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George Fisher  

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  • Algonquin Power: Tale Of 2 Countries
    Today, 9:50 AM AQUNF 4 Comments

    Summary

    • 80% of Canadian-based utility assets are in the US and, to counter exchange rate fluctuations, the quarterly dividend is paid to US shareholders in US dollars.
    • Emera Inc. has been taking a larger position in Algonquin.
    • Stock performance on the Toronto Exchange has far outpaced the US exchange due to the strength of the US dollar.
  • Mario Gabelli's Recent Utility Purchases And Commentary
    Yesterday, 6:15 PM GABUX 4 Comments

    Summary

    • Total 1-yr returns for Gabelli Utility Fund were horrible and there is a pending change in structure. However, the portfolio includes some interesting investments.
    • Gabelli increased share counts in Avista and NiSource while shares declined in Northwestern and UIL Holdings.
    • The annual report offers interesting industry outlook and company specific commentary worthy of investor's time and interest.
  • New High Income Global Infrastructure ETF Fills A Void
    Tue, Feb. 17 GHII 2 Comments

    Summary

    • Backdated data suggests GHII could have a yield of 4.1%, vs a current yield of 2.06% for EMIF and 1.86% for PXR.
    • GHII's annual fees are almost half of EMIF and PXR.
    • GHII's has a more balanced portfolio with 20% of assets in the U.S.
  • Electric Transmission In Transition - Sheltering $1 Billion A Year In Potential Future ROE
    Thu, Feb. 12 AEP, DUK, EIX 1 Comment

    Summary

    • With an average FERC base-rate ROE of 10%, electric transmission firms could earn $1 billion a year in allowed returns from investments made 2014-2017.
    • Last fall, the IRS ruled transmission firms could quality as a REIT structure.
    • REIT structures could entice large utility firms to spin-off their transmission business.
  • Water Utilities: American Water Works, Aqua America Are The Best Fundamental Selections
    Fri, Feb. 6 AWK, WTR 109 Comments

    Summary

    • American Water Works and Aqua America rank highest on the average positioning of five fundamental criteria. American States Water is not far behind.
    • A few water utility stocks have rewarded investors with total returns in excess of the S&P.
    • There are a plethora of firms that play in the water sector from an infrastructure viewpoint.
  • Southern Company: Taking A Pass On This Quality Utility Name
    Thu, Jan. 29 SO 34 Comments

    Summary

    • Buffett’s words should be heeded concerning Southern Company: “Price is what you pay. Value is what you get”.
    • Compared to 5-yr average fundamentals, Southern Company looks expensive.
    • While not a seller, I would not be a buyer either. However, investors should evaluate their dividend reinvestment position.
  • An Interesting Contrarian Utility Selection
    Mon, Jan. 26 EONGY 8 Comments

    Summary

    • E.ON is Germany’s largest electric utility and has announced it is splitting into two separate companies.
    • Low commodity pricing since 2009 has decimated earnings and dividends.
    • Analysts are warming up to the companies after the split, but for dramatically different reasons.
  • Surprising 2 Utilities Rated Highest In S&P's Quality Rating
    Thu, Jan. 22 ITC, NWE, SPHQ 2 Comments

    Summary

    • These two firms have earned their place in the top 1% of companies followed by S&P Capital IQ.
    • The 10-year time frame for Equity Earnings and Dividend Ratings should encompass at least one compete economic cycle.
    • The Quality Ratings is one piece of the puzzle in finding companies whose management has rewarded shareholders through consistency in earnings and dividend growth.
  • Is It Too Late To Buy Exelon?
    Tue, Jan. 20 EXC 10 Comments

    Summary

    • While returning 41.9% total return over the previous 12 months, EXC has a bit more juice in its gas tank.
    • Fundamental business changes have reduced earnings volatility.
    • Gains in profitability are dependent on improving power markets. PJM is so afraid of a lack of generating capacity it has proposed a premium for reliability.
  • The Surprise Of 2015 - Wage Growth
    Thu, Jan. 15 6 Comments

    Summary

    • Sub-par wage growth trend from 2009 to 2014 will be reserved in 2015.
    • Already 15% of companies surveyed by the National Federation of Independent Businesses plan on raising wages. The trend lines and survey by WorldAtWork forecasts wage growth of 3.0%.
    • Risks include slower global growth, decline in business fixed investment in the oil patch, strong US Dollar hurting exports.
  • Energy Stocks: What Could Be The Tertiary Evidence Of A Bottom
    Tue, Jan. 13 APA, AXAS, BP 10 Comments

    Summary

    • Technical history does little to shed light on how low or how long oil prices will stay down.
    • Mergers and bankruptcy, along with moves by commodity traders and a decline in the USD will help in identifying a turn.
    • OPEC production cuts coupled with stocks piercing their moving averages will be the most reliable indicators that a turn has/will happen.
  • Energy Stocks: The Opportune Time Is When Both A And B Occur
    Wed, Jan. 7 APA, CBI, CVX 175 Comments

