Given all the attention that renewable energy is getting in the news over the last couple years, investing in renewable energy has become a hot topic.  People are drawn to renewable energy for one of several reasons:

1. To fight Global Warming
2. To prepare for Peak Oil.
3. To improve Energy Security and local economies.
4. To cash in on the above trends.

The beauty of investing in renewable energy companies is that these goals are not mutually exclusive.  With one investment, the investor can feel good about what his money is doing for three reasons, while putting his money in what is proving to be a spectacular growth story.

How To Invest

For mutual fund investors, Renewable Energy focused mutual funds have been few and far between, but the recent growth of interest in the sector has lead to a plethora of new offerings.  US investors can choose from load funds such as the  New Alternatives Fund (NALFX) and Calvert Global Alternative Energy Fund (CGAEX) and the no-load Guinness Atkinson Alternative Energy Fund (GAAEX).   Unfortunately, the load funds have expense ratios in excess of 1.25%, and the Guinness Atkinson fund's ratio is 1.98%.   Given these high expenses, I strongly prefer the industry ETFs.

The Powershares Wilderhill Clean Energy ETF (PBW) and NASDAQ Clean Edge U.S. Liquid Series ETF (QCLN) have expense ratios currently capped at 0.60%, high compared to a general energy sector ETF such as XLE (0.24%), but is a much more economical way to invest than the sector mutual funds.  Unfortunately, both of these ETFs track US-based indices, and so provide little international diversification.  The new Market Vectors Global Alternative Energy ETF (GEX), neatly solves this problem with a portfolio similar to the more diverse mutual funds, and an expense ratio of only 0.5%, which easily makes it my favorite fund in the space.  Also recently launched, the Powershares Global Clean Energy Portfolio (PBD) has broader diversification into a greater number of small cap companies, but given its expense ratio of 0.75%, an investor with over $5,000 to put into the sector could closely replicate PBD by splitting his allocation 50-50 between GEX and PBW or QCLN.

Given the relatively high expenses of the sector ETFs, I believe it makes sense for investors who are looking to invest $25,000 or more in the sector for a period of years to build their own ETF from individual stocks gleaned from the holdings of the above ETFs and mutual funds.  This also opens the possibility of focusing on established companies which are early movers into the renewable energy arena, a strategy which is less likely to lead to spectacular gains, but which also gives some protection against spectacular dot-com bust style losses.  Investors seeking a greater international exposure could mix GEX with a smaller portfolio of domestic companies.

Picking Individual Stocks

Given the complex nature of the technologies, and the sparse coverage of many of the companies by industry analysts, there is still considerable room for active management in the sector.  Many investors buy Renewable Energy stocks for emotional reasons, so an understanding of practical behavioral finance may lead to excellent buying opportunities in quality companies.

Many development stage renewable energy companies have declined considerably in the recent market correction triggered by the fallout from the US subprime mortgage market.  If market uncertainty continues, investors who bought these companies in response to excitement about their growth prospects will likely lose their nerve.  An understanding of the business models and technologies in the industry should provide the knowledgeable investor with the tool to differentiate the undervalued quality companies from the cheap trinkets that have been finally recognized for what they are.  

EDITORIAL NOTE: Currencies

This article was first published in UK-based The Price Report, issue 13, published by Tim Price, Chief Investment Officer for Global Strategies at UBP in London.  He added his own editorial note:

Continue reading "Investing In Renewable Energy 101" »

Posted by Tom Konrad at 08:54 PM | Permalink | Comments (0) | TrackBacks (0)

Alternative energy is undoubtedly the future and we are just entering the early phases of what will be the next booming industry.

Even if the growing consensus over global warming isn’t enough to change human behavior, we really don’t have much choice in the matter. Fossil fuels are becoming more difficult and expensive to find and extract from the earth. Couple lower supply levels with rapidly increasing demand from nations such as China and India and you have the perfect recipe for much higher oil prices. Many experts believe we have reached or will soon reach “Peak Oil.”

