We have two things in our favour. One, our purchase price was attractive as we paid less than a reasonable estimate of the liquidation value. Secondly, TOU benefits from a virtuous circle. Its low operating and drilling costs produce significant free cashflow. This cashflow combined with a significant infrastructure base and a large undeveloped land bank allows TOU to be selective with its drilling which reinforces its low cost structure." — Tim McElvaine, McElvaine Value Fund, Q4 2020 Fund Letter
Read full letter at gurufocus McElvaine Value Fund 2020 Q4 page.
