RE:RE:RE:For those interestedJohnwith30years wrote: Yes I agree ALA is still an excellent investment. I do not see any break-up happening within a 12 month time frame. Do you. So I may switch back more fully to ALA during the year if I see a modest rise in ALA and a stronger one is FTS, But what time frame are you thinking for unlocking fuller ALA utility value?? Thanks for your perspective.
I thought I would mention the potential split and valuation because I recently had a meeting with M&A people in the energy industry. I thought the valuations were interesting.
Imo, if they invest $1 knowing the value on the market will be almost twice as high, they'll probably wait until closer to the end of the investment program (I think it runs through 2024?). Interestingly enough, RIPET should be at double capacity at that time. My investment thesis in Altagas is that even if they don't split the company, the stock price will be closer to $28 by 2023-2024. Add the dividend and that's a 15% compounded return on investment for the next 3 years. If they split it up, then there is upside up to $40, which would boost the return on investment to the 28% range.
However, I think Fortis is also a good buy and while I like Altagas a lot (and it's an overweight position in my portfolio), diversification is never a bad thing either. Whatever you invest in, management can always go off the rails at some point or there can be an outside unpredictable event that will affect a stock more than another. Diversification will mitigate your risk in that sense.