CLP is having an issue today, down more than 2% thanks to a press release.
They have entered into an option arrangement to sell a large portion of their properties at some later date. Investors are taking this to signify a bad quarter and liquidity needs.
It doesn’t have to.
In the release, the executives point out that they are keeping in mind the age and condition of their properties, and their desire to hold the most desirable locations. There are plenty of other strategic issues, like keeping your vast network of properties in localized pockets to cut down on maintenance arrangements or management costs, that may be at play here.
Plus, in the release, the company has said it has every intention of rolling over all proceeds into new properties, yet to be selected.
If I were them, I’d use this guarantee to begin the selection process. It’s more ideal than selling first and then trying to roll the funds over. With the option, if they can line up potential purchases, they will know exactly how much money they have to spend. A few right to purchase options, and they can arrange a massive deal with otherwise very illiquid and volatile assets.
I am still convinced the company is doing everything right. I have no reason to suspect anything less than a stellar quarter.
I added to my position conservatively, for $21.11, looking for a large reversal later this week.
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