August 28, 2000
MAINE STOCK TRENDS
New York Investment Group Acquires 5.85% of Bangor Hydro
Copyright © 2000 Blethen Maine Newspapers Inc.
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On June 30 of this year, Bangor Hydro, Maine’s second-largest electric utility, announced plans to be acquired by NS Holdings, which is a power company in Nova Scotia, Canada.
Evidently, Gabelli did the math and found that he could earn a double-digit rate of return on Bangor’s common stock just by buying it at current market prices and holding it until the merger takes place, presumably sometime next year.
Gabelli was already a shareholder prior to the merger announcement. He has more than doubled its holdings since the merger was announced though, and that is what triggered the need to file a 13D report.
A 13D is a report that is filed with the Securities and Exchange Commission by beneficial owners of five percent or more of the common stock of publicly traded companies. The report tracks when these large holders of stock add or sell to their position.
The report was filed by Mario J. Gabelli, Marc J. Gabelli and various entities which either one directly or indirectly controls or for which either one acts as chief investment officer. Most of the group’s shares (326,700) are controlled by Gabelli’s GAMCO Investors, which is a New York investment advisory firm.
In total, the Gabelli companies announced ownership/control of 430,700 shares of Bangor Hydro. That represents 5.85 percent of the shares outstanding as reported in the Bangor Hydro’s most recently filed Form 10-Q for the quarter ended June 30, 2000.
In the recent Bangor Hydro stock-purchasing spree, Gabelli bought stock for as low as 23.41 per share on the day the merger was announced. The filing shows that Gabelli continued adding to its position at prices as high as 24.44 on August 11.
In its filing, Gabelli indicated that it typically buys for investment purposes and uses its shareholder votes to back management.
The merger of Bangor Hydro and NS Holdings is expected to receive final regulatory approval by next summer. Assuming the merger takes place, Bangor Hydro shareholders will be paid $26.50 in cash for their shares.
Many ups and downs for I-Many
Say what you will. In its brief history as a publicly traded company, I-Many (IMNY-10.875) has given shareholders their money’s worth in thrills and excitement in terms of stock price volatility.
Since going public at $9.00 per share just a little over 30 days ago, the Portland e-commerce company has seen its stock price drop to 8, rise to 16, then fall back to a new low at 7.75, before ending this week up 30 percent from the one previous.
After the company’s first-ever quarterly earnings release two weeks ago, the stock price fell by a third. It didn’t help that the “earnings” release was actually a loss. If the stock price volatility keeps up, Maine may have yet another tourist attraction: its own e-commerce roller coaster.
For UnumProvident, it's just downs
Speaking of roller coasters, UnumProvident’s (UNM-19.625) financial strength and credit rating was downgraded by Moody’s Investor Service last week. Senior unsecured debt was lowered to Baa1 from A3; junior subordinated debt to Baa2 from Baa1. (Baa3 is the lowest category of debt that remains in the “investment grade” category.)
The company’s commercial paper rating was reaffirmed at P2, a which precludes many of the country’s leading money market funds from purchasing it.
UnumProvident management strongly disagreed with Moody's downgrade. Executives at the world’s largest disability insurance company acknowledged the need to improve its insurance subsidiary capital levels and to lower holding company leverage. They believe that several actions the company intends to take in the second half of 2000 will substantially improve its financial flexibility.
Over the past four weeks, at least eight analysts who follow the Portland-based company have reduced their earnings estimates. The consensus for UnumProvident’s 2000 earnings has fallen from $2.48 to $2.38 per share. For the year 2001, the consensus estimates have fallen from $2.88 to $2.71 per share during the past four weeks.
The stock closed out last week’s trading by ending at 19.625. A share price of 20 had been seen as a key support area for the stock on its road to recovery. UnumProvident stock has fallen from a high of 54.75 on its first day of trading after the June 30, 1999 merger between UNUM and Provident. The stock reached a low of 11.94 in March 2000.
Brad McCurtain is president of Maine Securities Corporation. Maine Securities Corporation is an investment firm specializing in Maine's securities. From time to time, the corporation, its employees, and its clients may buy, hold, and/or sell positions in companies mentioned herein. As a regulated securities broker/dealer, the company and its employees are required to abide by all securities regulations at all times when communicating with the public. Brad McCurtain may be reached at info@MaineSec.com. Web site: http://www.MaineSec.com