I am helping to organize a workshop on investing in Cleantech companies targeted at private equity investors, in conjunction with the Denver Chapter of the Keiretsu Forum.
Archive for Investing information
A beaten-down battery company
I’m bullish about the battery industry, because I fee that rising oil prices and consumer awareness will lead to accellerating adoption of hybrids, plug-in hybrids, and electric vehicles over the next decade. So I’ve been researching the battery industry, and trying to look for companies that can benefit without being tied to a single battery chemistry, since I doubt the conventional wisdom that some company will perfect the Lithium-Ion battery, and that will be the solution for all mobile energy storage.
I just did a write up on one company that I think not only has technology that is applicable to a wide variety of chemistries, but it’s also selling for less than what I think its assets are worth.
The company is Electro Energy Inc. (EEEI), and you can read more by clicking here.
What I told Bill Paul
Mea Culpa, I’ve been falling behind keeping this blog updated… but most of you probably realize that the real stuff goes on at AltEnergyStocks these days. Over the last two weeks, I wrote a series of companion pieces to a series of articles that were published on energy Tech Stocks, based on a long interview Bill Paul, the writer did with me. Here’s an index to them (and they each contain links to the interview articles.)
1. Large Scale Electricy Storage
2. Plug-In Hybrids and Battery Stocks
3. & 4. Improving Transmission and my Ambivalent stance on Biofuels
5. Light Emitting Diode (LED) Stocks
Why the future of Big Biodiesel my not be so Bright
I’ve been out of town a couple days, but the article I left to be published on AltEnergyStocks while I was gone is causing some controversy… I look at
what might happen to the biodiesel industry if Big Oil starts to use animal fats and oils in their refineries. At least one reader didn’t like what I saw. You may not like it, either, but you can read it here.
Two Utility Scale Electricity Storage Stocks
While many investors are excited about the potential of wind, solar power and ethanol, I am more interested in those technologies that will make it all possible. One of the oft-cited problems with wind and solar power is that they are not usually produced both when and where they are needed. Last year, I wrote an overview of large scale electricity storage technologies. Today, I take a look at two stocks that are well postioned to profit from these technologies.
You can read about VRB Power and NGK Insulators here.
Energy Efficient Homes & Performance Contracting
I have now posted the last two articles in my series on the WGA Energy Efficient Buildings Workshop.
The third article (here) talks about some of the “above code” standards, such as Energy Star and Built Green, why I feel the code should resemble these standards a lot more than it does now (above code should mean measures that are not viable on a pure economic basis, but that people want because it makes them feel good… when total cost of ownership is taken into account, these “above code” standards actually produce homes that are cheaper to live in and own than houses built just to code.)
I also talk about several companies that my benefit from a move to wide adoption of these above code standards, as well as from energy retrofits of existing homes.
Article number four (here), talks about the trend to performance contracting, where a building owner contracts for a certain level of service (lighting levels, temperature, etc.) with a third party, and that party upgrades the building’s efficiency, with the savings from efficiency gains not only paying the energy bills, but also paying for the upgrades (which can include solar panels and other renewable energy projects as well as energy efficiency upgrades) as well as a profit for the contractor.
Investing in Energy Efficient Homes
Investing in Performance Contracting
Some difficulties getting information on Global Resource Corporation
I have been looking into Microwave Waste-to-energy pioneer Global Resource Corporation (OTC:GBRC) for the last couple weeks… much of it spent in phone tag with Global’s CFO. I didn’t get anything from him, but the firm’s 10K and other SEC filings made interesting reading.
I was left with a lot of unanswered questions, and an urge to short sell the company. You can read about what I found on my AltEnergyStocks column, here.
ABB Group: Efficient Electiricty Transmission and Distribution
As I have written before, a smarter, more efficient grid is key to integrating more renewable energy and replacing fossil fuels. ABB is well placed to profit from the increase investment that’s needed. You can read the whole column here.
