One Stock Picker Says the Coast Guard's Broadwater Report is a Reason to Sell TransCanada Shares
TransCanada (nyse: TRP - news - people ) operates as a natural gas transmission and storage company. Its partnership with the U.S. subsidiary of Royal Dutch Shell (nyse: RDSA - news - people ), Broadwater Energy, had hoped to build a liquefied natural gas depot in Long Island Sound. On Friday, the U.S. Coast Guard issued a report highly critical of the idea, and while it did not kill the project, for all intents and purposes, it is now dead in the water, so to speak. The Coast Guard pointed out the vulnerability of such a facility to terrorist attacks and maintained that it did not have the resources necessary to ensure safety. Gurus bailed completely.
To be fair, when he says he "bailed completely," it's not clear whether he means TransCanada, or Shell, or both. My guess is that if he's looking to protect himself from a stock price that falls because of a questionable report from the Coast Guard, the smaller company would make him more vulnerable than the bigger company, because the impact of the Coast Guard's report would be greater on the smaller company. TransCanada, with a market capitalization of $16 billion, is much smaller than Shell, which has a market capitalization of $137 billion.