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Hedge Funds’ interest in Calpine

Alexander Richter 8 Jan 2009

An interesting article, by Right Side Advisors, talks about that "hedge funds have seen a strong beating with redemptions topping maybe around US$ 100 billion in 2008. The funds have been selling a lot of their stock, but according to this recent article, they haven´t been selling stock in Calpine Corp.

An interesting article, by Right Side Advisors, talks about that “hedge funds have seen a strong beating with redemptions topping maybe around US$ 100 billion in 2008. The funds have been selling a lot of their stock, but according to this recent article, they haven´t been selling stock in Calpine Corp. (NYSE:CPN), with a US$ 3.9 billion market capitalization.

Basically more than half of the company is controlled by hedge funds today. Luminus Management,

Harbinger Management and SPO Partners together own in excess of 50%. Alone in the last quarter of 2008 funds owning at least 10% of Calpine bought US$ 230 million of its stock.

The article goes on saying, that this was “a lot of investor attention for a company that emerged from bankruptcy last year and whose share price has fluctuated between a 52-weeks high of $23.36 and low of $6.35. Indeed, the stock has steadily declined since NRG Energy (Ticker: NRG) last May made an unsolicited, and ultimately unsuccessful, all-stock bid for Calpine worth about $22.70 a share at the time.

So, what’s the attraction? Calpine controls more than 23,800 MW of generating capacity through interests in 60 natural gas-fired power plants throughout the US and 17 geothermal power plants in California. Indeed, it’s a top geothermal producer, owning 90% of the plants at the Geysers in California, the largest geothermal facility in the country. …. This was a major attraction for NRG, which had it been successful in its bid for Calpine would have greatly strengthened its position in the California market, where renewable energy is likely to be the only meaningful way to expand for years to come.

Source: Right Side Advisor

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