Thursday, 9 July 2009 Just had a few thoughts after reading this article. These SDRs are nothing special, its just like making a market in a basket of currencies, but it just made the Raven twig, the Chinese are angling to make the US take the FX risk on these, he's speachless, truly gobsmacked, how does that work?!?! That's like buying a house and renting it out and then asking the former owners to make up any value in the price falls in the house.

The Raven has been doing some more work on NRG, he thinks its really too cheap and is dramatically increasing his size in this position. The management seem pretty keen on avoiding EXC and are making a good case for it. They've increased the share buyback from 5% to ~9% of the market cap (he's not too keen on the leverage increase - but that should at least provide some kicker to the stock short term). Its trading at a decent discount to EXC's offer, it looks cheap, its leveraged to natural gas prices in Texas long term, its held its technical levels in the up channel, its not being talked about too much by his fellow traders, oh and it cheap like a cage of discount canaries. Its also got funding for only one of four nuclear deals, EXC didn't get this. The stocks ~$23, he thinks fair value is more like $40, EXC is offering ~$27 - pfffffff. Anyway its obviously got some risks fundamentally to the business from the macro picture and its geographical position, however at this level its risk reward looks good enough for a swing of the bat.

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