Peak oil is the date when the peak of the world’s conventional petroleum (crude oil) production rate is reached. After this date the rate of production is predicted to enter terminal decline, following the bell-shaped curve predicted by the theory. Some observers such as Kenneth S. Deffeyes, Matthew Simmons, and James Howard Kunstler believe that because of the high dependence of most modern industrial transport, agricultural and industrial systems on inexpensive oil, the post-peak production decline and possible resulting severe price increases will have negative implications for the future outlook of the global economy.

With oil prices over $60 per barrel, alternative energy is suddenly receiving an unprecedented amount of attention and funding. The rate of technological advancement is increasing and clean energy systems that were once price prohibitive are becoming more and more feasible.

Investing in the Future

The number of publicly listed companies involved in the clean energy sector has skyrocket in recent years as private equity firms and individual investors are attempting to position themselves in what will be the next big thing. But similar to the dotcom days, there is plenty of hype mixed in with the companies offering substance. With the technology difficult to understand or envision, the average investor should be cautious when picking individual alternative energy stocks. We have made a few recommendations in previous articles, but these stocks are very volatile and only suitable for investors that are very risk tolerant. A safer, more diversified vehicle for investing in alternative energy exists, so let’s take a closer look inside our favorite Clean Energy ETF.

Performance

Green ETFs have been performing very strongly lately, driven mainly by the solar sector. Market Vectors Global Alternative Energy (NYSE:GEX) started trading in May of this year at $40 and hit a high today of $48. That is a 20% return in just over two months.

But our favorite alternative energy play, the PowerShares WilderHill Clean Energy ETF (AMEX:PBW) recently shot up to nearly $23, after starting the year at $17. That is a gain of nearly 35% in just six months. Take a look at the chart below, which may encounter some resistance at the previous high, forming a bullish cup and handle pattern.

The PowerShares WilderHill Clean Energy Portfolio (Fund) seeks to replicate, before fees and expenses, the WilderHill Clean Energy Index, which is designed to deliver capital appreciation through the selection of companies that focus on greener and generally renewable sources of energy and technologies that facilitate cleaner energy.

Over 50% of the allocation is small-cap growth, with the top 10 holdings heavily weighted heavily toward the solar sector and consisting of:

Yingli Green Energy Holding Co. Ltd. (ADS) 3.83%
Trina Solar Ltd. (ADS) 3.68%
JA Solar Holdings Co. Ltd. (ADS) 3.61%
Echelon Corp. 3.57%
First Solar Inc. 3.46%
Suntech Power Holdings Co. Ltd. (ADS) 3.43%
Zoltek Cos. 3.33%
American Superconductor Corp. 3.27%
Evergreen Solar Inc. 3.15%
Ormat Technologies Inc. 3.10%

Much of PBW’s recent action came from surges in First Solar (FSLR), JA Solar Holdings (JASO), Trina Solar (TSL) and Yingli Green Energy (YGE ), which all spiked 15% or more on news of inking deals worth over $1 billion dollars, doubling earning or beating analysts’ profit expectations by significant margins. The solar sector is hot (pun intended) and we expect PBW to continue its climb and make a record high above $24 in the coming weeks. After breaking this resistance, we think the ETF could reach towards $30 by the close of 2007.

Disclosure: The author owns PBW

Jason Hamlin is Founder of Gold Stock Bull, a site that has been tracking the secular bull market in gold and silver since its inception, back in early 2002, as well as the emerging bull market in energy since it took off in early 2004.

Posted by Jason Hamlin at 01:20 PM | Permalink | Comments (0)

Why Invest in Renewable Energy?

Given all the attention that renewable energy is getting in the news over the last couple years, investing in renewable energy has become a hot topic.  People are drawn to renewable energy for one of several reasons:

1. To fight Global Warming
2. To prepare for Peak Oil.
3. To improve Energy Security and local economies.
4. To cash in on the above trends.

The beauty of investing in renewable energy companies is that these goals are not mutually exclusive.  With one investment, the investor can feel good about what his money is doing for three reasons, while putting his money in what is proving to be a spectacular growth story.

Internet Bubble Redux?

