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Author: WestervilleSlim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 10845  
Subject: Is Calpine a Buy at 30 Cents? Date: 12/19/2005 2:00 PM
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What are Fools thinking about Calpine now? Are you waiting before buying? Are you holding your breath until the bankruptcy goes through?

I just can't believe that a company the size of Calpine has a stock price so low. I realize it is probably going into Chapter 11 very soon, but once it comes out, don't you think someone will buy it quickly or it will recover under new management?

What are you thinking about it? Are you thinking it's a bargain, or are you waiting until something positive happens?

When I look at a company with $27B in assets, $22B in debt, that leaves $5B in shareholder's equity. And the market cap is $173M?????

What gives? If you sold the company and cashed in the assets, paid off the debts, you'd have $8/share left over.

Could someone wiser than me explain what is happening? Thank you!
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Author: jck101 Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10832 of 10845
Subject: Re: Is Calpine a Buy at 30 Cents? Date: 12/19/2005 2:01 PM
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The assets are probably significantly overvalued is my bet, if they weren't, they'd be able to take out more loans and not be in bankruptcy.

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Author: WestervilleSlim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10833 of 10845
Subject: Re: Is Calpine a Buy at 30 Cents? Date: 12/19/2005 2:07 PM
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Thank you jck. That is very helpful info.

I think you're right, this is a time for speculators, not for high-quality investment.


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Author: Littlechap Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10834 of 10845
Subject: Re: Is Calpine a Buy at 30 Cents? Date: 12/19/2005 5:37 PM
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What are Fools thinking about Calpine now? Are you waiting before buying? Are you holding your breath until the bankruptcy goes through?

Absolutely not. I need the oxygen. ;-)

I just can't believe that a company the size of Calpine has a stock price so low.

Apparently you have never heard of Enron!

I realize it is probably going into Chapter 11 very soon, but once it comes out, don't you think someone will buy it quickly or it will recover under new management?

ASSUMING that it "comes out" at all. Calpine is full to the brim of trouble. Any company with enough resources to buy another company can choose from other candidates with less baggage and more promise.

What are you thinking about it? Are you thinking it's a bargain, or are you waiting until something positive happens?

I guess you have not read this board at all. The most positive possible things have already happened to this company: the departures of its two top executives and many of its board members. Other than discovering a diamond mine on one of its properties, I can't think of any other magic cures for its problems. Check back in about 3 years.

When I look at a company with $27B in assets, $22B in debt, that leaves $5B in shareholder's equity. And the market cap is $173M?????

Slim, you have now joined a dubious list of newcomers to the Calpine board who fiddle around with the company's numbers and think that they've discovered hidden value that the rest of Wall Street is too stupid to have seen.

Read the board. Among other things, you'll find messages from me quoting Morningstar, whose stock analyst has given Calpine a "fair value" of less than 25 cents for about a year now. Most recently, he lowered it to zero. The stock price is low because it should be low.

What gives? If you sold the company and cashed in the assets, paid off the debts, you'd have $8/share left over.

There are a million answers to this. One is that your numbers are probably wrong, especially if they come from Calpine itself. Second, you should know, just from reading the past few months of news about this company, that when it sells *anything*, its use of the sale proceeds are constrained by numerous liens and other legal obligations.

Another reply has already mentioned valuations being skewed. Again, if you read the past few months of news, you'll see that two power plants they sold in 2005 were sold *at a loss*, and those losses lowered the company's EBITDA. Chances are that this scenario would happen over and over if they had tried to do what you describe.

Like I said, the company is in this situation for many reasons, and most people think that it is long overdue. If the company had reorganized two years ago, perhaps it could have salvaged more value for bondholders, and even stockholders. By waiting so long, they just let the wounds fester and the legal problems mount.

You gotta get past the idea that a low-priced stock is automatically inexpensive. When the stock was around $3.00 -- a couple of months ago -- I suggested that anybody owning Calpine should sell it, and for every 100 shares of it, they could buy 1 share of Google (GOOG), which cost about $300. Was Google "expensive" at $300? Nope. Anybody who had taken my suggestion would be up more than 25% right now, because GOOG is over $400. If they sat on Calpine instead, they lost about 90%.

Hope this helps explain things.

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Author: qazulight Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10835 of 10845
Subject: Re: Is Calpine a Buy at 30 Cents? Date: 12/20/2005 8:15 AM
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I have gone over the annual and quarteries. Not the numbers from Yahoo, the annual report from Calpine. It is important to read the entire thing. Then read all of LittleChaps post for the last year. Calpine stock has a value of negative 3 dollars per share. If you can pick up unsecured debt and want to take extreme risk. Pick up the unsecured debt for 30 cents on the dollar. The only reason Calpine stock is worth 30 cents a share is that the people who have shorted it, have to buy the stock to return to the owners.

Cheers
Qazulight

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Author: CM001 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10836 of 10845
Subject: Re: Is Calpine a Buy at 30 Cents? Date: 12/21/2005 4:26 PM
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Actually, I am owning some unsecured debt of calpine. I am planning to take a tax loss ( by writing off) my entire unsecured bonds. Calpine has one of the complicated capital structures. Its myrid first and second liens, project financing leaves very little for the unsecured debt holders. The problem is significantly compounded by the hedge funds holding the secured bonds. They will not be going for realistic, just solution. They will force the company to sell the assets to pay them. In this high priced natural gas market the calpine plants will be severaly under-valued. Also the fact that so many calpine plants will be in market also not going to help. I am waiting for the unsecured bonds to quote around 10 cents on the $, then I will gamble $1000 on that. Personally I still believe the unsecured debtors may not receive anything.

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Author: CM001 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10837 of 10845
Subject: Re: Is Calpine a Buy at 30 Cents? Date: 12/21/2005 4:29 PM
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The shares are woth 0 cents. The only person in USA who can think of buying the shares to make any difference in this company is Warren Buffett.

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