Snake-bitten investors have made a powerful statement in the past couple of years.

The message, in a nutshell, is: SHOW ME THE MONEY!

They’ve stamped their feet.

They’ve shouted it from the rooftops.

And, most importantly, they’ve staked their hard-earned dough on it.

The message couldn’t be clearer. Yield-hungry investors sour on the broad markets want equities that deliver cold, hard cash.

They want investments with attractive tax advantages.

They want investments that generally minimize risk.

They want trusts – income trusts, royalty trusts and REITs (real estate investment trusts). And that’s where they’ve been placing their bets.

Aside from the rush to gold stocks, income trusts have been the hottest trend in Canada and one that refuses to wane.

Just one problem here. It seems the stodgy old Toronto Stock Exchange is still deaf and dumb to this ringing endorsement from investors, having allowed what looks to be a minor technicality to prevent the trusts from entering show time.

Astonishingly, this country’s stock exchange is still giving income trusts all the respect of Rodney Dangerfield.

While retail and institutional investors have been flocking to income trusts and are being handsomely rewarded in the throes of a grisly bear market, trusts still aren’t eligible for inclusion on this country’s benchmark index, the S&P/TSX Composite Index.

You can watch the TSX ticker tape on ROB-TV until your eyes glaze over and never see an income trust, royalty trust or REIT.

Yet, while income trusts have had to play second fiddle to conventional stocks, the trusts are where the action is these days, particularly the red-hot oil and gas royalty plays.

Trusts make regular cash payouts to investors and typically yield anywhere from seven to 14 per cent, eye-popping numbers in an environment of low interest rates, a high-risk broad market and eroded confidence in conventional stocks.

Because trusts aren’t on this country’s benchmark index, TSX index investments can’t get any exposure to the trusts. The inclusion of some trusts on the TSX composite would also make the exchange a more useful gauge of how the Canadian market is faring.

Last year, trust companies tapped into the market to raise $6.7 billion and income funds beat the pants off the TSX composite.

While the TSX was down 14.2 per cent, the Scotia Canadian Income Fund, for example, was up 8.1 per cent.

The Standard & Poors committee that decides which stocks go on the TSX index met in November to consider the issue of including trusts on the TSX composite, but decided not to change its policy.

Although the TSX gave no explanation for its decision, the main reason for the exclusion of income trusts apparently is their unique structure.

There’s a concern that if income trusts were included in the major indexes, unit holders would be susceptible to legal liabilities.

But most major players in the industry don’t believe that technicality is significant enough to keep trusts out of the index.

“The liability issue is really an urban myth,” says Ian Bacque, director of government relations for the Canadian Institute of Public and Private Real Estate Companies, which has lobbied the TSX over the issue.

“We have been saying for years that there is essentially no difference in the risk to REIT unitholders and shareholders of a corporation.”

In addition to attractive yields of income trusts, many of the 166 trusts on the TSX are among the top performers in the bear market.

Three Calgary-based trusts on the TSX – CCS Income Trust (CCR.UN), Foremost Industrial Income Fund (FMO.UN) and Trinidad Energy Services (TDG.UN) – had their shares double or better in 2002.

Generally, companies with stable earnings and strong cash flow are good candidates in the income trust space, but the trend for companies to convert to income trusts hasn’t been all roses and champagne.

Investors who jumped on the beer wagon and chased Calgary-based Big Rock Breweries when it announced it was converting into an income trust in September have watched the stock fizzle and fall 20 per cent off its high.

Now, there’s a nasty hangover.

* ATHLETE’S FOOT SPREADING! Calgary may be getting a serious case of Athlete’s Foot, but Canaccord Capital isn’t putting much stock in its ability to give Forzani Group (FGL-TSX) a serious run for its money. Athlete’s Foot Group, an Atlanta-based retailer of sports shoes and attire, plans to begin an expansion into Canada this spring with a five-store franchise operated in Calgary by local entrepreneur Wayne Metcalf.

Athlete’s Foot operates 700 stores in 40 countries and plans an ambitious expansion through five-store franchises in Canadian cities, including Edmonton.

“Forzani gets a touch of Athlete’s Foot?” wrote Canaccord in a morning note to investors. “Athlete’s Foot may have its work cut out for them. Forzani buys cheaper, rents cheaper and advertises cheaper than its competition.”

Shareholders weren’t overly concerned either as Forzani shares dipped only 2.6 per cent, to $16.50, in its first day of trading after the news.

Although Forzani stock is down about 35 per cent in recent months, it’s still one of Canada’s hottest stocks in the past two years, up more than 200 per cent.



HOT ALBERTA STOCK: Drillers Technology
DLR-TSX $1.74
Up 29 cents (+20.0%) on 1,480,700 shares (for week ending Feb,7).
Drillers’ stock gushed on the backs of two news releases. The stock was off to the races on news that the Calgary drilling rig services company had a deal with Kuukpik Drilling, an Alaskan Native company, and then gained momentum on news of a joint venture with Schlumberger in its Mexican drilling operations.



COLD ALBERTA STOCK: Antrim Energy
AEN-TSX $.90
Down 25 cents (-21.8%) on 560,900 shares (for week ending Feb. 7),
The New Year’s champagne has gone flat for shareholders who have been riding the wild Antrim roller-coaster. The Calgary oil and gas exploration company’s stock fizzed at the start of the year on news it had commenced drilling a previously suspended well in Tunisia, North Africa, spiking to $1.44. Since then, the stock is off 60 per cent.