    Summary

    • We have been here before, and history offers interesting insights.
    • OPEC production cuts will signal an end of low oil prices.
    • Energy stocks - at least those still in business - will eventually rally and cross their 75-day and 200-day moving averages.
  • CenterPoint Energy: The Sweet Spot For Dividend Growth Investors
    Dec. 23, 2014 CNP 12 Comments

    Summary

    • With a 4.1% current yield and dividend growth potential of 8% to 10% annually until at least 2018, CenterPoint should be a darling of the DGI crowd.
    • The extra kicker above the usual regulated utility is its interest in ENBL whereby Centerpoint is part owner of the GP and is entitled to a growing IDR.
    • CenterPoint is a model for the Gabelli-driven transformation of National Fuel Gas.
  • Junk Bond Funds And Rising Interest Rates: Fact Or Fiction?
    Dec. 22, 2014 EKHBX, VWEHX 5 Comments

    Summary

    • The myth is that high yield bond funds lose value as interest rates increase. However, charts tell a very different story.
    • From the beginning of the last three interest rate cycles to the end of the up-leg of rates, junk bond funds have generate positive total returns.
    • The problem for junk bond funds is not during rising rates, but, much like utilities, it is in times of declining rates where difficulties arise.
  • Energy Bonds Causing Havoc And Stress For All High-Yield Bond Fund Holders
    Dec. 19, 2014 BSJF, BSJH, HYG 10 Comments

    Summary

    • 18% of energy high yield bonds are currently trading below their face value.
    • Energy high-yield bonds carry almost twice the risk premium as does industrial bonds and almost three times the risk premium associated with healthcare bonds.
    • It is not time to panic sell but rather for investors to be aware of their exposure to the problems in the oil patch through their high-yield bond fund.
  • Updates: Utility Firms Otter Tail, Avista, And Exelon
    Dec. 14, 2014 AVA, EXC, OTTR 7 Comments

    Summary

    • None of the three firms has outperformed the Morningstar index of diversified utilities over the previous 5-yr and 10-yr timeframes.
    • Exelon is most undervalued based on an anticipated 12% EPS growth rate, but fairly valued based on historic P/E ratios.
    • Even with depressed earnings due to weak power markets, Exelon has generated 3-yr average returns on invested capital above their cost of capital while the other two firms have not.
    • Avista has the best regulatory environment assessment profile and is the greatest “pure-play” regulated utility of the three.
  • Fluor: Industrial Construction Company Getting Rave Reviews
    Nov. 23, 2014 FLR 6 Comments

    Summary

    • Fluor's growing backlog of orders will fuel several years of revenue growth.
    • Only 60% of the business is related to oil infrastructure, but the stock has been taken to the woodshed along with all energy-related equities.
    • Even with a forward PEG ratio of 1.00, current share prices may offer the potential of about 18% total annual return over the next two years.
  • Mario Gabelli - Not So Hot 2014 Picks, Or At Least Not Yet
    Nov. 22, 2014 CHMT, DBD, GBL 6 Comments

    Summary

    • Gabelli’s analysts and researchers are PHDs – Poor, Hungry and Driven.
    • Over the past four quarters, GAMCO has invested over $330 million in his January 2014 stock picks.
    • If you believe Gabelli, Diebold, Chemtura and Weatherford International could double. Journal Communications, National Fuel Gas and Post Holdings could gain +50%.
  • Suncor Is A Buy, Especially With Energy East On The Horizon
    Editors' Pick • Nov. 21, 2014 SU 36 Comments

    Summary

    • Forget the Keystone Pipeline. “Canadian Nation Building” will include a pipeline to the Maritimes for export of oil sands production.
    • The discount to Brent pricing for WCS is disappearing.
    • Even with $80 to $85 Brent pricing levels, SU expects to be 2015 free cash flow positive, including an increase in cap ex by 6% to 16%.
    • Positive free cash flow coupled with rising cap ex is not usually discussed in the current low oil price environment.
  • 4 Utilities For 2015 And Beyond
    Nov. 13, 2014 EXC, ITC, NFG 4 Comments

    Summary

    • ITC is the only independent FERC regulated transmission company and this differential is fueling higher allowed ROE.
    • Southern Company‘s completion of its massive construction projects by 2018 will drive free cash flow higher, with investors collecting a comfortable dividend while they wait.
    • Is the earnings turnaround at Exelon finally here? JPM’s recently announced pricing structure for merchant power reliability would seem to aid in that important objective.
    • National Fuel Gas will be transforming itself, with the assistance (or is it insistence) of Mario Gabelli.
  • What Is Tax Loss Harvesting And Why Should I Care?
    Nov. 12, 2014 CBI 21 Comments

    Summary

    • There is only two weeks remaining to institute this Tax Loss Harvesting strategy.
    • This strategy potentially reduces taxes due while maintaining exposure to the targeted stock.
    • With the advent of online inexpensive trades, this year end strategy should be a "no-brainer".
  • Algonquin Power: Diversified Canadian Utility With Mainly U.S. Revenues
    Editors' Pick • Oct. 23, 2014 AQUNF 14 Comments

