Tag: AT

Atlantic Power – after the buyout

It’s always interesting to see what happens to companies after they get bought out. It makes you wonder whether the price you are receiving is well-deserved or not.

In the case of Atlantic Power, they were bought out for approximately US$270 million plus the assumption of debt (not a trivial amount, roughly US$560 million).

I was just doing some checking up and noticed that Innergex bought the Curtis Palmer hydroelectric project. They paid US$318 million, which implies an EBITDA multiple of about 7.5x.

This was the gem of Atlantic Power.

I also notice they inked a deal with New Jersey to decommission their only coal plant (a 40% economic interest) at Chambers effective May 2022, where they would have received a capitalized value of the remaining power purchase agreement. This PPA was set to expire in 2024. I’m not sure exactly how much the payout was, but I would estimate it would have been around US$80-90 million.

This leaves 19 projects remaining, consisting of biomass, natural gas and hydro generators.

Atlantic Power was a very interesting company to analyze, and run by top-grade management that I would follow in a heartbeat if they decided to manage another public company.

Tax-loss selling / Atlantic Power

One obvious tax-loss selling prospect was Atlantic Power (NYSE: AT / TSX: ATP).

I can see people thinking to themselves… “I’ll crystalize a loss today, and then 30 days later after the wash sale period, I’ll buy back!”

The market has ways of tricking people:

Today was the highest volume day (over 2 million shares on the American exchange) since June 26, 2020 (which was another conspicuous end-of-quarter date) where over 5 million shares traded.

Days like today tell you what the true liquidity of the stock is.

I’m guessing some portfolio managers are trying to dump this out of their portfolios because it has been a dog on price.

Better times will be had ahead in 2021.

AcuityAds Holdings – Part 2

Merry Christmas and Boxing Day everybody.

I can’t get enough of looking at AcuityAds (TSX: AT), which is one of the best TSX performers of the year.

I gave some brief thoughts back in October, questioning the $200 million market capitalization, but fast forward a couple months and look what happened – they quadrupled again!:

Look at the huge amount of volume since December 14th (quadruple over the previous few months of trading). Obviously this got on the radar of the daytraders and pancake flippers, but the straight-line accumulation since July looks to be a steady algorithmic “buy a little bit each day” without regards to price.

On November 16, 2020 the company did a bought deal offering (roughly 3.8 million shares with greenshoe) at $6.10, partly from the treasury and mostly from insiders.

Even the insiders sound surprised at all of this price action, which they been selling willy-nilly since September for roughly $3.50/share. One insider recently got out at $20.69/share, which was pretty damn good market timing considering he cashed out 500,000 shares out of his 542,462 share ownership at the time of sale.

Just imagine if you were one of those people that purchased the stock on December 21st for $22/share. Right now you’re sitting on a loss of 22% for four days of effort.

This is how volatility looks at market peaks. I’m not saying this will not go any higher and resume the course along the blue line that I drew on the chart above. But it is instructive how these kinds of stocks trade.

Note this post is devoid of any fundamental analysis of the company itself – I have no idea whether their technology warrants such price action or not. It could be the case they are the next Google. You’d never see it by reading their financial statements.

Suffice to say, no positions. Also, don’t take advice from people holding the much-worse performing (NYSE: AT) either.

Availability Bias and financial markets

Seemingly half of the economy (tourism, restaurants, entertainment/sports, etc.) have been taken away with the onset of COVID-19.

So what else can people do when they are locked away in their basements? Invest in Bitcoin.

Because I mentioned Bitcoin, I will show you a chart on how much you’ve missed out:

Do you feel jealous? Resentful that others are making money while you’re not?

Just because I brought up the issue, it went into your attention and naturally you gravitate towards an availability bias – it is on your attention so it is of higher concern.

Here’s another issue.

Back on November 27th, you could have picked 9, 15, 35, 41, 42, 45, 46 on the Lotto MAX and claimed $55 million! You missed out! Feel regret? You can take solace in the fact that others did not win on the missed fortune that was available.

Or perhaps Trillium Therpeutics (TSX: TRIL) or AcuityAds (TSX: AT)?

You’re missing out!

What about Galaxy Digital (TSX: GLXY) or Electrovaya (TSX: EFL)?

Are you feeling resentful you’re not making these 500% gains in the markets?

I hope you see where I am getting at here – there are 1,340 securities on the TSX (common stock, preferred shares, warrants) that are trading. 617 of them had a positive price return. 413 of them had a price return of 10% or greater. Likewise, 416 of them had a price return of -10% or lower.

Everybody likes to talk about the grand slam home run that won the world series (here is a video for you Toronto people, albeit one away from a grand slam), but few talk about the hitter that can hit a consistent 0.300, or even worse, the person that gets called up from the minor leagues and gets 1 hit for 28 at-bats before the person he replaced got off the disabled list and said person got sent back down again.

While Bitcoin and Telsa are highly entertaining, they suck up attention in a manner that breeds resentment. Minimize the human psychology behind it by thinking about the feasibility of predicting the next Lotto MAX numbers (and all the more power to you if you can crack that algorithm!).

AcuityAds Holdings

I was looking at Atlantic Power (NYSE: AT, TSX: ATP) but accidentally typed in AT on the TSX, which is AcuityAds (TSX: AT). I saw the following chart:

They have nearly quadrupled their market value in about three months.

This got my interest (considering I’ve made the same error before in typing in the ticker, I generally saw a flat chart before). I didn’t see anything relevant in the financial statements – it was pretty sedated although they’ve been reasonably decent on cost controls from the first half of 2019 to 2020. I also tried to see why they spiked in July, but couldn’t find anything of relevance other than a remarkably increased amount of receivables collection in the first half, to the tune of about $6 million free cash flow.

Is this worth a market capitalization of $200 million? I don’t know much about exactly what they do (a bunch of fancy sounding names for using software to optimize advertising campaigns) but whoever invested in them during the Covid crisis will have made out very well.