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Gold/Mining/Energy : Big Dog's Boom Boom Room
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From: ChanceIs7/26/2007 9:23:09 PM
  Read Replies (2) of 206214
 
Short TXU in the morning?!?!?!?!

I have attached/linked an article to this post regarding the possible failure of the TXU buyout. The article mainly addresses the dependence of the deal on the liquidity of the debt markets - can you spell oasis??? If one assumes that TXU is up on the buyout - and lets face it, the private equity boys are probably worth about 1K on the DOW today - and that deal could get squirreled - then poof...15% down the drain. Also of note is that TXU's earnings are very dependent upon high NG prices . The article doesn't explain this, but I will bet its the old story of NG setting the marginal price, and TXU has a lot of coal generation. TXU is getting paid the high NG marginal price even though it is generating with low priced coal (see highlights in linked article). So they are printing it faster than "Easy Al" Greenspan used to do, but low NG prices will stop the presses.

To reiterate:

1) Chart "looks toppy," a) double top July '06 and current, b) 50 day line cracked, and c) 200 day line has flattened at what appears to be a top.

2) Merger in danger - stock price will tank if fails,

3) TXU earnings will get crushed as NG prices drop.

4) TXU has outdistanced the broad DOW Utility Index since '03 - a little convergence might be in order.

Hey. If you missed getting out of the gassy stocks (I did) this one provides the same opportunity with a very kindly offered time delay.
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