Pattern Energy Group Inc. (PEGI)

[dydo 1,560]

NYLD is something to be cautious about and this is why I recommended PEGI.

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[explo 706]

4 minutes ago, odyd said:

NYLD is something to be cautious about and this is why I recommended PEGI.

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Because of the NRG activist wanting them to sell NYLD?

[Jetmoney 51]

What is wrong with JASO?  Should have followed you to sell out JASO.  It continues to go down day after day like a water torture (drop by drop).

[dydo 1,560]

Because of the NRG activist wanting them to sell NYLD?

The caution comes from unknown evaluation and the interest in sale. It is not bad yieldco just the market hold up giving it value

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[sunnypease 35]

38 minutes ago, Jetmoney said:

What is wrong with JASO?  Should have followed you to sell out JASO.  It continues to go down day after day like a water torture (drop by drop).

Probably the 6.80 standing offer from the ceo to buy out the company.  Longs are weak to just give him inexpensive shares.

[explo 706]

20 minutes ago, odyd said:

The caution comes from unknown evaluation and the interest in sale. It is not bad yieldco just the market hold up giving it value

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I'm not following exactly, but couldn't it be that uncertainty creates opportunity? I think they have the potential to lower their yield given their consistent high DPS growth since inception and continued guidance of it.

[explo 706]

I get a feeling that I'm 3 months behind odyd's conclusions.

Likely because I only took a cursory look at the yieldco.

[Jetmoney 51]

1 hour ago, sunnypease said:

Probably the 6.80 standing offer from the ceo to buy out the company.  Longs are weak to just give him inexpensive shares.

If you think this is a low ball offer, I would not mind getting this price for 10% profit.  If JASO gets any higher competing offer, then its SP should also go up.  Either way, holding JASO here should be safe except having to deal with water torture.

[solarpete 103]

23 minutes ago, Jetmoney said:

If you think this is a low ball offer, I would not mind getting this price for 10% profit.  If JASO gets any higher competing offer, then its SP should also go up.  Either way, holding JASO here should be safe except having to deal with water torture.

I wish I shared your optimism.  I thought the same thing a couple of months ago.  Then the CEO lowered his offer--something I had not anticipated.  What if the price continues to drip down into the high 5's the next few weeks?  What's to keep the CEO from then lowering the offer again, say to $6.20?

[dydo 1,560]

I'm not following exactly, but couldn't it be that uncertainty creates opportunity? I think they have the potential to lower their yield given their consistent high DPS growth since inception and continued guidance of it.

NYLD gets enough credit in comparison to PEGI. Perhaps it is an opportunity, but PEGI offers a lot more for the same dollar and can give better growth. If NRG is just selling who knows what price this brings. It is tough to see premium.

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[dydo 1,560]

Collecting projects to build, they are serious about growing

http://nawindpower.com/pattern-acquires-montana-wind-facility-german-developer

[dydo 1,560]

So 80MW in Montana and 103MW in SD.  D2 is growing its portfolio.

http://nawindpower.com/pattern-development-acquires-103-mw-wind-quarry-project-south-dakota

[explo 706]

5 hours ago, odyd said:

Collecting projects to build, they are serious about growing

http://nawindpower.com/pattern-acquires-montana-wind-facility-german-developer

After reading their white paper I really like the model of taking on higher risk to eliminate the yield compression and thus propel them out of the high yield catch 22 (no growth -> high yield, high yield -> no growth) they and some others got stuck in (NEP is out of it, NYLD has a chance to break away from it) and reduce the risk that they experience a yieldco growth model doubt crash again. It will no longer be hard to find accretive investments at high single digit stock yields, but they will have significantly larger risk.

The uncertain part of it is that it is a new model with higher risk to enable more stock price independent growth and the market has to figure out how to price this. The capital raised will be deployed at much higher risk and the conversion to CAFD will be delayed.

I think there is quite a lot of analysis to do to understand if this is a good model. For now the model to reduce cost of capital has been to separate high risk and low risk, but we all know how that worked out. I hope to get time some day to do a deeper analysis of this. My guess is that PEGI has a chance to trade much higher (at much lower yield) when the markets concludes their new model successful. This could take time if it wants empirical and not just analytical proof of this. PEGI guiding multi year dividend growth they expect to achieve would give much more confidence in that the risk assumed is considered manageable and predictable enough to maintain a dividend.

