Mirant Explores Options

Mirant (NYSE:MIR) announced very early this AM that they have hired JP Morgan to explore strategic alternatives. On Thursday options volume spiked noticeably so someone knew something was up. There should be an investigatigation and sanctions.

Management has been very quiet with very little in the way of announcements and or press releases in recent past. Mirant has been a phoenix rising from the ashes. Lately the fundamental picture has been looking very good. A series of cash sales of some unwanted power generating plants are scheduled to close in Q2. The cash position was going to look so good they were probably going to come up on the acquisition radar.

Management was careful to point out that because they will be looking at some alternatives there is no guarantee or obligation to actually close any of the potential deals. There have been no major insider dispositions reported in the past twelve months or so. But improbably the level of institutional holdings has dropped by approximately 24 million shares as supposedly savvy investors shed approximately 13% of their holdings. Go figure!

The very real last minute signal was last weeks announcement that the CEO Edward Muller received a 2006 comp package of approximately $18 million which included $15.6 million of stock and option incentives. Sounds like the CEO is aligned with the shareholders so let's go and find someone who can drive up the price.

The turnaround at Mirant is still in its infancy. I am sure that they will attract attention for their successes to date. Investors need to ask themselves should they accept a quick offer now or wait for the long term value. Management has under communicated in general and therefore investor expectations may not be that well entrenched. (Look at bonehead institutions shedding the stock) Private equity may be able to steal this one.