WGL
WGL Holdings Inc
Utilities, Event Driven/Special Sit, Energy
01/17/2018
Presented
| Date | 01/12/2018 |
| Price | $85.39 |
| Market Cap | $4.40B |
| Ent Value | $6.59B |
| P/E Ratio | 22.83x |
| Book Value | $29.34 |
| Div Yield | 2.39% |
| Shares O/S | 51.49M |
| Ave Daily Vol | 256,413 |
| Short Int | 5.58% |
Current
| Price | $88.74 |
| Market Cap | $0.00B |
| WGL Holdings, Inc. engages in the sale and delivery of natural gas and provides energy-related products and services. It operates through four segments: Regulated Utility, Retail Energy-Marketing, Commercial Energy Systems, and Midstream Energy Services. The Regulated Utility segment is represents the assets of Washington Gas, Hampshire, and WGL. The Retail Energy-Marketing segment is comprised of the operations of WGL Energy Services, which competes with regulated utilities and other unregulated third party marketers to sell natural gas and/or electricity directly to residential, commercial and industrial customers in Maryland, Virginia, Delaware, Pennsylvania and the District of Columbia. The Commercial Energy Systems segment is the operations of WGL Energy Systems, WGSW and the results of operations of affiliate owned commercial distributed energy projects. The Midstream Energy Services segment consists of the operations of WGL Midstream, which engages in investing in and optimizing natural gas pipelines and storage facilities in the Midwest and Eastern United States. The company was founded on November 1, 2000 and is headquartered in Washington, DC. |
Publicly traded companies mentioned herein: AltaGas Ltd (ALA CN), Avista Corp (AVA), Dominion Energy Inc (D), Great Plains Energy Inc (GXP), Hydro One Ltd (H CN), Puget Sound Energy (Public Debt), SCANA Corporation (SCG), Westar Energy Inc (WR), WGL Holdings Inc (WGL)
Highlights
AltaGas and Hydro One have made all-cash offers to acquire US-based Washington Gas (WGL) and Avista (AVA), respectively. The separate, but interestingly similar, utility deals have yet to receive regulatory approval. With some larger deals “distracting” investors in the event-driven space, the presenter sees an attractive risk/ reward setup for a bearish position on the US utilities at current levels. The macroeconomic backdrop has been deteriorating [for utilities] as interest rates rise, but both WGL and AVA are trading at tight spreads (3-4%) and have meaningfully outperformed the XLU. In his opinion, short sellers have limited risk up to the deal prices (AVA $53, and WGL $88.25), and could see meaningful gains if i) there are further delays, ii) the risk is repriced (reflected in a wider spread), or iii) either deal falls apart.
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