“Have you heard about this Whisper Stock?” — 9.25% Dividend Utility

A good number of folks sent me the latest Sovereign Society teaser email while I was traveling over the weekend, so I thought I’d jump in and take a look for you.

The ad is really for one of the publisher’s conferences, they’re selling some of the content from this recent conference that they call the “Total Wealth Symposium” … they call it the “Escape from Amerika” kit and it includes some stuff about expatriating yourself, living in a cheaper locale with “more freedom,” and it also includes a number of investing ideas.

One of which, now that we approach the point of today’s note, is teased out for us in some detail.

Here’s how they put it in the ad:

“Our intrepid managing editor, Andrew Packer, shared his clear-eyed opinion.

“There are more reasons to be skeptical today. But still there are strong companies that have missed the rally.”

“Take the regulated utilities market, for example. They’re essentially government-granted monopolies that are designed to NOT lose money.

“Which utility does Andrew have his eye on?Well, just last week, he uncovered a tiny power company – trading for less than $12 a share. So far, it’s attracted zero attention from Wall Street analysts, precisely because it’s so small.

“But that didn’t stop Andrew from peeking under the hood, and he liked what he saw!

“This firm has its power tentacles deep into the United States, with a collection of 13 properties supplying major markets.

“Not only that …

“It’s paying a fat 9.25% dividend.

“It’s about to jump from the “Pink Sheets” to the NYSE – where it’ll get a whole lot more attention.

“And best of all, this tiny power company has signed forward contracts with its customers FOR THE NEXT THREE YEARS! That means, no matter what happens in the market – its revenue is safe and secure.

“Look, I’d love to share this stock with you. But it’s far too small to “blast out” to our entire A-Letter list. (Can’t imagine what would happen is 200,000 folks decided to buy it.)”

They also describe this one, on the order form, as …

“an “under the radar” Canadian powerhouse that supplies energy to eight American states… It’s trading for under $12…kicks off a huge 8.71% dividend… and boasts one of the strongest balance sheets in its sector.”

Yes, the yield has jumped around a little bit as they wrote, thanks to some price movement, but it looks like that’s the same company. And the name?

Oddly enough, it’s a stock that I republished an article about for you on Friday — Atlantic Power (ATP in Toronto, ATLIF on the pink sheets).

And yes, as I noted in my older writeup that got republished last week, I do still like this one … this is one of the stocks that used to trade as a hybrid income security, part stock and part bond, but is now a plain old corporation, albeit one with a high dividend. And it is Canadian (though all of their assets are in the US), and does have 13 power generation and transmission assets, and a strong yield … and it does operate in a regulated environment and sell a substantial portion of its energy through forward contracts of various types, though I don’t know exactly the average term (three years sounds close to what I’ve seen for Atlantic Power in the past, so I’ll buy that).

They have been pre-approved to submit a NYSE listing application, I haven’t seen any updated information on when that NY listing might happen, but as of their last quarterly release they were still saying that they expected it to happen in the second quarter … which gives about a month. Their primarily listing is in Toronto right now, not on the pink sheets, so it’s not quite the same as an illiquid OTC stock suddenly getting a major market listing, but since they think about half of their shareholders are in the US it would certainly help.

My gut feeling is that yes, the stock should probably have more upside with a NYSE listing, given what I think will probably be a resurgence in interest in “safe” utility stocks and the fact that Atlantic Power will come in at the top of most lists for the highest yielding utilities, but there’s certainly no guarantee of that — I like the company and would consider buying it for the dividend and the broad array of generating assets, but I’d buy it to own, not to trade off of a possible boost from a US listing.

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If you’ve got a feeling about Atlantic Power or any of their regulated or unregulated utility brethren, let us know with a comment below — thanks!



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May 25, 2010 8:21 pm

Have owned this one for a while. I think your assessment is right. Nice dividend, some safety but not a "multi-bagger" as most teaser stocks are purported to be

May 25, 2010 8:58 pm