Northland Power Inc (NPI.TO)

(Market Call Minute.)

A renewable energy independent power producer, largely focused on wind with a little hydroelectric power generation mixed in. They initiated a process to Sell the company, which has been dragging on and on, for almost a year. Investors started getting a little squeamish, so he exited his Long position when he got wind of more capital controls in China. This morning, it was reported, but not announced by Northland, that they were about to end the sale process, and the stock traded up on that news. A very worthwhile name, and he is probably going to buy his shares back.

Big wind generator in the North Sea. He likes the assets. It started as an alternative energy provider in Ontario and then spread across Canada, followed by a big foray into Europe about 10 years ago. This is now starting to pay off big time. Their 1^st wind plant, Gemini, is now generating cash. Nordsee will be generating cash by the end of this year. Just announced a 3^rd offshore wind plant that will be coming on in a couple of years. Dividend yield of 4.6%. (Analysts’ price target is $26.50.)

This seems to have dragged on in the $23 level, and the longer it drags on, the less likely it is that someone takes them out. The company has great assets and great cash flow, so if it doesn’t get taken out, you are probably looking at a significant dividend increase. He took about half his money off the table. If it dropped to the low $20s or the high teens, he would look to add to his position to get back to his previous weighting.

This is basically going sideways, although down a little recently. Reported earnings a couple of weeks ago were fine. They have 2 projects in Europe. One is on and the other will be fully on by the end of 2018. They announced they were doing a strategic review, and the hope was that there would be an announcement made when their earnings came out. They haven’t raised their dividend in the last 5 years, and with this new cash flow they are getting out of the European projects, he would expect that, if they are not selling the company, they will raise the dividend sometime this year. 4.6% dividend yield.

Historically stocks like this do very well from around May right through until October of each year. This is a time when this stock does quite well on a seasonal basis. Technically, the chart shows it is forming a trading range.

(A Top Pick March 31/16. Up 19%.) He was looking for stability and for its yield. He expects to see further dividend growth because of the wind projects in the North Sea, that are now coming into fruition. They’ve just announced another project for later on, plus you get the possibility of something happening because the company is looking at strategic alternatives. Dividend yield of 4.4%.

Has just agreed to acquire 252MW German offshore wind farms. Shortly after they announced this, the stock sold off pretty hard, which he feels was a knee-jerk. This makes it a more appealing takeover target. Dividend yield of 4.4%.

A smaller energy producer. Results have been OK. Most of these names have gotten a bit stretched in terms of valuation.

They’ve locked themselves into some nice contracts over the next 5 years in some of the wind power new developments they’ve got coming from Europe. The dividend is safe. They’ve essentially put themselves up for sale and the stock is pretty much trading in the range of what companies could pay. Maybe an Asian company wanting to get some tax environmental credit. There should be word on the sale over the next month.

(Top Pick Mar 31/16, Up 17.63%) He saw dividend growth from The Netherlands and eventually from German offshore wind sites. They have the capacity to grow that dividend. The company is up for sale, essentially. They have been delivering on time and under budget wind power projects.

(Market Call Minute.) He really likes their business model.

It is an event driven situation for him. They put themselves up for sale. He thinks they want to get a deal done. The market is under estimating what the pricing should be. (Analysts’ Target: $25.60).

An independent power producer, producing 1400 MW. The attraction is the growth in offshore wind in Europe where they have 2 projects currently coming on. One is coming on right now, and the other will be coming on in 2017-2018, which will bump their cash flow by 50%-60%. There is potential for pretty big increases in dividends over the next couple of years. In July, they announced that they were doing a strategic review. One family owns 30% of the company, and the question is, do they want out. There is a potential that the assets could be sold. He likes the company long term, because he thinks the dividends are going up. Dividend yield of 4.59%. (Analysts’ price target is $25.60.)

The key thing to be cautious of is that the company is for sale. He would expect a takeout offer in the next few weeks or months. The question is price. If they don’t sell themselves it could be negative for them.