If you missed the news yesterday, American Water Works Company announced a massive trade of assets with Aqua American, ceding their Texas operations in exchange for increased exposure to Missouri.
Through their subsidiary, Missouri American Water, they acquired 11 water systems and 59 wastewater systems, a deal valued at roughly $3 million. By consolidating their assets, they’re hoping to lower their administrative costs by also being able to consolidate their staff into a smaller area.
Despite the consolidation, AWK maintains presence in more than 30 states, hardly making it a centralized operation.
Needless to say, I am pleased with the company. This sort of strategy almost always brightens my day; the management of AWK has been working hard to open up value and take full advantage of their existing structure. I don’t know if this move will significantly improve earnings, but it definitely helps and shows the men and women in charge of AWK to be intelligent and willing to continuously improve the business that has been entrusted to them.
Combine that with my own positive outlook on utilities at the moment, and I’m glad I own AWK.
Elsewhere, I continue to be up for the day (about ¾ of a percent, at the moment) despite my ERX hedge jackknifing higher. I will hold this rally with suspicion until I have better reason to trust it. I wish to directly see where the currency is going before I’m willing to relieve myself of this small, but questionable, cash position.
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In the “things that make you go hmmm” department, AWK’s volume today was the highest in over 6 months.
The trade was announced a while ago so it was old news – it’s been acting pretty wild though spiking up last week over 3% (weird for a UTE!) and then back down again, all on higher than average volume, so I don’t know what the hell’s going on…big institution selling, trying to shake out weak hands before moving higher, beats me. Still think it’s a long term winner.
I must have missed the announcement the first time around.
It’s definitely active. But so has been the entire market.
My guess is people got caught leaning to far against the dollar, so a large volume of indescriminate selling is taking place to refill the coffers.
For someone not in this investment, what is a good price point? I day trade using PPT and 12361 services but have some higher dividend stocks like NLY, PM in the portfolio. This looks like a longer term hold for either a regular account or IRA. Thoughts on trying to find a price to buy in? Thanks.
The longer your time frame, the less it matters. However, right now we seem to be trading at the bottom of the channel, if you’re into that sort of thing.
If you’re worried about the economy and think the dollar can strengthen further, then wait a week and look to see if we get a flush out.
Regardless, I think the stock can be sold higher than here.
Thanks Mr. Cain Thaler. Appreciate your insights here and in the PPT. I got this on my radar. Like the chart and the dividend is a nice bonus.
This is why you don’t fuck with these guys when they want a rate increase:
http://wvgazette.com/News/201105191317
Ha, hopefully the whole community feels it. Don’t fuck with your basic necessities, when they’re asking something so modest.