The entire IPP sector has been destroyed lately because of Enron, CA issues, trading issues. I trade in and out of DYN AES MIR RRI WMB CPN. The only stock that has a short-term chance is CPN: a. resolved all liquidity issues b. only IPP without a CA problem c. doesnt do as much trading as DYN RRI or MIR so will not get into the same SEC trouble (I believe they stopped non-hedge related trading in Dec 2000). d. P/E of about 5 plus solid revenue growth. most importantly: great relative strength this past week compared with the other IPPs. It looks like people putting money in the IPPs are gravitating toward CPN. I have been long CPN for awhile with a cost-basis now in the 7s thanks to Febs dip and in the past few days I entered into new swing positions on AES and MIR. I am most interested in AES and MIR for the dividends on the preferred stock. For instance, I bought 5K shares of AES preferred C which currently pays a 17.5% dividend and hedged by shorting 10K shares of AES. So far, so good.
Visnhu, This is brilliant. I also trade a/b shares against the common, etc, but never in this way - hmmmm..... nitro
Right now i'm doing about a 60% hedge based on correlations I've calculated towards the upside and correlations towards the downside. I also think AES has bottomed or is close to bottoming so I hedged with a slightly bullish bias.