State investigating fund’s stake in utility company

State regulators have started investigating Horizon Asset Management's 27 percent stake in Nevada's investor-owned electric utility company and are reviewing legislative history on a measure that limits investors' ownership of public utilities.

Public Utilities Commission spokesman Sean Sever said staff attorney Alaina Burtenshaw has sent the New York investment company a request for information. She is trying "to nail down when Horizon became a shareholder and the chronology of their current holdings, including history, dates, percentages and their stock transfers," Sever said.

Also, the attorney is reviewing a law that requires investors to get commission approval before obtaining more than 25 percent ownership in a public utility company, Sever said.

Attempts to reach Horizon for comment failed. Requests for an interview with Sierra Pacific Resources nonexecutive Chairman Walt Higgins were denied Wednesday. Company spokeswoman Faye Andersen said board members were following company policy of not commenting on investment decisions of Sierra shareholders.

Meanwhile, a senior manager of a New York investment bank said this week he cannot imagine any sound investment strategy for Horizon Asset Management, also of New York, to hold such a large stake in the utility.

Horizon Asset Management owned 27 percent of the outstanding shares of Sierra Pacific Resources on Sept. 30, according to MSN's Money Center. The investment company's holdings would be worth $1 billion, based on the closing price of the utility holding company shares' Tuesday. Horizon has not responded to requests for comment in recent days.

Oppenheimer & Co. chief investment strategist Michael Metz said he couldn't ascertain the reasons behind the stake Horizon has in Sierra Pacific Resources.

"Frankly, I'm baffled," Metz said. "I don't know what they had in mind. I don't know why they took such a large position."

Activist investors sometimes seek to get a company to break its businesses into separate companies to realize more value. The Nevada utility holding company theoretically could be broken into power generation and power transmission and distribution companies. Sierra planned to divide its function a few years ago, but that proposal died when Nevada lawmakers reversed plans to deregulate the power industry.

Alternatively, the holding company could split its two subsidiary utility companies, Nevada Power and Sierra Pacific Power, into separate companies.

Metz said splitting up Sierra Pacific Resources would necessitate the expense of obtaining regulatory approval, and he questioned whether spinning off a separate company would result in financial gain at Sierra Pacific.

"Just because you have a lot of money to manage doesn't mean you're a genius," Metz said.

Metz said hedge funds often have a problem of riches: "It's just too much money with no place to go."

Another analyst, who spoke on condition of anonymity, said Horizon's ownership in Sierra Pacific Resources poses a huge public policy concern.

"This has never happened in the whole history of Nevada Power or Sierra Pacific," the analyst said.

Sierra Pacific Resources shares fell 9 cents, or 0.55 percent, Wednesday to close at $16.28 on the New York Stock Exchange.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or (702) 383-0420.