Author Topic: AT - Atlantic Power Corp  (Read 28256 times)

SafetyinNumbers

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Re: AT - Atlantic Power Corp
« Reply #10 on: February 23, 2017, 03:21:34 AM »
I see they have two prefs outstanding - 4% and 7% that are both cumulative ... a slightly safer bet, or not worthwhile if the thesis is one of an equity stub anyway?
Thanks - C.

There are three preferred actually. AZP.PR.A which is a perpetual fixed rate. AZP.PR.B which is a fixed reset and AZP.PR.C which is a floating reset. AZP.PR.B and AZP.PR.C are interconvertible every 5 years which makes the AZP.PR.C significantly more attractive at current prices, in my view.
ELF IAM GCM.DB.X/GCM PIF PPR


awindenberger

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Re: AT - Atlantic Power Corp
« Reply #11 on: February 23, 2017, 02:01:23 PM »
Attached find a write up I did on AT. This is the type of write up I do on my larger positions and I don't usually share them. I thought I should contribute to the forum more as I have received a lot from it.

Hopefully things turn out as I see them.

Also, find below a recent Canadian power acquisition with a similar mix of hydro, gas, bio in terms of MW to Atlantic Power.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aVSN-2445119&symbol=VSN&region=C

Thanks for bringing this stock to my attention. I'm going to be taking a serious look at this.

Sunrider

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Re: AT - Atlantic Power Corp
« Reply #12 on: February 24, 2017, 12:23:03 AM »
Thank you.
I see they have two prefs outstanding - 4% and 7% that are both cumulative ... a slightly safer bet, or not worthwhile if the thesis is one of an equity stub anyway?
Thanks - C.

There are three preferred actually. AZP.PR.A which is a perpetual fixed rate. AZP.PR.B which is a fixed reset and AZP.PR.C which is a floating reset. AZP.PR.B and AZP.PR.C are interconvertible every 5 years which makes the AZP.PR.C significantly more attractive at current prices, in my view.

Saj

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Re: AT - Atlantic Power Corp
« Reply #13 on: February 24, 2017, 03:18:49 PM »
Their preferreds are some of the highest yielding available today. Here's a list I maintain by yield: http://www.conferencecalltranscripts.org/prefs/

Cardboard

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Re: AT - Atlantic Power Corp
« Reply #14 on: February 24, 2017, 05:01:12 PM »
That is a very good summary/analysis Flesh. However, I believe that you are too conservative on PPA's and their renewals. Simply said, where are current customers going to get their electricity from?

Cardboard

Sunrider

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Re: AT - Atlantic Power Corp
« Reply #15 on: February 25, 2017, 12:55:07 AM »
And they are cumulative, right? So unless you think the company goes under, not a bad bet.

Of course, if the company doesn't go under and even just continues to repay its debt it'll be much better to own common  :o

Their preferreds are some of the highest yielding available today. Here's a list I maintain by yield: http://www.conferencecalltranscripts.org/prefs/

SafetyinNumbers

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Re: AT - Atlantic Power Corp
« Reply #16 on: February 25, 2017, 08:58:19 AM »
And they are cumulative, right? So unless you think the company goes under, not a bad bet.

Of course, if the company doesn't go under and even just continues to repay its debt it'll be much better to own common  :o

Their preferreds are some of the highest yielding available today. Here's a list I maintain by yield: http://www.conferencecalltranscripts.org/prefs/

They are cumulative but the thing that makes AZP.PR.C and AZP.PR.B attractive is that they trade at a giant credit spread and they are floaters so there is a chance for credit spreads tighten and rates to go up which can result in very strong income and capital performance.
ELF IAM GCM.DB.X/GCM PIF PPR

flesh

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Re: AT - Atlantic Power Corp
« Reply #17 on: February 25, 2017, 01:01:29 PM »
I have very little to add.

1. Are all ev multiples created equal? Choose a 8x ev multiple that consisted of 20% common equity or 80% common equity?

2. Many on this forum were interested in zinc and outr, missing the forest for the trees. The trees were the deep competitive advantages, the forest was virtually no way to predict future cash flows. How likely is it AT's common equity is permanently impaired? Is the risk reward high or low? Have you tried to kill it, or did your programming kick in before the work was done? At the time, outr was spending massively on buybacks, I thought they should pay down debt. At is using 80% of cash flows for debt, next four years, also has individual assets to sell opportunistically to raise cash to accelerate debt repayments. Plus, hydro may be there for decades. MGMT has not made ONE decision that I would not have made myself.

3. I use draconian assumptions because I know that I don't know. If I like an investment after using conservative numbers, they almost always turn out very well. OTOH, It may be helpful for me to try to think more accurately by elucidating what I believe will happen and receiving that feedback in the fullness of time.

Cardboard, I'll look into that. Thanks.



« Last Edit: April 26, 2017, 04:29:08 PM by flesh »

Sunrider

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Re: AT - Atlantic Power Corp
« Reply #18 on: February 26, 2017, 01:52:42 AM »
These Draconian assumptions notwithstanding (agree with the approach) - what do you make of the fact that management increased it's own incentive plan by more than half from 2015 year end AND lowered the exercise price? Seems like self-dealing and they're all nicely in the money now?

C.


I have very little to add. In fact, I'll be purposefully not visiting this thread in the future, for my own sake. My biggest mistake thus far has been not holding due to others influences. As always, my success doesn't require others belief and generally others beliefs underestimate my success. This will be my epitaph.

1. Are all ev multiples created equal? Choose a 8x ev multiple that consisted of 20% common equity or 80% common equity?

2. Many on this forum were interested in zinc and outr, missing the forest for the trees. The trees were the deep competitive advantages, the forest was virtually no way to predict future cash flows. How likely is it AT's common equity is permanently impaired? Is the risk reward high or low? Have you tried to kill it, or did your programming kick in before the work was done? At the time, outr was spending massively on buybacks, I thought they should pay down debt. At is using 80% of cash flows for debt, next four years, also has individual assets to sell opportunistically to raise cash to accelerate debt repayments. Plus, hydro may be there for decades. MGMT has not made ONE decision that I would not have made myself.

3. I use draconian assumptions because I know that I don't know. If I like an investment after using conservative numbers, they almost always turn out very well. OTOH, It may be helpful for me to try to think more accurately by elucidating what I believe will happen and receiving that feedback in the fullness of time.

Cardboard, I'll look into that. Thanks.

Regardless of my valuation, if I had to guess, we wouldn't hit 5+/share for 3 years unless the company is sold outright. That is acceptable to me.

dr.malone

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Re: AT - Atlantic Power Corp
« Reply #19 on: February 26, 2017, 01:33:08 PM »
Just in case some members had been un-aware, but Cardboard actually started a thread on this stock (albeit the pref) about 14 months ago.

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/azp-pr-b-atlantic-power-corp-preferreds/

The CEO was names in an article last April in the WSJ titled "16 favorite annual letters"

http://blogs.wsj.com/moneybeat/2016/04/01/16-favorite-annual-letters-from-an-investor-whos-read-more-than-1000/

Atlantic Power – “The Outsiders is one of my all-time favorite investing books, so I was immediately intrigued by this reference.  Discussion of corporate overhead is excellent and supports the CEO’s claim that he cares more about growing per-share intrinsic value than enlarging his managerial fiefdom.  A CEO who moves corporate HQ from Boston’s financial district to a much smaller space in suburbia is my kind of guy!”