Freeman

Comment Stream

Comment Stream
Filter comments by:
Highest rated Latest comments
Or filter by symbol:
  • 7 Reasons Why NRG’s Offer for Calpine is Laughable
    It’s hard to argue with your crack analysis (lol as you would say), but here’s my attempt. Kudos to actually looking through the 10K and 10Q. Did you read the document or merely look at the financial statements? Something tells me you only looked at the financial statements. It is not good enough to take operating income and add D&A to it to get EBITDA. You’ll have to spend more than two minutes on this to get an accurate number. I am glad you matched Yahoo’s calculation. You’re both wrong.

    One easy way to figure out Mirant’s EBITDA is to look at the company’s presentations. This is an accurate number (although I don’t add in interest income as that is removed from EV). If you take this number and then calculate the enterprise value, I think you’ll see that EV/EBITDA is not 17x on a trailing or forward EBITDA basis. It’s absurd that you still maintain it trades there. And make sure you are using trailing or forward multiples consistently. My guess is that you’re attempting to calculate where Mirant and Dynegy are trading based on trailing numbers and then applying that number to Calpine’s forward EBITDA estimates. That won’t cut it, tough guy.

    FYI – There’s something called the futures market. If you look on Bloomberg you can get natural gas prices going way out into the future per this market. That’s a good starting place for estimating future commodity prices. That’s how you calculate a DCF.

    I tell you what - show me your calculations and I will tell you where you’re wrong. You seem like a royal jack*ss, but I will do it anyway. And why would I tell you where I work? I've already wasted too much time trying to educate you.
    Jul 14 19:47 pm |Rating: 0 0 |Link to Comment |View article
  • 7 Reasons Why NRG’s Offer for Calpine is Laughable
    Good luck investing if you're using yahoo finance to calculate your EV/EBITDA multiples. Open up a 10K tough guy or read Mirant's and Dynegy's conference call transcripts. Maybe try looking at their guidance. If you're looking for a short cut read some of Citi's power research.

    NRG's hedges are clearly below market, but when you calculate a DCF you use forward cash flows as well as the current period's. That means NRG's "open" EBITDA should be factored into its intrinsic value. This "open" EBITDA is far higher than the company's 2008 guidance.
    Jul 02 09:06 am |Rating: 0 0 |Link to Comment |View article
  • 7 Reasons Why NRG’s Offer for Calpine is Laughable
    As a professional investor, I normally do not comment on these sites, but I will make an exception in this case. There are too many inaccuracies not to. Plus, my father-in-law reads these things and is often swayed.

    I am knowledgeable about both NRG and Calpine and the industry. FYI – Mirant and Dynegy don’t trade at 17-18x EBITDA, they trade far lower, so check your numbers or look at analyst reports. You say that Calpine's fleet is younger than NRG's. That is certainly true, but coal and nuclear plants earn far more than natural gas units, especially in a rising natural gas price environment. As such, coal and nuclear plants are worth far more than natural gas plants, even considering carbon legislation. Look how much KKR and TPG paid for TXU Energy.

    To truly understand the earnings power of each company, you need to understand the sensitivities to commodity prices. NRG benefits more than Calpine from rising natural gas prices and Calpine benefits more than NRG from expanding heat rates. Natgas has skyrocketed and the expansion of heat rates could be slowed by a recession or new low cost supply additions. NRG's current EBITDA is encumbered by bad hedges, so its misleading to value the business using those numbers. If they reset these hedges (like they did once before), the will generate almost double the EBITDA of Calpine. Even if they don’t reset the hedges, the earnings power of NRG will become more visible as the hedges expire in the coming years. Again, they will make far more money that Calpine. So you tell me which business is worth more? And CO2 legislation does not bridge the gap!

    So to all Calpine shareholders out there - keep your company. We, as knowledgeable NRG shareholders do not want it. If I wanted to own the company, I could buy it in the open market like you all did.
    Jun 25 08:10 am |Rating: 0 0 |Link to Comment |View article

Freeman's Comments Stream Stats

  • 3 Comments, 0 , 0
  • Total Comment Stream rating - = 0