    Summary

    • Algonquin Power is a stealth water utility, representing 5.8% of revenue. Pending acquisition will increase its water customer count by 70%.
    • Recent dividend increase of 12% and change in payment currency is U.S.-shareholder friendly. Dividend growth investors should take notice.
    • Many utility investors, even income investors looking for small-cap opportunities, overlook Algonquin Power.
  • Exelon: Nuke Reliability Worth An Additional $5 A Share
    Oct. 17, 2014 EXC 17 Comments

    Summary

    • New PJM capacity performance proposal is a profit booster for Exelon.
    • If implemented, proposal could add $0.17 to $0.25 a share in earnings, or about 7% to 10% increase.
    • Due to the complexities, changes are proposed to be phased in from 2015/2016 to 2018/2019.
  • Utilities: 'Funny How Time Slips On Away'
    Oct. 13, 2014 AEP, AES, CNP 10 Comments

    Summary

    • Net ROIC, or ROIC minus WACC, is a telltale indicator of potential total return out-performance.
    • Dow Jones Utility Index's electric utilities that provided higher net returns on their complete capital structure generated 28% higher 10-yr shareholder total returns.
    • WACC calculations are now just a click away, making this very important fundamental available to all investors.
  • For Equity Income Investors, Southern Company Has The Best WACC Of Its Peers
    Oct. 5, 2014 SO 17 Comments

    Summary

    • With WACC of 3.8%, Southern Company's lower cost in this capital-intensive sector is a strong advantage for shareholders.
    • The firm's debt profile offers lower interest cost than many of its peers and its regulatory environment offers one of the best in the country.
    • Southern Company has interesting high-tech coal-power generating licensing potential and initial plans for distributed generation.
  • Utility Equity Research In The 21st Century Part 1: Regulatory Environment, ROIC, WACC, Hurdle Rate
    Sep. 29, 2014 AES, EXC, SO 2 Comments

    Summary

    • Regulatory environment plays a key role in the long-term performance of regulated utilities.
    • Return on invested capital should be a key fundamental ratio for all utility investors.
    • Weighted average cost of capital calculations are now just a click away.
  • AES Corp.: Electric Utility For Emerging Market Investors
    Sep. 25, 2014 AES 4 Comments

    Summary

    • AES generates power in 20 developing countries and only 24% of pre-tax profits are produced in the US.
    • Management has been realigning assets over the previous 2 years, returning cash to shareholders, funding cap ex, and reducing debt.
    • 37% of pre-tax profits have added risk with exposure to FX fluctuations, unusually high for a plain vanilla electric utility.
  • National Fuel Gas: Buying A Dollar Of Value For 75 Cents, Or Buy, Buy, And Then Buy Some More
    Sep. 19, 2014 NFG 8 Comments

    Summary

    • Mario Gabelli estimates National Fuel Gas is worth $100 share while the current market price is $74.
    • Gabelli has filed the paperwork to place a proposal for shareholder vote to split the utility into a separate company, similar to Oneok and One Gas.
    • At today’s price, not only is the firm undervalued by 33%, it offers the most Marcellus acres per $1 million of Enterprise Value compared to its peers.
  • Hong Kong And China Gas: Gas Utility With China Growth Prospects
    Editors' Pick • Sep. 19, 2014 HOKCY 1 Comment

    Summary

    • Hong Kong and China Gas (TownGas) offers exposure to the growing gas distribution business in China. The firm is the largest utility serving both HK and the Mainland.
    • 55% of revenues are from Mainland China, and gas volumes are expected to continue their double-digit growth for the foreseeable future.
    • Opportunities encompass the entire natural gas "food chain" (ex-exploration) - from pipelines and midstream facilities, to retail/industrial distribution, to vehicle filling stations, to infrastructure.
    • Russia's massive $400 billion gas contract with China amounts to only 20% of consumption growth to 2020.
  • How Is Your Regulated Electric Utility Handling Distributed Generation?
    Sep. 12, 2014 AEP, AQUNF, AWR 25 Comments

    Summary

    • Rooftop solar panel installations are creating structural changes to the regulated electric utility business.
    • The extent of this disruptive technology affecting a specific utility’s bottom line will be determined by the company's programs and state regulations.
    • It is not too early to begin adding Distributed Generation to your regulated electric utility due diligence.
  • If You Like Chicago Bridge & Iron, You May Want To Own Oil Infrastructure Construction Firm AMEC
    Sep. 10, 2014 AMCBF 16 Comments

    Summary

    • AMEC is expanding its presence in the oil and gas infrastructure engineering and construction industry by acquiring Foster Wheeler.
    • Earnings revisions to the downside, mainly due to currency fluctuations, will hurt share prices in the short term, but the Foster Wheeler acquisition will be the future driver of higher earnings.
    • While not as large as CBI’s backlog, AMEC and Foster Wheeler combined have an order backlog of $10 billion. This represents about 15 months of business.
  • TransAlta: Power Producer's Reset Preferred Shares May Be Preferred Over The Common
    Sep. 8, 2014 TAC 9 Comments

    Summary

    • TransAlta has been a poor selection in the Independent Power and Renewable Electricity Producers industry.
    • TransAlta 2014 ocf may cover cap ex plus dividend, but just barely.
    • Better times may lie ahead, but not until 2018.