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God Watches Out For Fools And Children

|Includes: Atlantic Power Corporation (AT)

After all the times I've cautioned readers to be sure to give due diligence before investing, I messed up.

While researching an article on Monday, I took a look at Atlantic Power (NYSE:AT). Initially, it looked like a steal - high dividend (~ 20%), just coming off a big drop in price, Price/Book < 1 - so I put in an order to be filled start of business on Tuesday. Hey, I know what I'm doing, right? I write for Seeking Alpha and Motley Fool, so I know my stuff, right?

Guess again.

Had I finished my research, I would have discovered that AT announced that they had cut their dividend by 60% (I had based my figures on the trailing 12 months). Also, three law firms were investigating the company for questionable practices (the company's executives had put in place a golden parachute for themselves). On Monday (the day I did my research) the company announced it was selling its interest in the Path 15 transmission project (i.e., it sold some of its "book"). Any one of these things would usually have raised questions for me, and either of the first two would have stopped me from buying into the company.

[To be honest, although the company somehow got through my PIC screen, the fundamentals were not that great. I have a feeling the screener I was using - Merrill Lynch - might not have been completely up to date.]

How did this happen? I got a little impulsive in the face of what I thought was a good deal. Checking recent news on a company is one of the last things I do before actually writing - I get my fundamental analysis done, then sniff out any bad news. Instead of being patient, I jumped the gun.


As luck would have it, after the purchase the stock has bounced. It is up over 4% from where I bought it (and I bought only a few shares). I'm making profit.

I got lucky - and luck shouldn't have anything to do with it.

Like the title says, "God watches out for fools and children." (Proverbs and Ephesians.)

I don't mind teaching by example, but I would prefer they be good examples.