Rick Rule Alterra Power Corp. AXY-T TOP PICK Jul 31, 2017

He likes the chairman. They have labored in the shadows for 7 years and have been paying down debt. They now have increasing flexibility to build out a good pipeline of projects.

(A Top Pick Aug 12/15. Down 14.71%.) Alternative energy such as geothermal, hydro, wind and solar that isn’t particularly popular right now. He likes this a lot and would be extremely surprised if it didn’t do well over the next 12 months. There is not much free cash flow, but a lot of cash flow is bringing down a lot of debt. NAV is growing consistently.

(Market Call Minute.) Looks reasonably priced. Not a Top Buy, but reasonably priced.

(A Top Pick Aug 12/15. Up 31.37%.) Still likes this, and thinks it has more room to run. People look at the cash generation, but what they don’t see is the amount of debt they have paid down over the last 6-7 years, and they continue to pay it down. With alternative energy, there is a lot of upfront capital expenses, and it takes a long time before you amortize enough debt that you begin to throw off cash. They reached that point in 2017.

Big geothermic producers in Iceland. The company has disappointed investors because it is in the alternative energy space, which takes a very long time. People look at the historic lack of cash generation, not understanding that the company has generated the cash to pay down $200 million in debt over 7 years. Their free cash flow really begins to come next year, and the stock will re-rate. Dividend yield of 0.76%.

A Canadian-based alternative energy supplier, wind, solar, geothermal. An extremely well-run company. Thinks it has sold off, partly because money has disintermediated out of all resource sectors and into gold. Also, because of a nervousness that a Trump candidacy could be bad for the subsidies that the US government awards wind and solar producers.

(Top Pick Sep 28/16, Down 10.87%) He has been adding rapidly. People don’t understand that their free cash is growing rapidly as their cost of capital decreases. The company could get sold too soon. They have a lot of assets in Iceland and he feels pensions there want to repatriate those assets.

Innergex (INE-T) is buying this company and is giving stock as well as cash. If it's a tax deferred takeover, he would be fine with the takeover. It does some Hydro, renewable and power, a lot of it in Québec and some in Europe. On the cash portion, if you wanted to stay in power, you could buy something like Capital Power (CPX-T), which gives you a good dividend. However, the portion that comes to you in stock should be tax deferred.

Innergex Renewable Energy (INE-T) is acquiring this company. Believes that a larger company, resulting from the merger, will have a lower cost of capital, a defining advantage in a capital intensive business. He is going to Hold his shares.