Sunday, August 16, 2015

Adding Alterra Energy to the investment portfolio

Alterra Power is a renewable energy company based in Canada. The company has interests in geothermal plants in Iceland, run of river hydro in Canada, and wind projects in Canada and the US. The company is cashflow positive and profitable and has several possible catalysts that could propel the stock higher.

Marin Katusa, who used to write the Casey Energy report, now offers his research for free and highlighted Alterra Power in his first newsletter. He is a major shareholder and has laid out the specifics on how this company will be looking to increase shareholder value.

In addition Frank Curzio recently did an interview with Ross Beatty, the CEO of Alterra Power. Mr. Beatty is known in Vancouver mining finance as "the broken slot machine' because of his consistent value creation for shareholders over the years in various companies (Pan American Silver, Lumina Copper).

What I find interesting about the Katusa write up is that like Katusa I also jumped the gun early when these renewable energy companies first came on the scene five years ago. I bought into the hype and lost my butt on Nevada Geothermal and Ram Power. Mr. Beatty also talks about how he learned some expensive lessons when he first got involved in renewable energy. However like any good businessman he learned from his mistakes and refined the Alterra model to where it is now. The company is growing with a portfolio of operating assets with guaranteed revenue streams. Alterra fits into the royalty model that I have been drifting to recently (Altius Minerals, Sandstorm Gold).

Alterra Power came out with earnings last week and the transcript of the conference call is worth reading. I thought this exchange on the Q&A was interesting:

Marin Katusa - KCR Fund

My final question is a reiteration from the last call. Just wondering if there has been anything on the board level regarding a dividend or what Ross' and the board's opinion is on that?

John Carson - Chief Executive Officer

Thanks for that, it's Carson, Marin. We constantly talk about when, not if we're going to be able to pay a dividend. We're looking at all sorts of different scenarios right now. I would say let's give us another quarter to come up with more definitive discussion about that subject.

A dividend announcement would lead to a revaluation upward in my view. I am adding Alterra Power to the investment section of my portfolio.

We cover over 5K calls/quarter

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