Monthly Archives: May 2010

John Petersen I've written several articles over the last year that explain why idle elimination is a crucial first step in the global effort to increase fuel efficiency and curb CO2 emissions. For readers who are new to my blog, or confused by a torrent of news stories and analysts reports that wax poetic on the expected benefits, costs and challenges of gee-whiz vehicles that are "coming soon to a showroom near you," altenergymag.com describes stop-start systems, or micro-hybrids, as follows: "These are conventional vehicles powered either by gasoline or diesel engines in which the 12-volt starter...

Bill Paul In the wake of the massive Gulf of Mexico oil spill, it’s clear the U.S. needs to end its crude-oil addiction as much to protect its economy as the environment. To move the future forward, America needs one company in particular to come through on behalf of all Americans. In a cruel twist of fate, that company is ExxonMobil (XOM), which is working on arguably the most important energy-research project in the world today. Namely, a project to replace crude with genetically-modified algae that can be cost-effectively refined using existing refinery equipment. A year...

Tom Konrad, CFA Boralex Inc. made an offer to buy out the Boralex Power Income Fund on May 19.  The price is reasonable.  Boralex (BLX.TO, BRLXF.PK) announced on May 2 that it would offer C$5 per share in convertible bonds for all outstanding shares of the Boralex Power Income Fund (BPT-UN.TO, BLXJF.PK) that it did not already own in an acquisition approved by both boards.  As usual with mergers, the Boralex Power Income Fund's ("the Fund's") unit price jumped from C$4.61 to C$4.90 the next day, but then if started to fall back as people had...

John Petersen Since I discussed dilution risks in emerging energy storage companies last week, today I'm going to shift gears and offer an overview of the opportunities that have developed in larger pure-play energy storage companies since last September. The following graph tracks the 18-month composite performance of the five categories I defined in Battery Investing for Beginners, Part II and shows how they stacked up against the Dow Jones Average. To understand what's happened in the storage sector over the last 18 months it's helpful to remember a few key dates. First, we had...

Tom Konrad, CFA When I called the peak a year ago, it was too soon for the broad market, but not for clean energy stocks.  I think both have room to fall, but clean energy may bottom first.  Almost a year ago at the start of June, I wrote saying "we're near the peak" of the stock market.  I was too early, and admitted it in August.  But I also said that it was a bad time to be in the market: the risks of a decline far outweighed the potential gains of remaining in an...

Tom Konrad CFA Four new stock lists for different approaches to profit from peak oil.   As I've researched and written this series on ways to invest in companies that will profit from peak oil, I've been greatly expanding the number of stocks in our old "Clean Transportation" stock list, at the same time I've been doing a lot of thinking about how these companies will fare.  Because of this, I've decided to split Clean Transportation into four groups of similar companies, depending on how they are working to reduce our dependence on oil. The new stock categories...

John Petersen The greatest truth in micro-cap corporate finance is that small companies have a lot in common with small children in third world countries – they rarely die of starvation but they frequently die of dysentery. In hard times, small companies that need additional capital can usually find the cash if their management has enough humility to accept the price the new financiers are willing to pay. The problems can quickly become life threatening, however, if management fails to adjust spending to accommodate business conditions or rejects available financing because the terms seem predatory. My advice to...

Peak What? Eamon Keane The Energy Information Administration (EIA) released its Annual Energy Outlook 2010 (AEO 2010) last week, with projections out to 2035. It makes for interesting reading. Most notable was its take on peak oil, natural gas vehicles and on converting natural gas to liquids (GTL). An otherwise reasonable report was marred by the presumption of oil plenty. Figure 1 shows a graph presented (.pdf) by Glen Sweetnam, director of the EIA's International, Economic and Greenhouse Gas division, in April 2009. Although it mentions the source as being the...

Tom Konrad CFA CVTech Group (CVT.TO, CVTPF.PK) operates in two of my favorite clean energy sectors: electricity transmission and distribution and efficient vehicles.  Here is a look at the company's fundamentals. In "The Strongest Strong Grid Stocks" of my 2010: The Year of the Strong Grid? series, I took a quick look at CVTech Group's financial ratios, and decided not to look deeper because they had considerably more debt in comparison to income than the other electricity transmission ("strong grid") stocks I covered in that article.  I came across CVTech again while looking at companies involved in...

Tom Konrad CFA The easiest way to reduce fossil fuels is to increase vehicle efficiency.  Government mandates already in place will ensure that such improvements occur.  Some stocks may benefit from the trend, but choose carefully. Dr. Daniel Sperling knows about as much as anyone about what policymakers can do to reduce the use of oil.  He is the Director of the Institute of Transport studies as the University of California Davis, and a long time member of the California Air Resources Board (CARB), so he understands transportation from both the academic and policy perspectives.  He also...

John Petersen     "A man's got to know his limitations ..."                 Inspector Harry Callahan                     Magnum Force, 1973 Last Thursday the Department of Energy kicked-off a new effort "to develop its first-ever strategic plan for addressing the role of rare earth and other materials in energy technologies and processes" by issuing a Request for Information on resource availability and supply chain security. The information categories covered include short- and long-term: Demand forecasts for energy applications and competing issues; Supply issues including investment trends, processing requirements and future...

 Bill Paul For investors to benefit fully from the alternative energy revolution, they must first see it for what it is, namely, some 30 different businesses, separate yet interconnected in their goal to reduce the use of oil, coal and/or natural gas and, with it, the emissions these fossil fuels generate. While wind and solar dominate the news, analysts’ research reports, and alternative energy ETFs, there are many other prospective long-term winners receiving far less attention. Some are developing other alternative energy sources, such as geothermal, biomass and biogas, wave and tidal, and algae. Some are...

Tom Konrad CFA Part Subject / Description Stocks mentioned I Biofuels Overview WM II Hydrogen Vehicles and Vehicle Electrification III Natural Gas Vehicles WPRT, CLNE, and one I missed: FSYS IV Synthetic fuels: Gas-to-Liquids, Coal-to-Liquids, and Biomass-to-Liquids SSL, SYNM, RTK V Biofuel from Algae GSPI.PK, OOIL.OB, PALG.OB, PSUD.PK VI Barriers to Alternative Fuels ...

Tom Konrad CFA A somewhat delayed index to my Year of the Strong Grid series, looking into electricty transmission and distribution (T&D) or "Strong Grid" companies. Part Subject / Description Stocks mentioned I Introduction: Why Electricity Transmission and Distribution is a good investment. None II Comparing the financial strength of eletricty T&D companies ABB AMSC CPTC.OB CVT.TO BGC JST MTZ MYRG PIKE PWR RSSYF.PK SI VMI WCC III EMCORE Group (EME) and AZZ Incorporated (AZZ) ...

John Petersen For the last few days the green transportation press has been beside itself with breaking news that the battery pack for the Nissan Leaf costs a staggeringly cheap $375 per kWh. They point to the Times of London as their source, but fail to note that the cost figure was buried in a throwaway sentence in the seventeenth paragraph of an April 4th story about a British executive who'd been transferred to Nissan's headquarters in Tokyo to run their green cars program. This isn't proof folks, it's hearsay elevated to nonsense that belongs in...

Tom Konrad, CFA One of the best things about Solar Photovoltaics (PV) is that they can be installed close to load but need not take up open space.  Now public company Envision specializes on solar shading for parking lots that not only produces power, but also shade where it's needed most. I lived in Tucson, Arizona for two years in the early 2000s.  Like everyone who lives in the desert Southwest for any length of time, I became very aware of what would happen if I left my car in an open parking lot for more than...