Through The Fly's Eyes: Dynegy
Quietly Moving Higher
Left-for-dead Dynegy (DYN) is quietly coming back to life. We blogged back in the spring that investors should look at this survivor in the merchant energy trading business. Dynegy was able to bring in new management to appease bond holders and avoid bankruptcy - unlike Enron.
We blogged that investors should take advantage of a temporary price weakness resulting from a secondary to either build a position or for a quick trade. Today, the stock is selling for $6.79, for a 48% gain.
What should investors do now? Stay with this stock.
New management is becoming a leading consolidator of the merchant power business in the US. Dynegy has taken care of its money-losing toll arrangements, restructured its debt and should generate a good amount of cash in 2007.
The leader behind this effort is Bruce Williamson, a long-time executive at Duke Power. Williamson has been with the company since the early part of the decade and accomplished quite a lot. Williamson has clearly said he is optimistic about the long-term prospects for this industry and a lot of money should be made for shareholders.
While the aftermath of the Enron trail is still fresh in the minds of investors, Dynegy is building a solid foundation for growth and good shareholder returns.