- Sempra Energy (SRE -0.1%) is steady following yesterday's 15% rally after Elliott Management and Bluescape Resources said the company was undervalued and called for a strategic review.
- Bloomberg's Mark Chediak and Jim Efstathiou say the call for an SRE overhaul could serve as a warning shot to other utilities that have sought profits outside their core businesses and whose shares have lagged peers - including Dominion Energy (D +1.8%), PPL Corp. (PPL +2.4%) and Black Hills (BKH +1.6%).
- Elliott and Bluescape want SRE to sell Mexican and South American businesses and spin off its U.S. liquefied natural gas unit; last year, the two hedge funds went after NRG Energy (NRG +3.2%), which became one of the S&P 500's best performers of 2017.
- SRE’s U.S. utilities division, consisting of San Diego Gas & Electric, SoCalGas and Oncor, would have a combined value of as much as $30B, according to Elliott and Bluescape, which say the company’s conglomerate structure holds “no compelling strategic or financial rationale."
- “At the end of the day, we would expect that Elliott Management and Bluescape could have a similar impact that it has had with NRG,” says Shahriar Pourreza at Guggenheim Securities.
- ETFs: XLU, UTG, VPU, GUT, IDU, BUI, FUTY, RYU, UPW, FXU, SDP, FUGAX, JHMU, UTLF
- Now read: Utilities: Timely? Sector Comments Plus 3 Stocks To Consider
Original article