If there's one thing Mr. Market keeps teaching people, it's that they don't know everything about Mr. Market!
redfloyd and joewolf both raise good points. IMO there's a lot of quality contributors & discussion in this threat compared to other threads.
I may have said it before, but part of ERM trying to buy Mac Gen was an ego play by ex-Chairman and cofounder Philip St Barker. Please don't take that comment the wrong way, he has made a lot of people very rich over the last few decades. He just LOVES the idea of big generators sending electrons down wires!!! And, appealing to the child inside all men, what cooler way to do that then buy a MASSIVE coal fired generator in the Hunter Valley?
The stock sold off in the run up to the bid, aware of the equity raise requirements should ERM win. In the end, ERM bid smartly (LOW!) for the asset in a broader market environment which can be described as a 'race to the bottom' for coal fired generation. Electricity demand isn't growing like it used to and wholesale prices haven't changed in almost a decade.
The follow up to the share price sell off was an announcement from the company that 'growth won't be quite as high as we expected next year' and that the gas business was struggling to get off the ground after a pilot period. Then came some bad news in the form of Metgasco.
In that context, I think the current ERM share price makes perfect sense. The stock has been beaten up, but IMO the business model remains intact. They just need to keep stealing large business customers from the big 3 Gentailers. Good news is that is what they're good at.
If ERM deliver on their forecasts, the stock will rally strongly IMO
EPW Price at posting:
$1.84 Sentiment: LT Buy Disclosure: Held
