PNM Resources, Inc. (NYSE:PNM)

jerryguru69 (82.50) Submitted: 8/28/2008 9:56:20 PM : Start Price: $10.22 PNM Score: +75.49

Wait just a second, there, cowboy. You are a public monopoly, and you are LOSING money? Tell me, pilgrim, how does that happen?

The recent 10Q: even if we remove the "loss of good will" nonsense item (see note #17), PNM lost $45M selling electricity. Guh?
It is hard to imagine a situation like this persisting very long.

PNM has 3 parts: First Choice (unregulated electric utility in Tx), and TNMR Electric and PNMR Electric (regular, public monopoly). ALL of them are losing money. OK, I got the deal with PNMR and the NMPRC: the stupid utitliy did not have a fuel escalation provision, so as the price of LNG went up, they were not allowed to pass on the cost to consumers (see note #10 in the 10Q). Result: instant operating loss. NMPRC finally allowed rate increase to compensate, but PNMR is still losing money. But what about the other 2 subsidiaries? They tried to get rate increases, but were slapped down twice; they are appealing the court ruling, but so what?

Hard to believe that all 3 regulatory agencies are unnecessarily stingy. Suspect PNM is run by the Keystone Kops.

So why am I recommending a company being run by the Gang-That-Couldn't-Shoot-Straight? Because all this bad news is already built into the stock price. It can't (I hope) go any lower. So, the first time something good happens (winning court case for rate increase, one unit miraculously turns a profit, actually decreasing operating expenses), investors will jump in with both feet. What a bargain huh? Well, they also will not take the time to realize that it is still an idiot company that cannot turn a profit if they hit the lottery; so, short term pick as soon as the stock blips up on good news, sell; not a long term pick.