Jumping ship

Several equities have been disposed of over the last few weeks after we changed our assessment of their viability.

Carnegie Clean Energy (ASX CCE) has sold its strongest asset, Energy Made Clean, into a merger with unprofitable ASX listed venture TAG Pacific (ASX: TAG) to form a new company MPower with Carnegie shareholders to receive shares in the new merged venture. This leaves Carnegie with its wave energy development venture and several small renewable projects. Both companies would seem to be weaker than the pre-split Carnegie. It does not make sense to us. We are out.

Just a year ago we invested in Energy Pacific (ASX: PEA). This company provides remote energy generation services and has a small hydro generation arm and a gas peaking plant. We originally invested when the company indicated that they were to move away from diesel and gas generation towards renewable generation. This seemed a good move, given the cost benefits of renewables over older fuels, even more so in remote areas. In fact, they have moved in the opposite direction, including the purchase of the gas peaking plant at Taralgon in Victoria. In addition, their formerly  high dividend payments have been suspended and they expect to write off significant plant in the 2017/18 annual accounts. Again, we are out.