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Strategies & Market Trends : Value Investing
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To: Bob Rudd who wrote (13393)12/13/2001 11:04:52 AM
From: Bob Rudd  Read Replies (1) of 78580
 
Despite my resolve not to get more deeply involved with CPN due to regulatory issues, I averaged down yesterday, buying in the high 10's and mid- 13's pulling average cost down to 16.92. Merrill says break-up net asset value is $40+ per share. Listened to several CC's and I beleive liquidity & 'next Enron' concerns are overblown...especialy the latter. Unlike ENE, CPN owns a bunch of assets and the only significant 'off balance sheet' obligations are traditional operating leases. They say Ca. has affirmed the validity of existing contracts, but there may be win win adjustments of terms that would be no worse than neutral and possibly improve near-term eps. Yesterday was a classic panic.
FUNDAMENTALS THAT SUPPORT THE UTILITIES:
* Current conditions in the northeastern U.S. notwithstanding, most places on planet earth still get cold and still get hot. Discomfort is not virtual.
* Ultimately, someone pays for the product
* The business is backed by real assets that are difficult to hide and tougher to move.
* Those assets don't tend to be usurped by version 2.01
* Regulators are often adversaries, but ultimately they want to keep their jobs, too.
* There may be too much fiber in the ground, but there's not too much 345KV transmission capacity in the air. Ditto for 36 inch pipe in the ground.
* Try and build more of either near anyone.
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