Hedging cont.Some excellent points re ALA hedging. Nat gas prices are high and likey to remain
high going into the winter. Totally agree their hedging strategy is a double edge sword. You lose on the upside and gain on the downside but most important also
is maintaining volumes and consistency of deliveries. If ALA can continue to grow
and expand their export business to Asia, that will help in pushing earnings higher
and consequently their s/p. Does it look like asian demand is going to drop off any
time soon? Not by a long shot.
I have been of the opinion that their are some large players still manipulating ALA
in the trading. I suspect certain insititutions can move the stock up or down as they
wish thereby dragging retail along either on the sell or the buys side. These moves
bear no relationship to earnings or ALA's fundamentals IMO but are more designed
to create trading profits for these institutional players. Nat gas prices are more of
a convienient cover or excuse for the manipulation and trading of the stock by these
insitutions.
As for WGL, electrical and gas consumption to their customers in this segment
should remain very strong and will continue to contribute the lions share of earnings
to ALA. With an El Nino year in the making, utility demand for gas and power will
be explosive. Putting this all together, ALA should post excellent performance
and IMO, will easily meet or exceed institutional targets of $28-$30 over the next
3 to 4 months. I am still holding long and strong.