I recently dug up a Fool commentary on Motley Fool Income Investor pick National Grid
Katsenelson, a portfolio manager and business school lecturer who has also contributed great write-ups on Telecom New Zealand
The company recently hit the newswires with an announced sale of its wireless business to an affiliate of Aussie acquirer Macquarie. The gain on the sale is staggering: National picked up the wireless assets from Crown Castle
If the company is following the golden rule of share repurchases, then management must think that National Grid's shares are undervalued and there is no better use for the cash. I must admit to being a bit wary. Since Katsenelson published his piece, National Grid has more than doubled the solid performance of the Dow Jones Utilities Average, and sits over 60% higher today. Its forward P/E has inched up to 16.3, versus the S&P's 17.4.
That forward multiple of 16.3 seems like quite a lot to pay for a company projecting modest results in 2007. I risk repeating Katsenelson's error by urging caution here, but I'll take an error of omission over an error of commission any day. As we know, there are no called strikes in investing. I prefer to wait for a fat pitch.