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dydo

TerraForm Power, Inc. (TERP)

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explo    671

Thanks dk1. Yes I think the non-controlling interest consideration for TERP is straight forward as its share roughly match SUNE's share. For CAFD it's more confusing as sponsors own a majority while non-controlling interest looks smaller than that.

I looked at presentation from NYLD and they made a big point of being free from IDRs. I agree with them IDRs severely holds back dividend growth outlook (after initial growth which is incentivised by it). 

I've also called yieldcos ponzi schemes. This applies when yieldcos pays more (e.g. to a sponsor) for assets than would be required to report profits. Sure it might take a decade or two until the fact that it doesn't add up hits shareholders in terms of DPS and PPS evaporation, but some might think that some might fear etc. Not sure if this realization is what's driven recent crash. Crashing PPS punctures a ponzi scheme, add threat of interest rate hikes in US for the remainder of this decade and you have a perfect storm for panic. I think the crash might have hit bottom now though and I'm entering here. I'll do it in a diversified way to avoid large exposure to a single yieldco. If I'm lucky this can form a stable cash flow generating portion of my portfolio for the future.

Despite these IDR and scheme worries I like yieldcos after crashing based on the fact that they give a lot of exposure to the business model I like, which is levered growth of generation asset base enabled by long-term stable cash flows. Before I liked sponsor side better, since their terms are much more favorable, but then you get a lot of exposure towards devco or manufacturing business too. Considering all effects I can't resist this yieldco entry point. Generally I always like to enter names who recently raised a lot of capital at higher prices since I get that fresh value at a big discount. In this case capital is always invested in stable cash flow generating assets so normal business risk don't apply (that raised capital can be completely burnt by management).

 

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explo    671

I bought NYLD today. Along with ABY, GLBL, NEP and PEGI. They're all rocking already.

 

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dk1    6

I see very limited downside potential in yieldcos at current valuations.....market will get crazy again and increase their prices for whatever reason it finds and if yields go below 5%, I will sell them as I don't think that is sustainable...yieldco math is quite simple IMO...typical solar/wind projects get 8-10% equity IRR in the market and that is what yieldco investor can hope to get in the long-term if they buying at book value...yieldco trading at 2xBV and 3-4% dividend yield is simply taking money from new shareholders to pay for the olders ones (which are often sponsors)...and showing dividend growth of 10%+ is easy if you buy assets which have 8-10% equity IRR and you have to pay only 3-4% on the cash raised, but that dividend and hence dividend growth is not sustainable in long-term (and here we are talking of more than 5-10 years) but market does not want to look that far, otherwise no one can explain such volatility in companies, which have rather quite predictable cash flows!!

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explo    671

I agree dk1. I'll collect dividends while yield are here in high single digits (GLBL is mid teens though) and book stocks gains by selling when the enter low single digit guided yields. And the rinse and repeat if opportunity comes back.

I like the idea of growthco a lot better as the value growth equation it adds up more easily there (not so PPS dependent), but I guess there might be less tax benefits then..?

 

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disdaniel    69

almost 8M TERP shares short, up 10% in first couple weeks of Oct.

 

Why does Yahoo finance show TERP float (~113M) almost 40% greater than shares outstanding (~80M)?

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dydo    1,423

TERP in my opinion is very attractive at this price. While I do not want to take apart my position in CSIQ I may as it is incredibly priced. What most people do not realize that TERP does not share financial obligations of SUNE. It has ample amount of cash and it is getting to a point of profitability. TERP can buy plants from others if it wants to, if parent needs to sell plants third party.

This could be a quick gainer here. I will be watching tomorrow, and may join the yieldco.

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Pop2mollys    416
2 hours ago, odyd said:

TERP in my opinion is very attractive at this price. While I do not want to take apart my position in CSIQ I may as it is incredibly priced. What most people do not realize that TERP does not share financial obligations of SUNE. It has ample amount of cash and it is getting to a point of profitability. TERP can buy plants from others if it wants to, if parent needs to sell plants third party.

This could be a quick gainer here. I will be watching tomorrow, and may join the yieldco.

Very interesting.  You think market can separate TERP from SUNE if SUNE stock price keeps burning down?  Seems as though they are tied in lock step.

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pg6solar    98
11 hours ago, odyd said:

TERP in my opinion is very attractive at this price. ...

Is it from the point of yield at current PPS or more from PPS possible appreciation? 

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