Friday, July 8, 2011

Im Buying: Contact Energy Ltd

I have finally put my money where my fat mouth has been over the last few months 1, 2, 3, 4 and bought Contact Energy Ltd [CEN.NZX] shares. I haven't bought any shares since I went mad in mid 2009 and spent a good $70,000.00 on cheap shares in AIA (1,2) MFT, WHS and MHI.

I have been a patient little sod for the last few years - regular readers will notice the plethora of CEN posts I have made in that time - watching for my entry point for Contact and below $5.35 was my trigger point . I managed to pick up 9000 for $5.34 and am very happy with the price.

The CEN investment is not part of the Share Investor Long-Term portfolio I have a different strategy for this one that I cannot go into here but readers will be able to follow this investment on a daily basis as it fluctuates in value.

I bought primarily because the stock is cheap and I outlined that yesterday in a morning post (I made the CEN buy at 4.45pm) and because of the distinct possibility that majority owner Origin Energy Ltd [ORG.ASX] are keen to make a bid for the company.

The money I used was borrowed and at 5.75% the greater than 6 % gross dividend yield means that I am still ahead even if I have to hold for a year.

Contact Energy @ Share Investor

Share Investor Portfolio 2: Value @ 7 July 2011
Share Price Alert: Contact Energy Ltd 4
Share Price Alert: Contact Energy Ltd 3
Share Price Alert: Contact Energy Ltd 2
Share Price Alert: Contact Energy Ltd
Stock of the Week - Reprise 5: Contact Energy Ltd
Origin Energy asset stripping Contact Energy
Stock of the Week - Reprise 4: Contact Energy Ltd
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Long Term View: Contact Energy Ltd
Stock of the Week: Reprise 2 - Contact Energy
Stock of the Week: Reprise - Contact Energy
Not so fast Davy Boy
Still Watching Contact Energy
Beam me up Davy
Stock of the Week: Contact Energy
MarketWatch: Contact Energy - June 2009
MarketWatch: Contact Energy - Jan 2009
Contact Energy looks bright during dark times
Share Investor's 2009 Stock Picks
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c Share Investor 2011


  1. LOL, I couldn't resist and just bought some CEN. I hope this takeover does happen eventually. Any idea as to when it can happen... if it does?
    I'm guessing Origin would at least want to take the dividend in September before doing anything.

  2. You and me Rafa, you and me. Time till a move? I expect it this year but am willing to hold at this price for the medium term. 1-2 years.

  3. Thanks for your views Darren.
    The share price has been dropping lately, below $5.20.
    Is this a good or bad thing?

    i.e. The lower the share price, the easier it is for Origin to make it's move.

  4. It dipped below the current share price in intra day trading a few weeks back and finished above $5.20 but more operational news out today was the loss of around 7000 customers in June. Margins and costs look better as well as electricity used.

    If I had some spare moola I would have another go for another 10000 or so.

    There is this crazy notion within Contact that Origin are running the business down on purpose just to grab it cheaply. Why you would wreck a business just to do that I don't know. Long-term though those taking business off Contact are doing it at a loss or very low margin and may well pay for it when they start to have to pay for more generation, possibly off Contact itself.

    Just relax though, nothing to panic about.


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