dps (interim) 2009-10, page-30

MM, I may have gone too early it is true. Had it on my watch list since early Jan when it was $1.87. Better value in ENV 49c, HDF $1.08 plus long wait for divi meant it was a wait and see.

Fast forward 2 and a bit months and most other utilities have risen (above plus APA, SKI until the strategic review disaster etc) while DUE pulled back. At some time before Jun ex-divi date DUE will start to rally a little bit as it always does (all things being equal) but 3 months out is obviously a bit optomistic. Would be nice to know that shares always come back to the bottom of the channel in a nice predictable manner to load up again and trade out at the top of the channel, and often it does. I just can't be sure it will, bounced off $1.73 last time and may not make it that low this time given divi is that much closer thus I am happy to start buying at $1.79.

Regards safe shorting I am not in agreeance obviously. Firstly DUE has expressed a desire to sell Duquene and with the USD rallying now would be a very good time to do it. The first we would know is a rallying share price as the insiders get set so obviously not close and if it happens it won't be out of the blue.

In regards sovereign debt problems perhaps you are not reading as widely as I am. A number of articles this week noting that corporate bonds are trading at better yields than govvies (eg Buffet bonds trading lower yield than US bonds). Not suggesting that DUE will trade better yeild obviously just that many corporates have lower gearing, better cashflow above expenses than governments and are thus being treated as such. Sure the market can head lower if more sovereigns get in trouble and DUE with it but that hardly constitutes a 'cause and effect' argument. DUE could well go down to $1.73 but outperform the market index in which case DUE has shown positive alpha and you are better off shorting a more cyclical stock.

The market is gamed as I'm sure you would agree and the big boys will push this sort of stock up and down over the year for trading relatively safe profits. The closer to the bottom of this 5 month channel the more likely they will look to cover and re-stock for a rally (along with yourself) in the face of very few genuine long-term divi holders actually selling. I will be buying more at $1.73 but I won't infact be buying yours as alluded to earlier but competing with you before the quick spike down bounces back...lol.

I am holding until the next divi so time may allow me to stock up cheaper and you to make a dollar. Still think that below the middle of the trading channel this is a high risk-reward short.

goodluck