Not that it makes much difference ATM. Another thing that annoys me is that management's performance fee is 20% of the return above the SP200 Industrials accumuluation index (XJIAI.ASX). I think they should adjust this for franking credits, as the XJIAI understates returns as it does not count franking credits.
Pricing of power has become a political issue in NSW and QLD, with some belief that the costs of provision are overstated. You can get 8% or so on a BBB rated corporate bond ATM without worrying about the earnings or distributions going down. But that is also possibly what DUE (their assets) is going to be paying for debt soon, and paying out about 10% before tax (as return on current SP). Not really such fantastic use of leverage to get a 2% margin if the current debt costs are relevant.
The earnings are relatively low risk until the 2013/14/16 resets in Victoria. If there is an economic slowdown - this will probably become politicised in Victoria - next election November 2014 approx.
DUE Price at posting:
$1.63 Sentiment: ST Sell Disclosure: Held