To many, this sounds too good to be true.  Many have pointed out the similarities between today's renewable energy boom and the internet bubble of the late 1990s.  The speculation has been intense, especially in ethanol and photovoltaic companies.  And, similar to the internet craze, many of the companies are no-profit startups, and even the established companies with a solid record of profits trade at nosebleed price multiples.  Yet the internet did not go away because the bubble burst; more people are shopping online and more business is moving online than ever before.  Most likely, you are reading this article online... would you have been doing that in 1997?  The forces behind the advance of renewable energy are at least as compelling as those behind the internet.

I believe that we are still in the early stages, but even so, we can learn valuable lessons from that last boom.  One of the most important lessons is that the first mover does not always have the advantage, and often the winners are established companies that see the trend, and get on it in a measured way over time.  But the analogy also has weaknesses.  The internet was characterized by its low barriers to entry and exit, leading to cutthroat competition and me-too sites.  With Renewable Energy companies operate mostly in a heavily regulated, capital intensive sector, a sharp contrast to the internet, which will likely make the boom happen in relative slow motion compared to the internet.  I believe we're much more likely to see a series of mini market bubbles during the ramp-up, than to see a single gigantic bubble, as we saw in the late 1990s.

How To Invest

For mutual fund investors, Renewable Energy focused mutual funds are few and far between.  US investors are limited to the New Alternatives Fund (NALFX) and the Guinness Atkinson Alternative Energy Fund (GAAEX).   The former has a 1.25% expense ratio despite the fact that it also has a front-end load, and while the latter is a no-load fund, its expense ratio is a pricey 1.98%.  Given these high expenses, I strongly prefer the Powershares Wilderhill Clean Energy ETF (PBW) and NASDAQ Clean Edge U.S. Liquid Series ETF (QCLN).  Both of these have expense ratios currently capped at 0.60%, which is high compared to a general energy sector ETF such as XLE (0.24%), but is a much more economical way to invest than the sector mutual funds.

Given the relatively high expenses of the sector ETFs, I believe it makes sense for investors who are looking to invest $25,000 or more in the sector for a period of years to build their own ETF from individual stocks gleaned from the holdings of the above ETFs and mutual funds.  This also opens the possibility of focusing on established companies which are early movers into the renewable energy arena, a strategy which is less likely to lead to spectacular gains, but which also gives some protection against spectacular dot-com bust style losses.  

Finally, I believe that, given the complex nature of the technologies, and the sparse coverage of many of the companies by industry analysts, there is still considerable room for active management in the sector.  Given the emotional nature of the reasons for investing in Renewable Energy, a good understanding of practical behavioral finance, as well as an understanding of the technologies are likely to be necessities for success in the active management of an alternative energy portfolio.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 09:14 PM | Permalink | Comments (3) | TrackBacks (0)

Mutual funds are often touted as an inexpensive way to achieve diversification.  With declining brokerage commissions, this is often no longer true.  If you are interested in investing in alternative energy, is a mutual fund or ETF right for you?

Here are the currently available mutual funds and ETFs of which I'm aware with alternative energy type themes:

* These funds are too new to have published turnover ratios, but I anticipate that they will have low turnover (<10% annual) because they are index funds.

Diversification reduces the company-specific risk of a portfolio, but leaves market and sector risk.  Most of these benefits can be captured with a 30 stock portfolio, with greater benefit accruing to investors who make a conscious effort to choose dissimilar companies.  So to determine if a mutual fund, ETF, or stock portfolio is the most cost-efficient way to achieve diversification I will compare the costs across portfolio sizes and time horizons.

The following chart shows the amount of money you will have after the given time period, assuming that the underlying stocks return 10% per year, and dividends are reinvested (which can be accomplished commission-free via DRIPs in a stock or ETF portfolio.)  The 10% return is simply a guesstimate included for demonstration purposes and is in no way to intended to be an actual prediction of returns.  There is never any guarantee of future results.

Values in bold indicate the best investment option (given these assumptions) for any time period/initial investment combination.

An examination of the chart reveals that, at the minimum investments ($2,500 for non-retirement accounts) for NALFX and GAAEX, it is always cheaper to buy one of the Powershares ETFs for a $15 brokerage commission than to pay the high expense ratios and possible load for the traditional mutual funds.  Even the $1000 minimum for retirement accounts allowed by the GAAEX is only a bargain for holding periods less than three years, after which the nearly 2% expense ratio eats too much into the gains.

