# Crius Energy Trust



## Fraser19 (Aug 23, 2013)

http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=KWH.UN-T

This is something I was looking at, it has a high dividend and is also at its 52 week low. It is my understanding that this is a company that operates just like Just Energy the 3 or 5 year energy contract. Right now with the low price the yield is pretty high but back when it was 8.00 it was more realistic.

What do you guys think about this. Could it be a short term buy and sell when it goes up? Buy an hold for the nice dividend? or stay away from? 

I am still very new to this and will probably be asking a lot of questions.

Thank you for you patients.


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## Feruk (Aug 15, 2012)

Before you even consider investing, you have to figure out why it went from $10 to $3.50. Then you have to figure out if whatever major problem they had was resolved. From a very quick look, they can't afford that dividend, so ignore that it's at 20% and assume they will slash it.


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## liquidfinance (Jan 28, 2011)

If the company operates like Just Energy then you probably shouldn't do any more research.

Sounds like a good way to lose money. 

They have already cut the payout by 30% this year.


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## gibor365 (Apr 1, 2011)

Just came across this stock .... diversified utility that operates in 20 US states and a bit in Australia, IMHO looks attractive, payout ratio is just 53%, profit increases, 4 times dividend increase this year(yield is 9+% now), no debt ... 
Any opinions?


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## Ben Tunite (Aug 30, 2016)

somewhat dated but interesting...

From: Oil and Gas Investments Bulletin
Sent: Wednesday, May 18, 2016 



UPDATE
CRIUS ENERGY TRUST
KWH.UN-TSX; CRIUF-PINK


Crius Energy Trust announced late yesterday that it was buying out all the private LLC holders, so that now 100% of the Trust will be in the public company.

Once this slightly unorthodox financing is done and voted on June 20 at the AGM, this should be very good news for the stock. Unless I’m missing something today, this will eliminate the slightly unorthodox corporate structure that Crius has today, which has been the Street’s Big Pushback on the stock for the last 6-12 months.

(Today, only 42% of the Trust is in the public’s hands. The other 56% remains with the friends and associates of CEO Michael Fallquist; the group who helped seed the company to get it started.)

The stock will be simple, and larger and more liquid, and I would see that creating a (fast) path to a 6.5% yield or 7-8 cash flow; in dollar terms—just over $11/share.

I don’t know what the stock will do short term, but within a couple months from now, this is what I expect to happen.

Fallquist grew up at the global financial firm Macquarie, doing many jobs on the financial derivatives side. That gave him the knowledge and contacts he needed to start Crius.

But coming from the finance side of the business, he understands the Market and he wants—like all CEOs should—the highest valuation possible for his stock.

Crius trades at roughly 4.5-5x cash flow, depending on the analyst you read. His main comparable, Just Energy (JE-TSX; JUSTF-PINK) trades at 8-9x.

Part of the reason for that is market driven—right after becoming public in late 2012, volatility in natural gas prices in winter 2013 force the company to raise prices for customers on spot contracts.

That caused customers to leave, and the business got a reputation as a high churn customer base.

Plus competitor Just Energy was getting some bad press around cold calling retail customers; and Crius’ valuation suffered from that as well.

Then the same thing happened again a year later with Polar Vortex I in March-April 2014. Commodity pricing volatility (natgas prices soared) caused more customer attrition and the dividend had to be cut.

Result—18-20 months after going public at $10, the stock bottomed at $3.27. Nobody was happy.

Over time, Fallquist hired the right talent to hedge his exposure to commodity prices more effectively, and has simplified (made more conservative) his accounting practises, and shown steady (though not yet spectacular) organic growth and steady M&A growth. And he has kept a VERY clean balance sheetl

As soon as he showed the Market he could make it through Polar Vortex II in March 2015 without losing customers or money, the stock got rewarded.

The Market has been watching him since then—14 months now—and has seen flat to slightly up organic growth, and new partnerships (Comcast).

The Street sees Fallquist has done what he said he would do; that includes guiding to a flat year of EBITDA growth in 2016 as they move to lower margin but smaller churn commercial customers. But the business is set up now for great EBITDA growth in 2017 and 2018.

As a result, the stock has consolidated between $8-$9 for a year now—a big jump from $3.50-$4 where it spent a year in purgatory as Fallquist righted the corporate ship.

It became clear in the last 3 months the Market was ready to move the stock higher, because The Big Pushback from the Street had nothing to do with the business; it was the wonky corporate structure where only a minority percentage of it was in the public’s hands.

And now that Pushback is being eliminated. The other drag on valuation has been size/liquidity; Crius gets a discount for having a public float so small many institutions aren’t allowed to buy it.

The Company is issuing stock at $8.45 to the public, raising $63 million to pay a cash portion to the LLC holders as well as exchanging their private stock for public stock; their price works out to $9.74.

Management says there is no dilution in that but I clearly haven’t had enough coffee this morning to quite understand selling at $8.45 and buying at $9.74 being non-dilutive.

It sounds like there were some reticent shareholders in the LLC because they have a deal for 80% of the LLC, and with that can use securities laws to just force the other 20% to commit to the deal over time.

That doesn’t really matter; all that matter is that Fallquist has done what he needed to do to get the company fully public, and I think the Street rewards the stock now with a higher valuation.

I am buying some of the financing; but I haven’t been given my allotment yet so I don’t know how much exactly.


-Keith


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