RE:RE:Good news and badAfter several years of watching Alterra get hammered, and after taking a pass on last spring's coat-tail buying opportunities due to better options elsewhere, I finally opened up a long position.
Positives:
Alterra's Enterprise Multiple is better than Capital Power's when I bought said stock. Excluding only the asset write down, which I think the market had largely priced in anyway, the company was profitable. This despite poor aluminum prices and the financial aftermath of the rockslide. Should the ISK continue to appreciate, they will continue to book asset value gains. I don't see a true breakout until they post some positive earnings or announce the dividend, but by then I think the smart money will already be in. Maybe they will go the Boralex route and say "when our next project is online, we'll announce the dividend." Worked out well in that case.
Obvious positive: the chairman owns 30% of the company, and he's had offers for the company, but he will not sell.
Negatives:
The long term risk I see relates to another possible Icelandic collapse and the question mark that poses for the asset. Another currency collapse would probably result in some major negative charges to the balance sheet, especially since Orka is making large debt payments. But I wonder, though a currency collapse would affect the book value of Orka, how would it affect Orka's earnings? I don't know. I do think Iceland's currency controls devalue the asset even if the holding company was sold. So for now I am content for them to continue plowing money against Orka's debt, because really there's not much else that can be done, other than being sneaky and trying to "export" the profits in some non-currency way. The question remains, what will be the end game for the Iceland gambit? If they decide to end-run the currency control and just sell the holding company, will there be any buyers? Who wants to invest in a country where you can't get your money out? The diversification away from Iceland and geothermal is wise. Side note, aluminum shows no signs of recovery any time soon.
It seems that Ross Beaty has set a price floor at 0.27 ($126M) so that's effectively the downside risk. As for next quarter, it's Toba's slow quarter, and there's some maintenance coming up at Orka this year, which could leave the stock range-bound a while longer. So the plan is to open the inital position and buy the dips.
In terms of the tactical purchase, the hit-and-run technical guy is correct. The chart is turning bullish. I consider technicals to be only slightly more useful than witchcraft. But In the immediate term, technicals can be useful for timing entry points. I figured the big annual loss would scare out some dumb money, and the last few days proved correct. I was hoping for a retracement to 0.295 or even 0.275, but that fair size bidder at 0.30 probably put in a short term floor. I'm long at 0.305. We shall see if the next few years are better than the last.