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earnings follow-ups ?3
01:37 15-Nov-18
It's possible that CWEN is being affected by news
about the California wildfires. PCG has fallen drastically over
the past few days. If so, I would still be inclined to say the
CWEN drop is inappropriate. There's a big difference between
distribution, which could be related, and generation, which would
not. Furthermore, the state has been at political war with the
federal administration, which has resorted
to financial reprisal.
That may change with a Democratic House. Clearway is also diversifying
its geographic footprint.
To the other news, I'll add another CUI open market insider buy of 5000 shares at $1.64, along with some commentary on natural gas from a subscriber:
Long oil short gas has been a hell of a trade for the last three years and it was crowded…..i think we’re seeing it unwind.That sounds pretty plausible to me.On 11/14/18 7:01 PM, Esekla wrote:
I wasn't preparing a follow-up on RESN, because my review of the Macom call mostly confirmed what Resonant's management had already told us. However, I'm getting A LOT of questions about today's 40%+ drop today, amongst other things. So, here are the answers together with some other notes:
Specifically the Macom call confirmed 5G starting to ramp in 2H19, just as Resonant's management projected, with deployment following from 2020 to 2022. There's a lot of semi-related detail that I will be researching further, and possibly good long-term opportunity, but nothing I'm willing to chase at the moment. For Resonant, though, it mostly boils down to whether or not you believe management on the strength of their technology, and whether they believe in it enough to keep it secure.
To answer other questions, yes, the move seems overdone to me. Am I surprised at the drop? Only a little. From the questions, it sounds like most have heeded my standard warnings GRoDT stock position sizes, but that's probably not the case for many investors. Original guidance mapped this and the next quarter as breakout points. With that timing dashed, forced sales seem likely, but the worst of that should be over by Tuesday. That said, the same issue could easily play out next quarter as well, making it difficult to project the size of any immediate rebound, though the net 4% rebate rate should help a little.
There's also the $50M shelf registration, which management mentioned on the call, and I addressed obliquely when commenting on dilution. Now that it is filed, and the stock has dropped, though, the math looks worse. At the current price of $1.69, filling the full amount would represent about 100% dilution. There is no guarantee this will happen, but it doesn't help the fear factor.
There were also questions about the 10%+ drop in CWEN(A), which I see no reason for other than impending options expiration and the generally weak market. Consequently, I do see it as a good entry point at 7% yield, especially in advance of the dividend whose ex-date is the 30th.
Unlike just a few months ago, opportunities now abound, though, and BGCP may be better yet, now that the House Financial Services Committee will be chaired by a Democrat. I think most the market weakness is interest rate-related, but the battle lines in Washington and globally are probably also taking their toll. I still expect some relief as we get past this week, though the holidays can create pockets of strange trading. I'm beginning to hope that is the only thing going on with natural gas, which is now at $4.75, but I'm not so sure.
Consequently, I still see global telecoms like Vodafone as amongst the best long-term opportunities, after the Idea report was not quite as bad as feared. Vodafone could wind up contributing up to $1.5b to rebuild the Indian balance sheet, though, and sale of the local fiber network is also being considered.
Finally, I'll note that CenturyLink made its qualified dividend official, with an ex-date of November 23, when the markets will close at 1pm.