Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of electricity company Dynegy (NYSE:DYN) jumped as much as 10% today after it received regulatory approval to acquire new assets.
So what: Dynegy has gotten FERC's approval to buy Duke Energy's (NYSE:DUK) Midwest commercial and retail business as well as acquire Energy Capital Partners' EquiPower Resources Corp and Brayton Point Holdings LLC. The deals total $6.25 billion and will add 21 power plants to the company's asset base.
Now what: While companies like Duke Energy are divesting their wholesale assets, Dynegy is gobbling them up en masse. It's a risky move given the weakness in wholesale prices resulting from additional renewable energy sources and demand response mechanisms around the country, but the Midwest and Northeast, where these assets are located, may be somewhat insulated from those market threats for the time being. Given the weakness in wholesale markets, I look at these deals with some skepticism and would rather be on the side of disrupting the status quo with new energy sources than buying old energy assets and hoping their financial returns pay out long-term.