This demonstrates the well known advantages of using low-cost index funds (in this case index-ETFs) over traditional mutual funds, but as we move to accounts in the tens of thousands of dollars with longer holding periods, even the low 0.7% expense ratios of the Powershares ETFs start adding up, and paying $15 a trade to buy a portfolio of 30 stocks begins to look better.  If you consider that $15 a trade is fairly costly for most online discount brokers these days, and many offer free trades for qualifying accounts.

This leads to the question, if your alternative energy portfolio is in the sweet spot to use the Powershares ETFs, which one(s) should you choose?  The answer will depend mainly on what motivates you to invest in Alternative Energy in the first place.  If you're most interested in Global Warming, you will gravitate towards PBW.  PUW caters to investors concerned about energy security, and PZD companies focus most strongly on traditional environmental issues such as pollution.  For a $3000+ portfolio, the extra commissions involved in splitting your portfolio between two or three will not have a significant impact on your returns.  Or you could buy one, and when then buy a different one when you have more money to invest.

Finally, if you have $20,000 or more to invest, and and can leave it there for a few years, what stocks should you choose? If you don't have time to educate yourself about alternative energy stocks, the simplest way to go about it is look at the holdings of the mutual funds or ETFs you would have bought, if they were not too expensive. PBW, PZD, and PUW have lists of holdings that are particularly easy to use.  It may strike you as strange, to buy a basket of stocks with so little research into the actual companies, but that is exactly what you are doing when you buy any index fund... this technique just lowers the fees if your account is the right size.

Caveats

I have ignored some oft-cited advantages of mutual funds in this analysis, most importantly the ability to make small, regular investments for dollar cost averaging.  I consider this more a matter of self-discipline than good investment strategy.  The point of dollar cost averaging is to discipline ourselves into buying more of a fund when it is relatively inexpensive, and less when it is more expensive (even when we don't really know what expensive or inexpensive is.) Nevertheless, if automatic payments are the only way to force yourself to invest, you can always set up automatic payments into a money market mutual fund, and whenever that fund reaches some fixed amount over something like $1000, you can invest the money in an ETF, or add a stock to your portfolio.  These investments can be used to maintain a balanced portfolio by always investing in underperforming sectors.

None of the investment options I have discussed are truly diversified portfolios; a diversified portfolio will contain investments in a broad range of industries and asset classes.  For most investors, alternative energy should account for only a fraction of the entire portfolio.  If investment in alternative energy is taken as part of a broadly diversified overall portfolio, there is less need to own as many individual stocks for diversification, so long as no one stock comprises more than 2-4% of the entire portfolio.  This makes the individual stock method of investing more attractive, as it will require relatively fewer transactions.

Finally, when investing in a taxable account, owning individual stocks or low turnover ETFs allows the investor to tax-manage the account more effectively.

Shiller on Mutual Funds

In summary, I'll leave the last word to Robert J. Shiller, who noted in his prescient book Irrational Exuberance [p.202],

It is often said that people have learned about the importance of portfolio diversification and are using mutual funds to acheive this.  Given well-managed funds with low management fees, this argument makes some sense.  But many funds charge such high fees that investors might be better off trying to achieve diversification themselves, if diversification is the primary investment motive.  Moreover, when they are investing outside of a tax-free environment, by holding stocks directly investors can avoid capital gains taxes on the gains the mutual fund managers realize when they sell stocks in the funds' portfolios, an important issue with higher turnover funds.  Investors can instead realize, for tax purposes, the losses on the stocks that go down.  Mutual funds clearly have their limitations.

DISCLOSURE: Tom Konrad and his clients do not have positions in any of the securities mentioned here, although they do have positions in many of the stocks owned by these funds.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 06:00 PM | Permalink

Shares of Calpine Corp. (CPN) suffered a greater than 20% loss yesterday and is now down almost another 13% today. All of this was caused by a court ruling stating that they will be unable to use the $395 million in cash they received from the sale of oil and gas fields earlier this year for the purpose of buying natural gas to run its power plants.

