KWH.UN.to +.13 to C$8.69
Posted: Tuesday Dec 1 1:14:44PM 2015
Crius Energy Trust is a Canadian Trust operating in the US. They provide energy services in deregulated states. In those states, customers can buy power from various sources instead of regulated utilities. Usually the power still comes from the same source but the billing is handled by an intermediary like Crius. Then Crius has to negotiate purchasing the power and hedge themselves to protect whatever margins they have.
Crius is a Keith Schaefer pick. He likes it because they are expanding using a pretty compelling formula. They negotiate with partners that already have a large customer base within the state to sell power using the existing company's name. For instance, they have agreements with Comcast to market power to their clients in several states. They are expanding into several deregulated states using the name Comcast Energy. They offer the convenience of one bill for power and cable services. In some cases, they offer fixed price power for a period of time to attract new customers.
They give Comcast a piece of the revs over time. The payback is long term and the margins aren't huge. In addition, there is competition in these states and turnover of customers is high.
BUT in addition to the long term payback of low margin power customers, there is a much higher margin potential. Solar power is attractive in the US and CRIUS gets a much bigger pop from cross selling solar to their customers. They either get a big piece of the installation fees and sharing of the savings over the long term OR they partner with a solar firm that installs the solar units on the customer's roof and everyone shares in the power produced.
This is a marketing company that is rapidly growing. They recently made a deal with Sungevity to do their solar work. Solar City was their first partner but they are so backed up that many sales got cancelled because Solar City was unable to install in a reasonable timeframe. The Sungevity deal won't take effect until 2016 so Q4 will likely be mediocre.
The fiinancials show the rapid growth. The company does have positive cashflow and pays a high dividend of around 8%. The percentage of payout is high but seems sustainable if they can continue their high growth. The main attraction is the growth in solar going forward. US tax credits expire at the end of 2016 so this upcoming year is crucial for Crius to install as many solar systems as possible.
They are debt free and have been sucessfully raising money due to their high dividend policy. They need to frequently raise money to "buy" new customers from utilities or companies like Comcast.
Here is the latest quarterly report:
I originally bought a few months ago and the stock ran up to almost C$10. There has been a recent pullback and I have been adding as the price has declined.