Just bought AXY yesterday and as happens to me most of the time, the stock promptly sold off 5%. In the end, I don't care - the key reason I bought was because the book value of the assets is so low and the intention is to hold for many, many years. You're buying amazingly durable assets at right around book value. It’s hard to find durable assets at that kind of a price. Normally with businesses that have assets as durable as these, investors must pay a premium. So, think pipelines, railways....power plants. They are predictable, very simple, have a long life and are easy to monetize. I owned Innergex for a couple of years, did well, loved the idea, but sold when book value creeped north of 4x and had to re-organize my portfolio. Alterra at around book value....? The most attractive aspect to me is that you can basically lock in a long term contract for sales with a power regulator and then simply line up your financing so that you are making money. Then, repeat the process with a development project. Your customer is sometimes a regulated power entity who never surprises or stiffs you on the money. So topline revenue is virtually guaranteed. A high school student could run the business, so put this in the hands of management of even mediocre quality, you'll do fine. Line up good managerial talent in the various areas and you can accelerate earnings even further. The Geothermal aspect makes AXY standout in my opinion - in the hands of Ross Beaty's mining contact network...likely going to have big success here.
On Materialgirl's question of whether or not management is good or not, take Fisher's book entitled "Common Stocks for Uncommon Profits", a classic. Answer these scuttlebutt questions and you'll have a good idea of AXY prospects for the future and managements likelihood of delivering long term success to shareholders. Enjoy!
1) Market & sales potential of products/services for several years?
2) Management's attitude toward developing new product lines? Vision?
3) R&D effectiveness relative to company's size?
4) Good sales force?
5) Worthwhile profit margins?
6) What are they doing to grow margins?
7) Outstanding labor/personnel relations?
8) Outstanding executive relations?
9) Depth to management?
10) Cost and accounting controls?
11) Industry specific competitive moat characteristics?
12) Do they have a long range or short range outlook on profits?
13) Do they plan on financing through equity / dilution?
14) Transparency? Do they clam up when bad news arrives?
15) Management of unquestionable integrity?