Thursday, June 28, 2012

Progress Energy and Risk


I've blogged about Progress Energy (PRQ) in the past. I owned the natural gas producer for years and even as the value of natural gas tanked, so to speak, I upped my holdings of this natural gas producer. A very gassy energy play, many argued PRQ was a very risky investment. They would have been right -- on paper in a general sense. But, as I pointed out in one of my earlier posts:

"I've got the money to buy some PRQ. The yield is something that I can live with, at least for awhile. The stock offers the potential of offering an exit point that recoups all my investment and then some." 

I noted in my old post that "PRQ has proven to be amazingly resistant to the downward pull of the bear." When a stock has strong legs and holds its own as its sector crashes around it, one has to think that something is adding support to this story. It was no secret that a lot of this strength was coming from a link between Petronas and the excellently run Canadian gas producer.

Today my faith was vindicated. Petronas, Malaysia’s state-owned energy company, struck a $5.5-billion takeover deal with Progress Energy Resources Corp. It was time to sell. I sold almost all my shares at $20.07 and some more at $20.06.

I was not too concerned with owning Progress Energy. I did not feel the risk was all that great. A good dividend, a solid company and a good chance of something very good happening in the near future.

I almost wish that I had held more PRQ but I didn't and that's O.K. Too much money in any one place, no matter what the place, is risky.
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One thing about blogging, you put your ideas down for all to see. Later you can go back and say, "See! I was right!" (Or, damn! Was I ever wrong.") Here is what I wrote about PRQ back in January of this year.

"PRQ (Progress Energy) - This would be a big drag on my portfolio performance if it were not for the fact that I have less than two percent of my money invested in this natural gas producer. As the prices have come down, I have averaged down, and I believe an exit point will open up near the end of this year or sometime next year. I may be down thousands but I'm not worried over the long term and it pays enough of a dividend to ease the pain while I wait. If it declines in value anymore, I may buy a few hundred more shares. Yield is 3.6%."
And yes, I did buy more.

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