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  • short_is_good_baboly short_is_good_baboly Sep 2, 2002 7:08 PM Flag

    Aes+Aee+DOJ= The Process.

    The sky is not falling because of DOJ but it is falling because of the market and AES being over valued compared to other energy companies. When MIR is around $3.75, DYN around $2 and WMB around $3 then AES should be lower than $3.
    Now that the bad newses are coming left and right, then AES may break its support levels and heading to lower levels.

    By the way, I'm not short on AES and I really feel bad for longs who bought recently. I hope AES can pass Tuesday with not that much drop. Tuesday will be a test for AES to prove itself. If AES can stand the pressure and stays above $2.70, then it deserves a consideration.

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    • short, you also bring up a good point about DYN, MIR, & WMB....
      the mkt has really taken them all down (plus ILA) lately. I'm beginning
      to get pretty discouraged because these bounces aren't holding....I've made
      some decent $$, but seem to get caught in the downdraft too often, and
      it's likely that I'll get another haircut Tues IMO.

      • 1 Reply to mean_mr_mstrd
      • First, get some rest. You make better decisions when you're rested and fresh.
        Second, do not sell at first hour of trading since a few panic investors may send it down sharply. It will rebond back to a reasonable price when bargain hunters start buying.
        If AES closes below your target price of $2.80, then you may see more lower prices on Wednesday and Thursday.

        Good luck

    • short, that is my realistic outlook, too ($2.70 -$2.80 support to stay long).
      In about 14 hours we'll know what the Street thinks.

    • praisethelordandpasstheyakturds praisethelordandpasstheyakturds Sep 2, 2002 9:10 PM Flag

      You seem to be mixing your companies a bit with your valuations. MIR, ILA, WMB, DYN are all in (or just got out of) the energy trading business. Because of this there are potential bombs in the capital structure. Their valuation thus reflects this. AES does not do trading. There may/may not be bombs around but they are much more out in the open. Its valuation reflects this also.

      It is an open question as to how much these companies will make from trading/risk management in the future. The exception is ILA of course who decided to get out of the biz all together. This uncertainty as to future earnings further distorts the multiples that these stocks command. I agree that at 2X earnings, MIR is undervalued. However, it is taking things a bit too far to say that AES has to drop from 2.5X earnings to 2X earnings for this reason. MIR and DYN also have the problem of books that need to get certified. A problem AES does not have.

      Overall, I think that MIR and AES are the best of breed down here, but they are different companies doing different things. They need not be valued exactly the same.

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