Fortis (Symbol-FTS)

[Pickles]

What's going on? Fortis just fell to $17.00 a share!!!

[Shakespeare]

I managed to get on RBCDI (which is dreadfully slow right now) and got a current quote of ~$26 before the site errored out.

Added: From RBCI just now:

pen 27.00 P/E Ratio (TTM) 17.5x
Last Bid/Size 26.02 / 4 EPS (TTM) 1.58
Last Ask/Size 26.25 / 17 Next Earnings --
Previous Close 27.00 Beta 0.22
Volume 778,095 Quarterly Dividend 0.2800
Average Volume 625,905 Dividend Yield 4.30%
Day High 27.00 Ex-Dividend Date 4 Aug 2010
Day Low 16.65 Shares Outstanding 172.2M
52 Week High 29.32 # of Floating Shares 170.478M
52 Week Low 16.65 Short Interest as % of Float

So somebody must have got burned on this.

[Pickles]

Something really wold happened with Fortis but now it is back to normal. I could have bought it at $16.65 but hesitated because I had no idea why it had plummeted.

[Peculiar_Investor]

Something really wold happened with Fortis but now it is back to normal. I could have bought it at $16.65 but hesitated because I had no idea why it had plummeted.

Check out viewtopic.php?p=382176#p382176, there appears to have been a market event this afternoon.

[Shifty]

Something really wold happened with Fortis but now it is back to normal. I could have bought it at $16.65 but hesitated because I had no idea why it had plummeted.

As I posted in the other thread, TRP did the same thing, dropped to $30, then back up to $35.xx

[Shakespeare]

And now the car has crashed. [*]

* CAR.UN

[morleymarkle]

This is the most bizarre thing; I literally bought 100 shares at 26.50 today for a long term hold this morning, and then if fell off the table. Globeinvestor is reporting a LOD of 16.65 for Fortis, although it's now back up to around 26.00.

Trans-Canada has done something similar (although not nearly as severe) with a LOD of 30.00 or so, while now trading back at 35.00.

Does anyone has access to a Level 2 so they can see how many shares trades at low prices? Is it negligible volume, or did something really odd happen?

Thx...

Edit: Sorry, took too long to type; I see someone has already mentioned TRP.

Further edit: REF.UN isn't looking too healthy either. System issues at TSX?

[investor99]

What an opportunity on FTS.

[morleymarkle]

I suppose it's a good argument for always keeping a stink bid in the queue.

Edit: Oh, and IPL.UN seems to have done the same thing as well.

[Michael D]

How is everyone feeling about current valuation of this company? Recent dividend hike of <4%, and I have P/E over 20 on a 'utility' type holding company.

I have a longer investment horizon and am considering taking my gains and looking for something with better growth/dividend growth prospects. I do have good exposure to utilities, this may warrant a reallocation. If I move out of utilities, FTS might be the first to go.

[bpither]

I bought Fortis and Emera in Feb/March '09. Yesterday's hike resonates with their 38 year pattern rather than reflective of the past couple of years. Emera has been better to me. Both are up 50% on my entry point and I have no intention of selling either.

[JaydoubleU]

I've been on hold with the utilities since 2009, reasoning that upcoming inflation/a rise in long term rates will whack them. I've contemplated taking a few profits from the likes of FTS.... but it's hard to part with a winner

[kenwood]

Fortis makes $1-billion offer for N.Y. utility

http://www.theglobeandmail.com/globe-in ... le2344517/

[Shakespeare]

Since there has been some negative discussion of FTS (in which I have a modest holding) Post and later posts, this may be interesting:

Fortis primed for big boost in earnings, dividends - The Globe and Mail

“We expect Fortis, through a combination of acquisitions and organic growth, to significantly boost its assets, earnings and dividends in the next few years,” said Mr. Nagaraj. He forecasts revenues to grow to $5.1-billion from the current $3.7-billion by 2016. And he expects the utility’s dividends to grow from $1.20 to $1.52 over that same time frame, representing compounded annual growth of 9 per cent.

[bpither]

In my experience a company with regular dividend increases - as long as they beat inflation - is the best tax efficient retirement income I know of in a non registered account. Fortis has been brilliant over the past 40 years ... a little slow lately but no reason to sell.

[Shakespeare]

New 52-week low.

Dividend increases have been modest but continuing. Put 50 in my TFSA.

[schmuck]

New 52-week low.

Looks tempting and makes me wonder if some of these may have overreacted to all the fear of higher rates.

Drop from recent highs:
FTS -9.25%
EMA -9.70%
KEY -9.64%
GEI -9.64%
PPL -10.04%
TRP -10.84%
T -9.74%
ENB -11.83% (not exactly a high yielder, and the BC stand against northern gateway did not help)

Some of these have recovered slightly from their lows, and it seems to me that rate hikes would have to be substantial to justify the above damage.

