Big Mike's Contrarian Investing Blog

Thoughts on TXU

I think there's someting just a little bit humorous about the $45 billion leveraged buyout of TXU Corp (NYSE: TXU). The new owners say they are going to help the environment buy canceling plans to build eight of 11 new coal-fired electricity plants. As if anyone would spend $45 billion in order to help the environment. Obviously it's just about pretending to be green, and at the same time, with fewer electricity plants they can charge more money for the electricity. A win for the new owners of TXU. A win for the current shareholders. Who gets screwed? Consumers of electricity.

Natural gas followup

The astute will observe that my recent investments in Edge Petroleum and Harken Energy have already lost money. what happened?

We have had good natural gas withdrawals, and the temperature in the northeast, the main gas using region of the country, remains below average for this time of year although no longer super-below average. The market just isn't excited about it.

For those who didn't buy two weeks ago, this is a good time to get in. There is still a long term bull market for natural gas, and eventually we will have cold winter that really sucks the gas out of storage. Furthermore, increasing reliance on natural gas for electricity bodes well for prices.

Buying Edge

Today I purchased Edge Petroleum (NASDAQ: EPEX). In celebration of the accuweather.com forecast:

While temperatures may improve slightly over the weekend and early next week, it'll continue to stay below normal. By the middle of the next week, another round of harsh cold may be around once again because yet another arctic blast is headed down the pipeline.

After my worst year ever in the stock market, things are finally looking up. The prices of gas stocks hasn't risen yet in response to the coming big gas withdrawals.

You would think that if the market were efficient, this would already all be factored into the stock prices. But somehow they aren't.

Go gas

I haven't posted here in a while, so probably no one is reading, but I was so excited to see that for the first time in a long while there is less natural gas in storage than there was a year ago.

And next week's storage report will probably show the biggest natural gas withdrawal ever. And the weather forecast shows the temperature staying colder than average for the next two weeks.

I'm so excited I bought another 40,000 shares of Harken Energy (AMEX: HEC). At 48 cents it's such a bargain.