As I was mentioning with the Enron congressional hearings reaching a fever pitch today, with coverage on all Major Networks in Houston.....
It may be a time to be looking at the merchant energy companies, as potential opportunities on the long side.
It's possible that a basket of a group of these stocks may perform well over the coming 6 to 12 month timeframe.
there is maybe a 10% chance that we are going to see another 3 or 4 of these companies go into ch. 11, but that should be a lower probablity outcome. Especially since this type of widespread power and electricity disruption, could be a national security issue.
As Tom mentioned to me, there are undoubtedly behind the scenes meetings to prevent this if at all possible.
some of the firms in this area are: Dynegy, El Paso, Williams, Mirant, JP Morgan, AEP, Cinergy, Calpine, RWE, and even Edison and PG&E.
this quote from John Allario is one I agree with.
What many do not understand is this risk management and trading business at Enron began with noble intentions and was based on sound policies. It was the lust to expand into new businesses and foreign markets, which caused our downfall and spawned our alleged corruption and rule bending practices. These new businesses and markets required a lot of new capital fast. Access to quick capital was acquired through hundreds of Enron's abusive and complex funding sources and concomitant financial structures, which ultimately led to our collapse. |