How to avoid Stock Scams
My AltEnergyStocks column this week talks about signs to look for to help you aviod falling for stock scams. Investment scams foolw whatever trend is hot at the moment, and right now, that’s renewable energy. Here’s how to make sure your money is helping to reduce our carbon footprint, not financing some shyster’s trip to the Bahamas.
As an example, I take a look at US Sustainable Energy, a biofuel company that shows some worrying signs….
An insider’s take on the Ethanol Industry
I have a sequel to my article on the competitive landscape of the corn ethanol industry up today on Alt Energy Stocks. In it, I discuss insights I gained from a talk by Mark Wong, President and CEO of Renwable Agricultural Energy, a private corn ethanol producer.
The fine line between ads and spam
Here’s an article by Davis Freeberg it because it confirms my thoughts about stockpicking… if you find out about a company because of an ad, you’re probably best staying away. A healthy dose of suspicion is worth it’s weight in gold.
No AltEnergyStocks column this week… I’m trying to dig myself out after coming back from vacation. But I did catch up with my Economist reading… they now have an audio version (free to subscribers) which is great for long drives.
A Hard Look at the Ethanol Industry
My weekly column for AltEnergyStocks again doubles as part of my study for the second CFA(R) exam. The Equity valuation part of the curriculum contains a chapter by Michael Porter on analyzing competitive pressures in an industry. I decided to apply it to the corn based Ethanol industry, and, as often is the case, it changed my way of thinking about the industry. I’ve never been bullish, because I worry about a classic commodity squeeze: both ethanol and the main feedstock (corn) are commodities, and are subject to forces outside the industry which effect their prices. For instance, if corn harvests were to be poor because of drought or pests, at the same time that oil prices fell, many ethanol producers would be forced out of business because their costs exceed their selling prices.
I also went on a little rant about the typical measures of Energy Payback and Energy Return on Energy Investment (ERoEI) often used in the industry. These measures are often used to criticize ethanol, but it is a weak criticism, because they do not take into account the time value of energy: namely that a kWh of electricity today is a lot more useful than a kWh produced 30 years from now. We should instead be thinking in terms not only of how much energy we have to use to get energy out, but also in terms of how soon we get that energy.
I propose a couple measures, of Energy Net Present Value (ENPV) and Energy Internal Rate of Return (EIRR) which I think would give us a clearer view of the undying energy economics (and hence the potential economic profitability) of various energy production technologies. But that is a column for another week.
This week, here are my thoughts on competition in the corn Ethanol industry, and how it might affect your investments.
If you have a subscription, there’s also an excellent article in the NYTimes on ethanol in Hawaii. I think it ties in well to this one, and the one I wrote last July about renewable energy in Maui.
SNL: All the financial planning advice you’ll ever need
I usually stick to advice on investing, but if you don’t have any money to invest, or if you’re up to your eyeballs in debt, what should you do?
This Saturday Night Live clip answers that question.
I’m still laughing.
Where and How to Look for Mispriced Securities
Part I of my series on how small investors might go about beating the market is up on AltEnergy Stocks. I focus on how to exploit two weaknesses of institutional money management, large investors’ greater need for liquidity, and the tendency to miss the forest for the trees: too much emphasis on the numeric side of valuation, and not enough on big picture thinking.
You can read the new column here, and, in case you missed it, the first part of the series is here.
Where I find my Alpha
This week and next I’m taking a break from my usual analysis of some aspect of renewable energy. I’ve been studying hard for the second Chartered Financial Analyst® exam, and it has gotten me thinking about my investment philosphy. Why, do I, as a lone investment manager feel that I can beat the market, which essentially means making better judgements about stocks than all the other extremely bright an well funded people looking at the same stocks?
