Alterra Power MGMXD

Good news and bad

[calmandquiet]

I have to say, reading Alterra's financial statements is painful. Not because of the continued losses but because the financials are just too complicated. How am I supposed to evaluate the company when I'd rather be hit by a rogue wind turbine blade than attempt to read its statements?

Anyway I see both good and bad news this week. 

Good: asset writedown. They acknowledged that those growth assets were illusionary. They probably didn't go far enough in culling the assets, but it was a good first step to making the balance sheet more accurate. I wonder if the loss will offset some capital gains if they sell the Iceland assets. Anyone have any estimates on what they could sell the Sweden holding company for, including the foreign exchange? Maybe they could pay down some debt with the proceeds.  Also good: the profits on both asset sales. I know I criticized them previously for buying and selling assets quickly, but credit is due considering the realized gains. Maybe if I buy Alterra stock, I'm buying a company that's good at flipping electricity assets for a quick profit. Seems like an unusual business model, but hey, whatever works. 

Bad: No earnings from Montrose until... unknown. First it was the rockslide, now the insurer is making life difficult. Also: equity partners in both new projects. I guess that's the only option considering the company is quite indebted already.  Also bad: if I'm evaluating a power company, why should I have to decide if I want to be exposed to aluminum price fluctuations? The losses due to aluminum price fluctuations are large enough to wipe out the earnings they should be making.

It seems like profitability is always just around the corner, if it wasn't for those pesky "one time events" that recur more often than once in a while. My primary question is this: excluding the writedowns and Montrose impairment, could Alterra turn a profit in 2014? Will this finally be the year without "one time" charges?

[carinthian]

Hi calmandquiet, Regarding the distribution from toba I think I remember them to say something like beginning of second quarter when they expect the reserves to be big enough to start distributing again. Might have been said in the 3rd quarter call. Regarding the thought of making a profit in 2014: Gross Profit 2013 was aorund 13mio. This should be the number of what they did earn from their

[calmandquiet]

After 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

[Seldomseen]

This post has been removed in accordance with Community Policy

[carlson8]

calmandquiet, glad to see you pulled the trigger. i feel the same as you on valuation and business prospects. you've made some very good comments and i look forward to more