They say the road to hell is paved with good intentions. But I didn’t think it would turn into a 16 lane freeway as quickly as it did with the Internet.
“I don’t want that pair of shoes. If I wanted them I would’ve bought them when I checked them out on Amazon last week.”
“You do want the shoes, Dave. You’re just not sure, yet. But you will be. They will look really great on you. I will keep reminding you about these shoes until I see you type in the credit card number and click Buy Now.” :0)
So whether I’m checking the weather predictions for March and April, browsing family recipes from Tuscany for dinner ideas, or perusing cricket scores from the Pakistan Champions League, that same damn pair of shoes follows me wherever I go. A world wide web, indeed.
“Dave, just buy the shoes. They’re a little cheaper now than the last time I showed you the ad. Next time I’ll make them more expensive.” :0)
Highly targeted and relentless advertising creeps out everybody. But it must work or they wouldn’t do it. People probably buy the freakin’ shoes just to stop the ads. \
Then they hit you for matching socks.
I curse the nerds.
They used to have little pop-up boxes asking permission – “Can we fiddle with your computer?” Now they don’t bother.
Living in Quebec, I often find that my keyboard has been switched to a French layout. When I’m typing an email, without my knowing or asking for it, the keyboard has been switched. So I have to switch it back to English. And I curse the nerds who decided to implement that little feature because they just know better than you, and they have to justify their existence, and just because they can. “I see by your IP address that you’re in Quebec, so I’m going to fiddle with your computer. And you’re going to think it’s cool.”:0)
I curse the nerds. It’s not cool.
Bad things happen to good technologies. Everything can be used as a weapon or a sales pitch or a spying mechanism. The better the technology, the bigger the consequences. It’s the consequences that nerds can’t be bothered about. Hardware and software are straightforward. It’s too complicated to think about consequences. Let marketing worry about that.
As with all revolutions, the Internet revolution reminds me of the lyrics from The Who’s classic – We won’t get fooled again.
Meet the new boss
Same as the old boss
I curse the nerds because everything is cool until it isn’t. Jeff Bezos thinks it’s cool if Amazon puts every single store, including Walmart, out of business. Every cashier and salesman at these stores, out on the street. But Jeff will be just fine. Figuring out what to do with too many people on the street is not his problem.
As long as they need shoes.
So here I am involved in the renewable energy revolution. I’m using the technology. I’m investing in the companies that are making it happen. I’m not thinking about the companies and people that will be hurt if/when the renewable revolution really gets cranked up.
I curse the nerds. But I am one.
I expect that electric utilities are going to be changed drastically when more and more consumers generate their own electricity. I expect that the hydrocarbon business will eventually be replaced altogether. There will be revolutionary changes to these industries and the people in them as a result of big renewable energy technology advancements. “Mommy, what’s a gas station?”
I’m too busy thinking about which technology will get ahead to worry about the ones that will be left behind. I’m confident that renewable energy will be better for the long term health of the eco-system, and humans in it. But it’s possible, as with any tool, that renewable energy will be used to do some rotten stuff, at some point.
I curse the nerds, but we can’t go back. We can only go forward. And Mother Nature is the ultimate nerd. She programmed the system and she understands it. We don’t. We may think it's our computer but it's not. It's her computer.
Nature doesn’t care about the human consequences of the changes it makes in the hardware or software of the earth. She’s like the Girl With The Dragon Tattoo. She doesn’t ask for permission. What was once an ocean is now a mountain, nature never stops changing the landscape. We can adapt, or we are SOL.
Capstone Infrastructure
Capstone Infrastructure (
TSX:T.CSE,
Stock Forum) has been a loser of a stock. It’s done nothing but drop for years. It’s a dog that I’ve owned and held because it pays a good dividend and because the assets look cheap – a classic value trap. But I see the stock chart beginning to show a bit of spine. And I’m wondering if maybe Capstone will do something other than just keep dropping, for a change.
Capstone Infrastructure is in the power generation business in a number of provinces in Canada. The company owns and operates wind farms, co-generation plants, hydro projects, a solar farm etc. Besides the power generation facilities, Capstone has stakes in other infrastructure businesses. The company owns 50% of Bristol Water – a water utility in England. Capstone also owns a 33% interest in a district heating company in Sweden. District heating facilities produce and distribute heat for a number of buildings and/or industrial users.
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| Capstone Infrastructure 2 Yr. Chart: Source - Bigcharts.com |
But Capstone is primarily a power generator. Last year Capstone took over a company called Renewable Energy Developers (RED) (
TSX:T.CPW.DB,
Stock Forum) in an all-share deal. RED had operating wind farms in Ontario and Nova Scotia with a capacity of 143 Megawatts. That brings the total generating capacity of all of Capstone’s plants to 465 Megawatts.
In addition, some projects from RED are now in the pipeline to add to Capstone’s upcoming renewable energy cash flow. The first of these is the Skyway 8 wind farm in Ontario. This is a small – 9.5 Megawatt – project. All permits and power purchase agreements are in place and construction is currently underway.
RED had well-advanced, contracted projects totalling 79 megawatts of renewable energy capacity that can now be developed by Capstone. But after Capstone bought Renewable Energy Developers, the stock continued to drop.
One big albatross around Capstone’s neck is the Cardinal co-generation plant. This is a 156 Megawatt gas-fired plant that provides baseline power to the Ontario grid and steam for the nearby Canada Starch plant. It is Capstone’s biggest plant and it runs 24/7. Cardinal has been producing electricity and steam for a long time and produces lots of cash flow for Capstone. Problem is the long term Power Purchase Agreement – PPA – is expiring and Ontario Hydro doesn’t seem too keen to renew on terms that Capstone would like. Negotiations are ongoing.
The uncertainty about how or even if the Cardinal contract will be renewed has weighed on Capstone’s stock and it’s debatable if all the bad possibilities have already been factored in. It’s difficult to assume that any good consequences for Cardinal have been factored in because the stock has been such a dog.
In the first nine months of last year Capstone earned 37 cents a share. Adjusted EBITDA for the nine months was $90.4 million or $1.24 per share. The takeover of RED closed on October 1 so the company’s cash flow will increase in the last quarter of the year.
Capstone has a fair bit of debt on a subsidiary basis and on the corporate books. Before the takeover, long term debt amounted to about $618 million as of the end of September. Debt to capitalization stood at 62% - uncomfortably on the high side. Still the company has plenty of predictable cash flow to look after that debt. Revenues for the first nine months of last year were $279 million, and those revenues are growing.
The company pays a big dividend - 7.63% at Friday's closing price of $3.93. But the payout ratio is a manageable 65% of free cash flow as of last September.
Capstone is smaller than its peers – other Canadian renewable energy developers and operators like Northland (
TSX:T.NPI,
Stock Forum), Innergex (
TSX:T.INE,
Stock Forum), Brookfield Renewables (
OBB:BFLD,
Stock Forum), etc. What’s more, the company is diversified in other infrastructure projects and is not a pure energy play.
Still, the cash flow is big and predictable. Once the Cardinal power plant future is settled one way or another, there is reason to hope that the stock will trade higher.
Capstone was recommended on BNN this past week, - one of their Market Call top picks. That, likely, accounts for some of the run-up in the past few days. The stock is still cheap.
At least that’s what I keep telling myself.
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I'll be at the PDAC mining conference in Toronto next week. The next issue of The Green Miner will be posted March 10