On 1/31/13 the NAV was $16.02 and CH closed that day at $15.78, a 1.5% premium. On 1/31/14 the NAV was $9.20 and CH closed that day at $11.62, a 26.3% premium. During this period of time the NAV declined 42.5%, yet there were people out there who were willing to pay such a premium for this awful performance. For those that are willing to buy CH at this kind of premium, I would like you to know that I have a bridge for sale. I wonder what the NAV is today ? With the declining dividend and the risk involved (as the Chilian economy continues to slide downward) I would not consider CH unless it were at a steep discount to its NAV.
Sentiment: Strong Sell
Mr. Saville needs to step down. He is not fit to lead, having lost an entire $13.5M investment in less than a year. An aggressive stock buyback should have already commenced. It would appear to me that Accretive Capital agrees with me that if nothing is done $2.50/share is the next stop. I have been in this stock for longer than Accretive Capital.
The forward annual div. is now $.28. At that rate $2.50 is an appropriate price for the stock considering the risk. Be patient and you will be able to get this at a much lower price than today.
I am sorry for you that the cost basis for the shares you hold is substantially higher than the current market price.
You are looking at technical issues rather than the bigger picture. The next event that will set up the forward price of CIG will be the dividend announcement for 2014 based on 2013 profitability. But of course, a futher drop in the value of the Real or public unrest could undo everything.
Argentina. In 2002 the then president of Argentina froze electric rates and that freeze is still in efect today. As a result there has been little investment in expanding and maintaining the electrical grid or in maintaining or expanding the generating plants. Today rolling blackouts are the norm. Recently a blackout in Buenes Aires left some residents in the dark for two weeks. Now comes forward the Brazilian government, the majority owner of CIG, to put a feeze on electric rate increases that had previouly been agreed to. The government says they will make up the difference to CIG if this causes them a loss. How do you think they will come up with the money for this proposed bailout ? You can bet the prime source will be the dividend !
The inflation rate in Argentina is 30%, Brazil's is 5% and projected to go to 6 to 6.5% in 2014. At some point the Brazilian government will lose the rains on inflation. Yes, Brazil has stepped onto the moving sidewalk along with Argentina that is now carrying them to where Venezuela is now.....being a failed state.
Short CIG !
The stock is trading at the same level it was at last Feb. The dividend is the same. Why did the company get into the natural gas business if not to increase shareholder value ? Next month they will report the quarter's vital statistics. Can we expect something positive for the shareholders ?