BT, imho for what its worth, it may not be readily apparent why ILA is yielding 17% and it is trading at 30% of book value, but the odds are that there is a reason. Although the market can overreact to events, it is quite unusual for it to overreact that much. Speaking from a couple of "learning experiences" in the past, the odds are that there is a major problem somewhere with the company, the dividend will be cut or eliminated, and the stock has further to go to the downside. That's not to say that it won't make a short term nice bouce to as much as $8 on a temporary basis.
One slightly less risky approach to playing that beaten down sector is to look for the the strongest two or three companies in the sector and spread your position between them. I've looked at this sector in some detail (although it is hard to get all the information needed to evaluate these companies). My view is that the strongest are Duke (dke) and ElPaso (EP). Both these companies have strong businesses with significant physical assets relative to the size of their gas and electicity trading / merchant energy businesses. I think they have a good chance of surviving this and rebounding.
So, if you really want to take a shot at ILA, you might give some thought to spreading out your position in this sector between it, DKE and EP.
Tom
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