[JaydoubleU]

Looks tempting and makes me wonder if some of these may have overreacted to all the fear of higher rates.

IMHO, not nearly cheap enough yet. The entire space was very overvalued, so aside from any interest rate scare, I think there may be some rotation going on among fund managers. FTS in particular, judging by the yield vs historical average yield of around 4.8%, is overvalued given its slow growth and high P/E.

Consider, these one month changes,

CET + 20.10%
CEU +19.3%
FCR + 16.36%
AFN + 11.54%
AAH + 10.38%

Those are just the top five from my watchlist. I own three of them The first three are oil services, a cyclical sector that was so cheap before, people like Irwin Michael were pounding the table (on SVY, among others). That being said, I am not sure if this is a major shift, or just a blip. You could be right, and the money will move back to FTS and company in a flash.

Best then to own some of both (defensives and cyclicals) and stay diversified.

[2yen]

New 52-week low.

Looks tempting and makes me wonder if some of these may have overreacted to all the fear of higher rates.

Drop from recent highs:
FTS -9.25%
EMA -9.70%
KEY -9.64%
GEI -9.64%
PPL -10.04%
TRP -10.84%
T -9.74%
ENB -11.83% (not exactly a high yielder, and the BC stand against northern gateway did not help)

Some of these have recovered slightly from their lows, and it seems to me that rate hikes would have to be substantial to justify the above damage.

Does anyone know of any research on the approximate price declines in interest rate sensitive stocks when rates rise, historically? Or maybe there are just too many, time-sensitive variables to make such calculations possible. (?)

[schmuck]

New 52-week low.

Looks tempting and makes me wonder if some of these may have overreacted to all the fear of higher rates.

Drop from recent highs:
FTS -9.25%
EMA -9.70%
KEY -9.64%
GEI -9.64%
PPL -10.04%
TRP -10.84%
T -9.74%
ENB -11.83% (not exactly a high yielder, and the BC stand against northern gateway did not help)

Some of these have recovered slightly from their lows, and it seems to me that rate hikes would have to be substantial to justify the above damage.

Does anyone know of any research on the approximate price declines in interest rate sensitive stocks when rates rise, historically? Or maybe there are just too many, time-sensitive variables to make such calculations possible. (?)

I think you're right about too many variables to make such research possible.
Although I'm looking for a correction in the broad market, I think defensive, int sensitive stocks have indeed overreacted to the scare of higher rates. Not sure how far back we would have to go for the 4.8% average yield for FTS that Jaido mentioned, but the focus of today's aging boomers is a lot different than it was 20 years ago. 45 year old investors with steady employment income had a much higher risk tolerance than retired investors who rely more on dividends for their income.
Demographics will also affect the direction of int rates as demand for credit decreases with an aging population.

Anyway, I hope the "overreaction" continues as the only stock that I have had the guts to pick up so far was more IPL.UN near it's bottom.
Very hard to go shopping when you're sweaty and shaky on a day when you're down about $40k Gotta work on those nerves of steel.

[2yen]

Schmuck, I hear you on the nerves thing. On a bright note, it does appear the market likes the recent Fortis purchase of the U.S. power utility.

[Sensei]

Hi,

To my way of thinking, rising interest rates are a short term headwind for 'interest-rate sensitive' companies. To be sure, companies like Fortis run on more debt than equity. Debt to Capital = .53% where capital is debt plus equity. That said, companies survive and thrive in both high interest and low interest rate scenarios. Utilities might be attacked in the short term, but in the long term, there are ways to mitigate the high cost of borrowing money. One would be to raise rates and I'm sure Fortis and other companies would have the full cooperation of the local authorities. Another way would be to increase equity. Another way is to reduce spending.

Fortis strikes me as a solid, but boring company that could do all of these to keep stock prices up and maintain the current dividend (at least) if not raise it. What makes me think this is that the dividend has been steady with annual increases since 1972 (maybe a couple of flat years in there). I would agree with that it is expensive and dividend growth recently has been subdued. I expect dividends for utilities to be nearer to 5% than Fortis' current 3.8% or so. When I bought Fortis several years ago, it was around there. For comparison, Southern in the US reached 4.6% last week, consistent with most other major utilities in the US.

Another point is that Fortis share price doesn't move around that much. I consider this to be an indicator of a solid company.

Disclosure: I own shares in Fortis.

[2yen]

Sensei. I really like boring. CU fits that bill as well.

[j831robert]

+1 - I too enjoy the bordom. Bought 1000 shares in May 07 at $26 and added preferreds in 08 and 09 at $19.50 and 18.80 - still sleeping soundly !

[Sensei]

Hi,

I bought my shares in 2008 or 2009 @ $24. I've had thoughts of selling this one, but in the end, I like boring, too. Emera is another boring company I bought around that time and am quite happy with.