My answer is that large money managers are constrained by who they are: They have a lot of money, so they cannot effectively invest in small, thinly traded securities, and I also think that many institutions have a quantitative bias: they tend to use matematical models for valuing stocks. But mathematics has blind spots, and numbers cannot describe every truth about the world, or about companies, so I think that there is more potential for an individual to spot mispriced securities where the big managers can’t look: being a big fish in a little pond, as it were.
Here is Part I on “Beating the Market.”
Stocks for High Waters
My AltEnergyStocks column this week is about preparing yourself financially for the possibility of rising sea levels due to global warming.
I’ve been rather gloom-and-doom recently, with this and my article from a fortnight ago about preparing for Peak Coal.
Let’s hope that I’m just moody because of all the studying I’m doing for the second CFA exam (which is why entries here have been short and far between.) I plan to get back in the swing of things in late June, after the exam, the Colorado Renewable Energy Conference (there will be a session on “Investing in Renewable Energy”, led by Yours Truly), and a vacation. My wife and I want to see Glacier National Park before it becomes The National Park Formerly Known as Glacier.
Renewable Energy Mutual Funds
I’m travelling this week (and have had the opportunity to use the energy-efficient train system in the Northeast,) so my column for Alternative Energy Stocks was written ahead of time and saved for a busy day. It’s a run-down of the available renewable or alternative energy mutual funds and ETFs, and a cost analysis of when it makes the most sense to use each.
Click here for a comparison of renewable/alternative energy mutual funds.
(Update: the above link was broken when I first posted it. It’s now fixed. Sorry.)
What to do about Peak Coal
With Energy Watch Group’s recent release of a study which predicts Peak Coal by 2025, I thought I’d get in on the action.
Maybe you think it’s too soon to start worrying about Peak Coal… after all, most people haven’t even adjusted to the reality of Peak Oil (let alone Peak Gas, Peak Uranium, or Coal.) Yet all these finite resources will reach peak production, and some may already have.
So peak coal will happen, and it will either happen sooner than most investors think, or later. If you think it’s going to be sooner, my AltEnergyStocks column on Peak Coal gives some suggestions on what to do about it.
Transmission Stocks.. not exciting enough?
My AltEnergyStocks column this week is about investment opportunities in transmission, but to judge by the comments, readers are much more interested in direct investment in wind.
This is not particularly surprising to me… electric transmission is both complex and boring. It’s also absolutely necessary for our transition to a sustainable energy economy. As a contrarian, the lack of interest in my readers makes me more bullish; I love sectors with great prospects that no one is interested in talking about (or buying) yet.
An interesting parallel is my article on the polysilicon industry, which I wrote last July. At the time, only my regular readers read it, but in the last few months, now that the companies involved have risen another 50-100%, it’s consistently one of my most popular, despite the fact that there’s a good chance that the silicon supply crunch may soon ease up.
I wonder how many people will be reading my transmission column eight months from now?
Inverter Stocks: A Backdoor to Solar and Wind
My column on AltEnergyStocks.com this week is about the companies that make the inverters which transform the DC or wild AC current produced by solar panels and wind turbines (respectively) into the type of AC power used by the grid. It begins:
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Whenever there is a gold rush, the people who make the real money are seldom the gold miners, but rather the suppliers to the miners that come home with the lion’s share of the profits. This is not because there is not an incredible amount of money to be made in mining gold, but because the nature of a gold rush is that too many optimistic miners are encouraged by the early profits of a few to rush to pursue too few opportunities.
To many, the rush into solar stocks seems to be just that sort of gold rush. The boom in solar IPOs certainly reminds me of the type of feeding frenzy in which incautious investors are likely to get burned. And we are also seeing some other signs of rampant speculation, where investors are buying poorly managed (or even dishonest) companies with almost the same fervor of well managed ones. There’s little doubt that the future is bright for solar power, but picking solar companies that are going to survive and thrive in that bright future is becoming increasingly difficult in an increasingly crowded field.
In a gold rush like this one it makes more sense to look at the suppliers.
Click here to read the rest of the article.
