Tuesday 24 November 2015

Stock bought November 2015: RWE

RWE, a German electricity provider

Actually my plan was to buy a completely different company in November. I wanted to get that company at a very nice price and I therefore placed an order at a price that obviously was far too low and I have still not managed to buy the company and yet that money is blocked for doing anything else unless I stop the order and pay 4.5 € for doing so. This has been driving me up the walls. Each day I have been login into my broker account to see if the darn order has been taken or not and of course it have still not happened.

Happily I had a little bit more money on the account that I could use so I decided to use that now upon yet another massive share price drop for RWE. The CEO said (or at least it was interpreted like that by the journalist) that RWE has no money for making investments and they need to make investments to grow. This then brought up the fear of that RWE might be forced to issue more shares so that they can grow. If a company decided to issue more shares so that they get money to grow then I have no issue with this. I do not like when a company issues more shares because A) they are not generating enough money on their own to pay for operational costs or B) because otherwise they will go bankrupt because loans need to be paid back. There are probably a C and a D also but I can not think of them right now.

Anyway... due to this the share price dropped again by -5 to -6% and then I decide to pick up more shares in RWE.

I therefore bought 95 fresh shares in RWE at a price of 10.823 € or 1,036.08 € including fees in total. I now hold 330 shares in RWE with a total investment of 4,585 € or 13.89 € per share including fees.

To find out more about RWE please take a look at analysis of RWE 2015.

If you want to see my current Stock Portfolio then click on the link but the portfolio will not be fully updated until the end of the month.


Matthias said...

I don´t see a bright future for RWE and EON. Even if the nuclear issue is solved, coal is just coming around the Corner.

Netherlands plans to shutdown all 11 coal plants till 2020, big funds like Allianz will not invest in coal energy anymore.
So you can imagine what´s next for RWE and their product mix would bring up nightmares for me as Investor.RWE has 2 coal plants in netherlands.

Stromerzeugung 2014: 208 Mrd. kWh
77,2 TWh Braunkohle
48,3 TWh Steinkohle
31,7 TWh Kernenergie

Fredrik von Oberhausen said...

Hi Matthias,

I know what you mean. The thing is this... it is very hard in democratic countries to force companies to close down their business and to cease their assets. Usually, from what I have seen, the countries are forced to BUY the asset (at market price) BEFORE closing it down.
This cost ends up on the taxpayers shoulders that in the end were forcing the politicians to take the decision so it is ok.

Classical rules apply... If you want something you pay for it. This something can mean it to go away but you still pay because you are the one wanting something.

These giants will probably then move more and more into hydro-, solar- and wind-power plants. Those are (solar & wind mainly) today run by less successful companies that can be bought fairly cheap especially once the subsidies goes away which today are part of the reason for their survival and possibility to keep up their technological development.

So I understand that many are worried which are pushing down the market value of E.On, RWE, Cez etc but I do not fear it. Electricity will be needed far, far into the future.

Once we manage to develop fusion. Where will those fusion plants be? My guess for the future would be that they would than be placed inside the today run nuclear plants. Why? Because there are already intense safety systems AND the electrical infrastructure to go with it.... but... well.. that is a bit further into the future... in between we will have the wind and solar etc. and we will need to start to consider what we can do with unlimited "green" electricity. Will you still turn out the light when you leave the room? Will a massive electrical SUV in a city be something considered as something bad which it was considered as not that long ago... OR could it even be considered an asset since it would be able to "store" so much electricity in its large battery?

Well... those are just thoughts of the future which very rarely comes true but still it is influencing how and what we invest in.

Fredrik von Oberhausen said...

Bunk! They decided to cut the dividends. I start to doubt that I will manage to have a dividend increase during this year compared to the previous one... too many of my companies are cutting the dividends.