Fortnightly Magazine - July 2006

The Institutional Investor: Still Hot on Utility Stocks?

Michael R. Yogg, who manages Putnam's Global Utilities Fund, explains what investors want from the sector.

Is the love affair with utility stocks cooling? A Standard and Poor’s equity research report in late May included a negative outlook for electric utilities: “We think the sector will underperform in 2006, weakened by the rising interest-rate environment,” the report said. But not all investors agree. We talked with veteran portfolio manager Michael R. Yogg of Putnam Investments, who revealed how the modern-day investor views the utilities sector.

Are They Betting The Company?

Eleven questions to ask senior managers about their risk-management objectives.

It is almost impossible to design an effective hedge program without first determining the exact objectives a company wants to achieve. Although this sounds obvious, it rarely is. Management usually can agree that the firm should hedge to reduce risk, but “risk” is too vague a term to justify hedging on its own.

Calling EPACT's Bluff

How Congress opened another can of worms with its call for regional joint boards to study power-plant dispatch.

Did Congress really invite the industry to re-examine the concept of economic dispatch, as practiced by the regional grid operators and RTOs, through market bids, day-ahead markets, a centralized auction, and a uniform market-clearing price? Perhaps not, but skeptics of RTO practice have called the bluff, if that’s what it was.

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