Mirant - MIR

[ericd1]

Is anyone following MIR?

 

Mirant sells electricity, which it generates through coal-fired, and oil and gas generating facilities.  They are a wholesale generator of electricity, not a utility. Hedge fund manager John Paulson owns more than 12% of the company.

 

Shares trade at 0.6x book and 0.7x sales. They have high margins, return on equity and assets. Historic P/B is ~1.5x and P/S ~ 2.0

 

Although I don't see a catalyst to drive the stock price up, it appears to be under-valued.

 

I own a few shares and am considering adding to the position.  Appreciate any thoughts...

 

 

 

[watsa_is_a_randian_hero]

I spent 5 minutes looking at it.  valuation isnt that great when you look at 2010 expectations.  Why is the rev/net income forecasted to to decline so quickly?

[prevalou]

their position is hedged generally for two years. They still enjoy great price gas/coal differential (dark spread) but not for a long time.

On the positive side, reserve margins are declining in the east PJM aera and it's difficult to add capacity.

 

 

[ericd1]

Lower net/rev because of lower prices and demand, partially offset by hedges.

 

I don't see them losing money, but expect slow/no growth until economy picks up.

[alertmeipp]

One of its main risk is political one.. remember they have coal plants. old ones as well.