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dydo

Clearway Energy, Inc. (CWEN)

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I was asked about this on SA. I do not know how to assess this. Everything depends on a seller. I do not see this action aligned with a lot of value for NYLD. Why? The act of selling discredits it, same way FSLR discredited the value of CAFD.     

NRG went through the roof on a plan. I do not think this spells getting best dollar for the NYLD; it may mean selling it at the first opportunity. How to divide the ownership and who would buy it, no idea. For that reason, I think PEGI got an awesome deal, and I am confused with reluctant pressure to sell the stock, which may be ATM selling, and I would hate to be this.

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I am looking at the NRG presentation. To understand move between $2.5B and $4B as associated with 50 to 100% of the NYLD sale would suggest NYLD shares in ownership of NRG be valued at $35.10 plus range.

I am not sure if this is an accurate assessment because it would leave around $1B for 6GW of conventional assets. That is like $0.16 per watt (net). If the number goes to $0.33 per watt for the conventional net or $2B the NYLD price per share would be around $23. I think this could be the goal.

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I think there could be a truth to $35 per share. The net of $0.16 per watt is equity in a conventional. This means about $0.80 per watt. That is reasonable for gas and certainly coal. 

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The idea that NRG would want to get $35 per share of NYLD and drive yield to 3%, makes PEGI incredibly cheap in the aftermath. At 4% the stock would be at $41. At 3% PEGI would be worth $55 with today's $1.67 dividend.

Current prices for NEP has 3.82% yield, NEP is going to be sooner rather than later a 3% yield stock. Those numbers are awesome to be excited about. Those companies are safer, as they do not experience market shifts.  Having private investors like PSP and Riverstone pile up should be a vote of confidence.  We will not wait for too long Q4 2017 transactions will be taking place.

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6 hours ago, odyd said:

NRG went through the roof on a plan

Up 30%. Should have bought NRG rather than NEE and NYLD. Jokes aside, a slightly troubled sponsor (profitably problems due to industry dynamics, growth issues due to capital structure) is less of an issue than being troubled oneself, but I can see that NYLD gains a bit on a plan that would reduce the influence of their sponsor at the same time as the sponsor is strengthened and if there is capital contributed (by share sales) directly or indirectly to both of them to promote growth in the process even better. I have not seen the presentation. Took a quick look now, but it is not clear on PPS expectation of NYLD sale. Honestly I don't know what to expect from NYLD PPS movement now. I was AFK yesterday, so I missed a good profit taking opportunity before it on the initial surge before it lost steam.

Edited by explo

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Did the NRG presentation say that there were already potential buyers in place @ the $35 price?  

Why didn't NYLD jump to near 35 if the plan is to sell it for 35?

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1 hour ago, sunnypease said:

Did the NRG presentation say that there were already potential buyers in place @ the $35 price?  

Why didn't NYLD jump to near 35 if the plan is to sell it for 35?

Because when I say that my house is worth $1M and the market disagrees nobody is valuing it at $1M.  However when I sell at $1M everyone around me having similar house gets a boost into their equity. If I am moving to another city and need to sell my house (NRG cashing in) I may not care to get a full return, and I sell for less even if it means I make no return or just a bit. Nobody knows where NRG is in the selling cycle or the expediency it needs to sell. I am only speculating that is the price of course as well based on one line of the text. I suppose nobody is willing to bid up the stock for the same reason.  

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Thank you for that explanation.  It makes sense.

One thing that seems odd with a $35 / share price for NYLD is that at $18 a share, Google finance lists a 35 PE ratio.  @ 35 share price PE would be up to 70.  

However, these are TTM PEs & I do not know what 2017 is projected to be. 

This is just a "hmmm..." sort of note.

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Sunny, I think NRG's jump has more to do with plan to cut expenses 50% by 2020 and reducing future expected debt by ~$13B than it does with selling $0.9B-$1.8B worth of NYLD equity (?).

Edited by disdaniel
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4 hours ago, disdaniel said:

Sunny, I think NRG's jump has more to do with plan to cut expenses 50% by 2020 and reducing future expected debt by ~$13B than it does with selling $0.9B-$1.8B worth of NYLD equity (?).

Thanks Disdaniel.  That explains the NRG jump.  And so we probably can't expect such a big jump for SPWR or FSLR selling their CAFD stake.

However, the sanity check on NYLD's price still stands.  Robert had suggested $35 based on NRG's valuation of NYLD.  I was merely pointing out that would give NYLD a 70 PE ratio.  (based on the google finance TTM numbers...)

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4 hours ago, sunnypease said:

Thanks Disdaniel.  That explains the NRG jump.  And so we probably can't expect such a big jump for SPWR or FSLR selling their CAFD stake.

However, the sanity check on NYLD's price still stands.  Robert had suggested $35 based on NRG's valuation of NYLD.  I was merely pointing out that would give NYLD a 70 PE ratio.  (based on the google finance TTM numbers...)

what does 70 PE mean to the valuation made by the seller?

Like I said NRG can print what they like the only transaction will establish share price. The same goes for CAFD. This is why buying either of the two could carry a risk that value may not have a premium. It may have a lower price than the market if the seller is motivated to sell.

Despite everything said already, Sunny, you seem to create another scenario to create a value, there is none. NRG went up on improvements, not NYLD sale.  There are hundreds of stocks with 70PE. FSLR is one of them.

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On 7/13/2017 at 5:54 AM, odyd said:

I think there could be a truth to $35 per share. The net of $0.16 per watt is equity in a conventional. This means about $0.80 per watt. That is reasonable for gas and certainly coal. 

We've got to stop this Sunny thing.  Sonny is a nickname for a guy with just a few teeth who can fix any car or tractor.   That's not me.  I can't fix cars.

Anyhow, I was talking 35 because you had said 35.  & just posting a little note that a PE of 70 sounds too high.  Sounds like you maybe agree.

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12 minutes ago, sunnypease said:

We've got to stop this Sunny thing.  Sonny is a nickname for a guy with just a few teeth who can fix any car or tractor.   That's not me.  I can't fix cars.

Anyhow, I was talking 35 because you had said 35.  & just posting a little note that a PE of 70 sounds too high.  Sounds like you maybe agree.

I was saying it based on the presentation from NRG. Anyone can use the calculator and try to figure things out. I happen to share results when I use it.  Using PE for yieldco is an absurd metric. I also said that.

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We could be forgetting that NRG Yield could be buying rest of interest from its parent on a number of projects and then be sold to a buyer. The buyer could be paying more for shares of NYLD if the assets were sold to it with the benefits. The transaction could also include buying development projects, especially wind. PEGI could also buy some projects from NRG to sell them back to NYLD, would that be something?

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NYLD was downgraded by DB

Deutsche Bank analyst Jonathan Arnold downgraded NRG Yield (NYLD) to Hold saying NRG Energy's (NRG) plans to exit the renewables business creates a less certain path forward for the company. The analyst sees potential outcomes that could benefit the parent, while "not necessarily being entirely optimal" for NRG Yield's public float. The analyst lowered his price target for the shares to $18 from $19.
 

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