Share Price Alert: Contact Energy Ltd 2

Contact Energy Ltd [CEN.NZX] shares plunged yesterday on higher than average volume due to more bad operational data and a loss of 20000 customers over the previous 12 months. Three years ago they had well over 520,000 customers and now it is down to just over 450,000.

Every possible thing that could go wrong with an electricity company for May 2011 has gone wrong and CEN shares were marked down 18c or 3.13% to finish trading near a 52 week low of $5.57.

At this price level the share has found support more than a handful of times over the last few years and rallied above 6 bucks.

To be fair the news out today was so poor this low could be tested but just be mindful of the trajectory of the share price even in the last 12 months (see chart above).

There are rumours that majority owner Origin Energy Ltd [ORG.ASX] are keen to make a bid for the company and are mismanaging the company intentionally poorly so the share price is affected and they can come in and make a cheeky bid for the 47% odd of shares they do not already own. Its sounds an odd thing to do but nevertheless this rumour is currently doing the rounds for a number of good reasons that will remain between me and my keyboard.

Buy near the current price and because of the buy-out rumours.


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The Warren Buffett Way by Robert G. Hagstrom Buy new: $19.54 / Used from: $12.94 Usually ships in 24 hours

c Share Investor 2011