I wonder if the risk is that this model slides into a growthco, i.e. CAFD might be better used to invest in development than to pay dividend and opportunistically they will sell stock when it is expensive and there is a lot of projects to pursue. Otherwise it becomes sort of "here I pay you dividend, now will you give it back to me to use for high risk investments?" rather than "here I pay you dividend, now if you give it back to me I will use it for investment that will very predictably result in me paying you more next time". The former one is always true, but maybe not always attractive. The latter one seems always attractive but is no long true when ending up in the high yield catch 22.

That said I like the growthco model (mix retain assets and recycle capital, pay no dividend) better. But then again the retained assets are often put into yieldco which is used to recycle the capital for the developer in sort eat the cake and keep it model. Maybe they will go back to this after propelling themselves out of the growth trap.

Edited July 13, 2017 by explo

[dydo 1,560]

I wonder if the solar objective and building the solar dedicated team is something market is disliking? The idea is a bit off when Suniva could increase the price of modules. I do not see how could resolve when tariffs come in. Unless they aligned with manufacturers. They talk the game about it, but God forbid to be SunPower.

[dydo 1,560]

PEGI just deposit $60m into D2.

[dydo 1,560]

5 hours ago, sunburntbull said:

Is there some chance that PEGI beats this quarter?  There has been lots of rain.  I wonder if that translates to lots of wind?

Is there a chance they outline new plans which rallies the stock? 

I'd like to own some PEGI I just don't know when is a good time to buy.

The good time to buy is when your objective for owning a stock is met.  The three questions you asked, have you done a homework to conclude they are important to your strategy to buy the stock?

[dydo 1,560]

Good results from PEGI, not sure why they write net loss but show a net gain of $14M, EPS of $0.16 per share. dividend increase to $0.42 per quarter.

[Jetmoney 51]

Ok.  Just followed you in with some pegi.

[dydo 1,560]

I just loaded up with it, cannot believe the selling pressure taking all the stops.  I have tripled my position on PEGI and NEP had to go.

[sunnypease 35]

mixed shelf pegi

[dydo 1,560]

22 minutes ago, sunnypease said:

mixed shelf pegi

that's an extension of ATM

[dydo 1,560]

Pattern and PSP bought the Meikle project in BC,

here PSP is buying the Panhandle interest

https://www.natlawreview.com/article/upcomingnew-cfius-filing-public-sector-pension-investment-boardvertuous-energy

[dydo 1,560]

I have a feeling that solar project in Chile will be sold by the Development and they will focus on Mexico instead. Also, their plans for solar development in the US are likely never take off due to Suniva.

[dydo 1,560]

BTW that ATM could be sold now with the prices above $24. I would not be surprised if they started selling it now. This new El Cabo project in New Mexico looks really good for next acquisition. 

[sunnypease 35]

PEGI lowered its CAFD estimate to 5 - 11m    from 12-14M   because wind was below average for Q3.  

That sounds suspiciously low to me.   Half or less the wind?

[sunnypease 35]

2 hours ago, sunnypease said:

PEGI lowered its CAFD estimate to 5 - 11m    from 12-14M   because wind was below average for Q3.  

That sounds suspiciously low to me.   Half or less the wind?

What happens when they are levered and they miss half their cafd estimate in a quarter? 

[Jetmoney 51]

Didn't they just announce increased dividend?

[sunnypease 35]

1 hour ago, Jetmoney said:

Didn't they just announce increased dividend?

Not that I see.  In my newsfeed it says they are reducing their cafd for the quarter by approximately half due to the hurricane's affect.  I guess they had to shut down turbines for a while.  

They say they are on track to meet the full year cafd guidance though.  

So either they are sandbagging the other quarters, or Q4 is going to be especially windy.  

[dydo 1,560]

It is a lower revenue, CAFD is after all other payments are satisfied.

[sunnypease 35]

On 9/30/2017 at 1:15 AM, dydo said:

It is a lower revenue, CAFD is after all other payments are satisfied.

I was concerned because my mother owns some PEGI, on my advice.  And I remember you & explo talking about their plan to use more leverage to boost returns.  And then just thinking that the weather is becoming more unpredictable.  Unpredictable + leverage does not sound great, though I cannot quantify it.

 

I see that Pattern has a farm in Puerto Rico.  http://patternenergy.com/en/operations/facilities/santa_isabel/  

According to this, it was not damaged: http://renews.biz/108660/pattern-rides-out-storm/

According to news, there is no and will be no electricity on Puerto Rico, so I wonder what is happening to Pattern's wind energy there?