Investing is an undertaking that draws on many disciplines, including math, finance, economics, politics, history, psychology and story-telling.

Everything but the last is to one degree or another self-evident. (Psychological factors undoubtedly give the lie to “efficient market” hypotheses, though that’s a topic too far afield for today’s bit.) “Story-telling” is important because you have to be able to explain at least to yourself what’s going on around you and what you’ve done portfolio-wise to prepare.

If you’re a self-directed investor with eyes on building wealth over the long term you’ve chosen a road less traveled. For most investors the best thing to do–simply because they lack the time and inclination (or both) to devote themselves to managing their assets–is to allocate across passively managed index funds and roll with the masses.

That saves you from keeping up on the fortunes of the businesses in which you’ve invested and understanding the context in which they operate. Our mission is to manage the information flow and provide the best guidance for you to use as you build your own portfolio. This is an exercise that’s ultimately based on your own risk tolerance and objectives, but we can provide a blueprint for key parts of your asset allocation model as well as the material to make it sturdy.

We provide the basic building blocks and instructions on how to use them, issuing periodic updates based on ever-evolving facts and figures, so that your portfolio is flexible, too.

Doing something is better than doing nothing, but activity is no substitute for results. Doing it via Canadian Edge will take more of your time, but in the long run history suggests going this way will help you make money.

Once you have a sound plan in place, however, jumping around in response to each and every item out of Brussels, Bonn, Athens or Rome, for example, you’re only going to increase your short-term transaction costs and likely undermine potential long-term portfolio growth as well.

Churning your portfolio means paying brokers to execute trades. Professional portfolio managers do this sort of thing, too, make no mistake, particularly as quarterly and annual marking periods approach and they scramble to meet performance measurements. It also means you’re playing the timing game, seduced by talk of “bottoms” and “tops” rather than focusing on business quality and the ability to sustain and grow dividends.

A Very Brief History of Greek “Entitlement”

Prime Minister George Papandreou still plans take a deal negotiated by European leaders on the restructuring of his country’s debt to a national referendum. The two-day market dive has been explained away by this apparently stunning decision, but in reality the agreement to extend the European Financial Stability Fund and define the extent of bond-holder haircuts had many holes, the biggest of which–who will actually provide the funds–remains.

Let’s step off this rollercoaster for a moment and try to gather some sort of appreciation for what Greeks are thinking about now, as their debt burden is indeed being relieved but at the cost of income and wealth and a relatively comfortable standard of living that was established basically in response to deprivations caused by World War II and its aftermath.

Call it a sense of entitlement, if you will, but that won’t explain away what, to the Greeks, was a long unrealized justice: They and their country were used and abused by first the Nazis then British and American cold warriors, with never any proper recompense. What they’re now owed was first taken from them.

I’m not comparing British and American cold warriors with Nazis. There’s plenty of evidence to suggest with some degree of certainty that the fate awaiting Greece had Soviet Russia successfully extended its Iron Curtain to envelop the cradle of democracy would have been at least as bad if not worse than what did happen.

Nevertheless, from 1940 to 1945 Greece was devastated by war and occupation. Its economy and infrastructure lay in ruins. Greece suffered more than 400,000 casualties, and the country’s Jewish community was almost completely exterminated in the Holocaust. A vicious civil war between a British and American-sponsored conservative government and leftist guerrillas followed from 1946 until 1949.

The final victory of the Western-supported government forces led to Greece’s membership in NATO and helped define the ideological balance of power in the Aegean for the entire Cold War. The civil war also left Greece with a vehemently anti-communist security establishment, which would lead to the establishment of the Greek military junta of 1967–1974 and a legacy of political polarization which lasted until the 1980s.

After nearly three decades of British/US sponsored “benevolent” dictatorship rule returned to the people in the mid-1970s, whereupon Andreas Papandreou, himself the son of a prime minister, a socialist empowered in part by the revocation of laws that essentially banned Communism in Greece after World War II, embarked on a program to get his countrymen the succor he and they believed they had earned.

Now we have another reminder that, even with the fate of at least the European financial system at stake, all politics is ultimately local. Current Greek Prime Minister George Papandreou, who is effectively charged with dismantling a system of social support his father created to deal with the damage and dislocation caused by Greece’s term as a pawn in larger geopolitical games.

It was too much to hope–way too much to invest on–last week that Europe had resolved what still promises to be a long, uncomfortable de-leveraging process. Still to be resolved is the situation in Italy, which is home to the third-largest government bond market in the world behind the US and Japan.

Against this bleak background playing out in Europe, corporate earnings in the US and in Canada continue to come in above expectations. But in keeping with the “mixed bag” leitmotif that seems to have predated the 2008-09 crisis years and been resurrected during a still-too-tepid recovery, revenue growth has underwhelmed.

For the most part, however, companies–particularly those that populate the Canadian Edge Portfolio–are well-positioned to invest in growth in step with demand now and in coming quarters.

Third-quarter numbers reported thus far by CE Portfolio Holdings have been solid, and many are using their relative strength to grab market share and boost cash flow, including AltaGas Ltd (TSX: ALA, OTC: ATGFF), which this week announced this week the CAD230 million acquisition of Vancouver, British Columbia-based natural gas transmission and distribution outfit Pacific Northern Gas Ltd (TSX: PNG, OTC: PNGKF)

Strong cash flow under any and all economic scenarios is perhaps AltaGas’ most compelling operating characteristic. The transaction will result in a 50 percent increase in AltaGas’ regulated rate base to over CAD500 million and increase customers from 75,000 to more than 110,000. The regulated assets earn an allowed rate of return of approximately 10.1 percent with a weighted average equity “thickness” of approximately 44 percent. The acquisition is expected to be immediately accretive to earnings and cash flow.

