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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: NikhilJog who wrote (49254)	8/30/2012 8:01:51 PM
From: E_K_S	1 Recommendation Read Replies (1) \| Respond to of 78796

Hi NikhilJog : Re: Utilities Many of the utilities I own have subsidiaries w/ hidden "value" assets (at least based on my research). Therefore I tend to focus on the PE, dividend yield and 52wk high for a first take if the holding may be overvalued. For example, BKH has a few subsidiaries that (for me) represent some hidden assets that can be (1) sold, (2) developed w/ and w/o partners and/or (3) just run as a separate growing business. BKH recently sold some acreage to QEP that will be develoiped for it's shale Oil. That was worth between $2-$3 per share (paid in cash). BKH still owns shale oil acreage w/ development potential but also owns some coal mines. BKH also owns and operates an aggregate construction company that should benefit from the infrastructure build out of many of the Oil & NG shale wells (includes roads, drilling well pads, etc.). Many of these utilities (located in the U.S. shale regions) own NG distribution lines (and the right-of-ways) that can be developed by inter & intrastate NG companies. MDU is one I own that owns some of the largest underground NG storage systems in the U.S.. MDU also operates an E&P subsidiary w/ very valuable shale acreage yet to be developed. Some JV partnership deals have been announced but I expect many more and perhaps the spin off of this division in stock to shareholders (my speculation). GAS is another of my favorite utilities w/ NG processing and distribution assets I feel are significantly undervalued. They rank up w/ MDU for underground NG storage facilities but have interests in several NG processing facilities. They own major NG distribution systems that can (and will) be expanded to distribute the glut of NG. So Nick, you have to look beyond the utility operation. Remember, the utility component provides stability to the company's cash flow. There are a lot of "hidden assets" in several of these companies that should pay large dividends in the future (look at the BKH land sale to QEP last week). I still think there are some good pickings in one or more of these NG utilities even w/ the new tax law legislation. In fact, that may be the kicker for many of these utilities to sell and/or spin off these assets to shareholders. FWIW, I am looking to sell the last of my BKH shares and move them into GAS, MDU , ATO or one of the other NG utilities. I am no longer interested in BKH's coal assets. Unfortunately, these other utilities have already have had a nice run, so I must dig a bit deeper to see who my still have many of those undiscovered assets. My guess is MDU may get my vote. Hope that helps. EKS

To: NikhilJog who wrote (49254)	8/30/2012 10:02:03 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78796

Utility stocks: Great performers again this year. Perhaps over-owned now, given their relatively high prices (p/e's). Otoh - why not a case for the high prices? -- There's growth in dividends, yields better than some gov't bonds, not much foreign exposure with most. And as regards volatility and people upset with so much of it, utilities offer very low beta's. If tax rate on div's goes up, I guess I could see sell off in ute's. Otoh, maybe not. If tax rate does go up, I assume it would be on most or all dividend classes, so where would dividend-hunting people go to replace their utes if they were to sell them? As regards utility dividends, I would not be affected directly by increase in dividend taxes, because my ute's are held in a tax-deferred account.