Mr. Pink's Picks: selected event-driven value investments Message Board

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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments

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To: torquatus who wrote (16942)	8/21/2002 1:44:00 PM
From: MAELING	Read Replies (1) of 18998

Torq - I call that ready, fire, aim. The 10K was filed in the middle of March. Those thirty pages of confusion have been sitting there. I first looked at EP in Jan-Feb when it got down to the low 30's. I couldn't make heads nor tails of the filings. My eyes crossed, and I passed. A smart short seller would have recognized that the sector was becoming illiquid in April and May and June. I would have thought that the time to go short was in the 30's or 40's. IMHO, there is a case for valuing EP at 30. Fair value is 20+. Shorting at 10 didn't make sense. This market is alot of fun. There are momentum longers, and momentum shorters. Folks who spend time on the filings should be able to do OK. Let the momentum fools create opportunity. Back to EP: they are in a quasi-monopoly business that is super capital intensive, but has guaranteed income streams. They can support a lot of debt. They all set up powerplants in separate riskpool LLC's. Accounting-wise this ends up off balance sheet, but is reported in the 10K. Smart people would have recognized that trading doesn't add enough value uniquely to justify the kind of profits Enron was reporting. I'm not smart enough to have known that, but as I followed Azurix, I realized that there was something terribly wrong with the way the company was being run. I was never tempted by ENE. (Reread 'When Genius Failed'. Long Term Capital Management teaches a bunch about trading, 'fat tails', bubbles, etc.) Their PURPA stuff is very clever. However, all such is predicated on counterparty stability. EP has enough liquidity to survive. There are still FERC bumps, but I don't think there will be a return to re-regulation. Either way EP does OK.

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