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Aufgelesen bei yahoo : Long-Term Sentiment: Strong Buy 06/22/01 01:42 am Msg: 32952 of 32971 By CHRISTINA CHEDDAR Of DOW JONES NEWSWIRES NEW YORK -- As a native son of the Golden State, Calpine Corp. (CPN) has dodged the allegations of price-gouging being hurled at its rivals headquartered outside of California`s borders. Calpine further strengthened its relationship with the state and regulators when it became the first company to agree to sign long-term power contracts with the California Department of Water Resources, and proposed millions of dollars in new power projects to ease the state`s supply crunch. But when it comes to Calpine`s stock price, investors aren`t rewarding Calpine for its good guy image. Instead, the San Jose power producer`s stock price is seen by some investors as the best way of gauging the market`s sentiment regarding the state`s energy crisis. But why? For one, as a California-based company, Calpine is one of the most visible participants in the state`s power market. Even its name, reminds one of its location, one investor said. Traditional utility investors blame Calpine`s new role as a California bellwether on momentum investors, who aren`t looking at Calpine`s entire business, which includes many attractive power projects outside the region that give it the distinction of being one of the fastest growing independent power producers in the U.S. Calpine`s volatility shows the effect momentum players have had on the stock, said Larry Alberts, a power industry analyst at American Express Financial Advisors. Instead of reacting to Calpine`s business outlook, these investors react to the headlines that telegraph the twists and turns of the California power crisis, he said. "It`s sort of a call on mob psychology," Tim O`Brien, the portfolio manger of the Gabelli Utilities Fund. He agrees that there has been a lot of money coming in and out of Calpine. "Things haven`t been looking good, so they are selling them (the power producers) all." Recently, the momentum players have begun selling their stakes in Calpine, and exiting the sector entirely, triggering a domino effect among other portfolio managers attempting to save their returns before the quarter`s close. Recently trading below $40, Calpine shares have declined almost 35% from a 52-week high of $58.04 on March 30, set a week before PG&E Corp.`s (PCG) Pacific Gas & Electric Co. filed for bankruptcy protection. After a brief upturn in May, Calpine has been sliding steadily; Calpine now trades at about 12-times 2002 earnings estimates. At this level, the stock is not only trading at a discount to other growth stocks, but to the broader market as well. While shares of Calpine`s peers have also declined during the same period, none have fallen as much. And this is even with the allegations by California Gov. Gray Davis that the group - which includes Duke Energy Corp. (DUK), of Charlotte, N.C.; Dynegy Inc. (DYN), of Houston; Mirant Corp. (MIR), of Atlanta; and Williams Cos. (WMB), of Tulsa, Okla. - has overcharged, by as much as $9 billion, for what the state said were excessive wholesale power charges. Take Duke Energy, for instance. In the past three months, Duke shares have fallen 6.3%. Some suspect Calpine was the hardest hit by the pullback because it previously was among the biggest gainers. Lehman Brothers Inc. analyst Richard Gross discussed the sector shift in a research note about Dynegy Thursday. He said the stocks of power producers and energy merchants have become more compelling investments because hedge funds, which had used the group as an area to invest since the collapse of the telecom and technology sectors, are convinced the energy game is over and are dumping their interests. "Portfolio managers, faced with increasing performance pressures, are dumping their interests in order to salvage second quarter performance benchmarks," Gross said. Gross thinks the mood could shift by the end of this quarter, partially because most of the selling has already been done. Long-Term Sentiment: Strong Buy 06/22/01 01:43 am Msg: 32953 of 32971 But others don`t think this will happen for Calpine unless some of the political issues that could stall national deregulation are resolved. Once California stops capturing daily headlines, some of this political pressure will be relieved and will enable Calpine to once again trade based on the performance of its operations. At that point, it is not unreasonable to expect Calpine shares to return to a $55 to $65 range, according to Gabelli`s O`Brien. "I think the low to mid-50s is the realistic minimum for the stock," he said. Both Alberts and O`Brien don`t appear to be concerned by the hundreds of millions of dollars Calpine is owed by now-bankrupt Pacific Gas, and don`t think the unpaid debt is weighing on the stock. According to court documents, Pacific Gas has yet to decide whether it should be bound by long-term contracts that allow it to buy electricity from Calpine at fixed rates. If Pacific Gas validates the contracts, the utility would have to pay Calpine 100% of the money it owes Calpine - a figure put at least $270 million in filings with the Securities and Exchange Commission. Later this month, PG&E will tell the court how it expects to proceed with the 11 agreements it has signed with various Calpine units. Then, on July 5, the two companies will face off in court. Calpine has stood behind its contracts and is so confident about its position that it hasn`t put aside any reserves in case of a default. Both O`Brien and Alberts said Calpine`s position is secure because it is a low-cost producer that sold power to Pacific Gas under a contract, not in the spot market. As a result, the company`s debt, while unsecured, has precedence over other debtholders. "Nearly all of their output in California was sold under long-term contracts," O`Brien said. He added that the contract gives Calpine more credibility than other creditors. Calpine also has built up a great deal of credibility on Wall Street. "Management has not failed to live up to any promise we recall, financial or operational, in three years," said Chris Ellinghaus, an analyst at New York investment bank Williams Capital Group. On its own behalf, management said it continues to monitor the status of PG&E`s unpaid power bills, and if it appears that the company should take a reserve, it will. In a worst-case scenario, Calpine will post a charge to write off the unpaid bills, said UBS Warburg analyst Ronald Barone. However, he doesn`t think this is an absolute negative because the company then would be released from its contracts with Pacific Gas and would sell the power into the spot market, where it would fetch higher rates. "Either way, they will get the money," Barone said. This week, a change in Federal Energy Regulatory Commission policy made Calpine`s strategy even more attractive, analysts said. FERC decided to extend soft price caps it had in place in California during power emergencies to the rest of the Western power market on a 24 hours a day, seven days a week basis. According to several Wall Street analysts, the FERC order favors companies like Calpine, which locked into long-term power contracts and operate efficiently. On a day-to-day basis, Calpine will be largely unaffected by the FERC ruling, said Raymond James analyst Frederick Schultz. -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com |
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| aus der Diskussion: | Calpine |
| Autor (Datum des Eintrages): | RandomGambler1 (22.06.01 16:43:09) |
| Beitrag: | 66 von 251 (ID:3797951) |
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