At best these crises, which seem to be lining up line train cars lately, provide frequent and regular opportunities to test our hypotheses and adjust our portfolios accordingly. It seems too much to call the historically less-than-mediocre numbers encouraging, but data from the US, China and other key markets continues to suggest an expanding as opposed to a stagnant or contracting global economy. Getting down to it sometimes takes a trip through many “Value” ultimately boils down to particular companies and businesses if you’re a long-term dividend investor, not the whole market.

The Roundup

AltaGas Ltd’s (TSX: ALA, OTC: ATGFF) offer to Pacific Northern Gas Ltd (TSX: PNG, OTC: PNGKF) is for CAD36.75 in cash per PNG share. AltaGas CEO David Cornhill described PNG as “an outstanding strategic fit” his company.

The offer represents a 20 percent premium based on the CAD30.50 closing price of PNG shares on Oct. 28, 2011, and a 28 percent premium based on the volume weighted average trading price for the 20 prior trading days. The overall value of the deal, including assumed debt of about CAD85 million and CAD5 million worth of preferred shares, is about CAD230 million. AltaGas will provide an estimated CAD140 million cash to close the transaction from existing credit facilities and cash on hand.

PNG’s western transmission line extends from the Spectra Energy (NYSE: SE) gas transmission system north of Prince George to tidewater at Kitimat and Prince Rupert and provides service to 12 communities and a number of industrial facilities. In northeast British Columbia PNG’s subsidiary Pacific Northern Gas (NE) Ltd provides gas distribution service in the Dawson Creek, Fort St. John and Tumbler Ridge areas.

Increased natural gas exploration taking place in areas such as the Montney and Horn River formations in the Western Canadian Sedimentary Basin and increased industrial activity in northern British Columbia are expected to result in rate base and customer growth. Growing North American natural gas supply and continued attractive natural gas prices in Asian markets continue to support growth of a liquefied natural gas (LNG) industry in western Canada. PNG’s western system is well positioned to capitalize on the growing demand for additional pipeline capacity along the Summit Lake to Kitimat/Prince Rupert corridor.

Management also noted “significant geographic alignment” with other key AltaGas assets, such as the Bear Mountain Wind Park and the Younger facility, BC’s only natural gas liquids (NGLs) extraction plant. PNG’s run-of-river assets also fit well with AltaGas’ renewable strategy. AltaGas expects to complete construction of three of its run-of-river projects by 2016. The first, the 195 megawatt Forrest Kerr project, is expected to be in service in July 2014. The McLymont Creek and Volcano Creek projects, with approximately 82 megawatts total, are expected to be in service in mid-2015 and mid-2016, respectively.

The deal is subject to approval of at least two-thirds of PNG shareholders during a vote expected to be held on or about Dec. 12, 2011, and by a majority of the “minority” shareholders voting at such meeting. It also requires the approval of the Supreme Court of British Columbia as well as the British Columbia Utilities Commission. It’s expected to close “on or about” Dec. 16.

Last week AltaGas reported robust third-quarter numbers and raised its dividend for the first time since converting to a corporation in mid-2010, a 5 percent increase to a monthly rate of CAD0.115 per share. Revenue for the three months ended Sept. 30, 2011, surged 24.3 percent, while funds from operations rose 11 percent to CAD0.55 a share. The quarterly payout ratio, including the increase, was 62.7 percent.

AltaGas, shares of which continue to test the highs set five years ago on continuing strength of the underlying business, is a buy anytime it trades under USD26.

Here are announced and estimated third-quarter reporting dates for Canadian Edge Portfolio Holdings. We’ve linked to articles and analyses for companies that have already reported.

We’ll have details and analysis for all Holdings that report ahead of Friday’s publication of the November issue of Canadian Edge, including Conservative Holdings Keyera Corp (TSX: KEY, OTC: KEYUF) and TransForce Inc (TSX: TFI, OTC: TFIFF) and Aggressive Holdings Daylight Resources Ltd (TSX: DAY, OTC: DAYYF), Newalta Corp (TSX: NAL, OTC: NWLTF) and Parkland Fuel Corp (TSX: PKI, OTC: PKIUF), which all reported early this week. 

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Oct. 27 Flash Alert
• Artis REIT (TSX: AX-U, OTC: ARESF)–Nov. 8 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Nov. 11 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Nov. 8 (estimate)
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPUF)–Nov. 9 (confirmed)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Nov. 7 (confirmed)
• Capstone Infrastructure Corp (TSX: CSE, OTC: MCQPF)–Nov. 14 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Nov. 10 (confirmed)
• Colabor Inc (TSX: GCL, OTC: COLFF)–Oct. 18 Flash Alert
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Nov. 8 (confirmed)
• Extendicare REIT (TSX: EXE-U, OTC: EXETF)–Nov. 8 (confirmed)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Nov. 10 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Nov. 9 (confirmed)
• Just Energy Group Inc (TSX: JE, OTC: JUSTF)–Nov. 8 (tentative)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Nov. 2
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Nov. 8 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)–Nov. 9 (confirmed)
• Provident Energy Ltd (TSX: PVE, NYSE: PVX)–Nov. 9 (confirmed)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Nov. 7 (confirmed)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Nov. 2

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–Oct. 27 Flash Alert
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Nov. 14 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Nov. 16 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)– Nov. 9 (confirmed)
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)–Nov. 2
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Nov. 7 (confirmed)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–Nov. 10 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Nov. 2
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Nov. 2
• Penn West Petroleum Ltd (TSX: PWT, NYSE: PWE)–Nov. 3 (confirmed)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Nov. 9 (estimate)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–Nov. 3 (estimate)
• Student Transportation Inc (TSX: STB, OTC: STUXF)–Nov. 11 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Nov. 4 (estimate)