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Is it Still Safe to Invest in Endesa (ELEZY)?

·3 分鐘文章

Ariel Investments, an investment management firm, published its "Ariel International & Ariel Global Fund" third-quarter 2021 investor letter – a copy of which can be downloaded here. Ariel International Fund returned -4.55% in the third quarter, trailing the MSCI EAFE Net Index which lost -0.45%, and the MSCI ACWI ex-US Net Index which returned -2.99%. Meanwhile, Ariel Global Fund Investor Class returned -3.92% in the third quarter and Ariel Global Fund–Institutional Class delivered a -3.82% return, compared to the MSCI ACWI Index which lost -1.05% for the same quarter. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Ariel International & Ariel Global Fund, in its Q3 2021 investor letter, mentioned Endesa, S.A. (NYSE: ELEZY) and discussed its stance on the firm. Endesa, S.A. is a Madrid, Spain-based multinational electric utility company with a $23.0 billion market capitalization. ELEZY delivered a -20.65% return since the beginning of the year, while its 12-month returns are down by -20.90%. The stock closed at $10.85 per share on December 17, 2021.

Here is what Ariel International & Ariel Global Fund has to say about Endesa, S.A. in its Q3 2021 investor letter:

"Another stock that was particularly weak in the quarter was Spanish electric utility Endesa S.A. On September 16th, 2021 the Spanish government took regulatory actions aimed at reducing the surge in gas and electricity prices for consumers. Shares fell on the announcement of the legislation limiting the margin utilities may generate. Industry participants immediately challenged the law on the basis that utilities do not benefit from spot prices because power generation is pre-sold at fixed rates through long-term contracts. The Spanish government subsequently reversed course—declaring fixed price energy supply contracts would be exempt from the clawback measure. With the political overhang behind the company, we think Endesa presents an ESG (environmental, social and governance) related business opportunity in the years ahead. The company is working aggressively to shut down coal capacity and move forward with a multi-billion euro investment in renewables to reduce greenhouse gas emissions and lower the cost of power generation. We expect Endesa S.A. to retain a large portion of these cost savings. Meanwhile, this utility trades at a compelling 7% dividend yield."

Electricity, Electric
Electricity, Electric

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Based on our calculations, Endesa, S.A. (NYSE: ELEZY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Endesa, S.A. (NYSE: ELEZY) delivered a 1.48% return in the past 3 months.

In October this year, we published an article about ELEZY landing in the 11 Best High Dividend Stocks Under $50. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q3 page.

Disclosure: None. This article is originally published at Insider Monkey.