The dispute stems from the Bank of New York's decision in September when, acting as trustee for Calpine bondholders, it withheld proceeds from Calpine's sale in July of North American oil and gas fields.

The bank froze the money after the bondholders said money from the sale couldn't be used to buy fuel futures but should be used instead to buy other assets or pay off debt.

The move prompted Calpine to file a lawsuit against the Bank of New York and Wilmington Trust Co. seeking release of the funds, arguing that buying natural gas in storage is allowed under the terms of its notes. [ more ]

When I purchased this stock for the mutual fund I mentioned it was a very speculative play.

Shares in FPL and Calpine Purchased August 15
Calpine Corp. (CPN) is the other utility that I started a position in today. This one is a more aggressive play, but has the potential to generate better results. Calpine supplies electricity from natural gas-fired and geothermal power plants to wholesale and industrial customers in North America. This company has had some serious financial difficulties in the past and is trying to right itself. This is a very speculative purchase and I did not commit very much money into it. I purchased this stock with an average entry price of $3.35 for the mutual fund only.

With the stock now sitting at a dollar and change the big question is should I sell now? As I stated above I didn't purchase a large amount of the stock, so this loser doesn't seriously affect the portfolio. If they would have gotten a positive ruling then the small amount of stock would have seen some good gains. It was a gamble and one that is lost. There are now fears that bankruptcy is just a couple of quarters away. I'm going to sit with my shares for now since it is sitting at the 52 week lows. I will continue to watch this stock to see if they can get an appeal, but the hopes are fading quickly. The company still has a book value of over $6, so it could see itself purchased by a larger company in the future. So I will hold for now.

This is also just another reminder that many of the stocks in the Alternative Energy sector are very small companies. Many are on the verge of breaking out big over the next couple of years, but there are also many that can blow up in your face. So as they say, make sure all your money is not in one basket.

Posted by Mark Anderson at 02:59 PM | Permalink | Comments (0)

ENDESA (ELE) reported a 52 percent increase in third-quarter profit Wednesday and said it will distribute almost 2.12 billion euros ($2.48 million) in dividends for the year. The company said it will pay out nearly 2 euros ($2.34) a share in dividends for 2005. [ more ]

The increased dividend is an attempt to ward off a hostile takeover attempt by Gas Natural. The stock way paying an almost 4% dividend yield and this move takes the divendend up near 12% with the special payout.

Today I purchased the second third of my planned holdings for ELE in the mutual fund.

Posted by Mark Anderson at 01:20 PM | Permalink | Comments (0)

I purchased shares of Mechanical Technology Inc (MKTY) and Medis Technologies Ltd. (MDTL) this morning for the mutual fund and also my personal portfolio.

Both of these companies are working on the miniaturization of liquid fuel cells so that they can power portable electronic equipment like cell phones and laptop computers. Both companies have also secured contracts from the military to research portable fuel cells for military applications. Both companies announced earnings recently and still show no signs of becoming profitable in the near future. However, they have both made progress on trimming their losses. I feel that one of these companies will strike it big in the future so I’m buying both and hedging my bet. Both of these stocks will not see substantial gains until they start producing equipment that makes it out of the beta stage in the next few years.

Both companies are starting to trade at the lower end of their recent trading ranges and are entering the lower risk entry point.

Medis should be a good buy at this price level since it is now sitting on some firm support.

Mechanical Tech is currently sitting on some light support at the $3 level but could trade lower from here down to the $2.50 level and I would buy more that that point.

I purchased a 1/3 holding in each for the mutual fund and a full holding for my personal portfolio.

MDTL was purchased at an average price of $14.93
MKTY was purchased at an average price of $3.04

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 10:25 AM | Permalink | Comments (0)

Shares of Capstone Turbine Corp (CPTC) are rising sharply this morning with high volume and gapped up with a gain of over 35% this morning. There is currently no news to cause this increase today and I will be digging deeper to find out what is going on. This is good news for the stock and also the portfolio. My holdings are now up over 50% in about 10 days.

If you were thinking of buying the stock now, you should wait till some news confirms this move.

Update at 12:15 EST: The only news I can find on the this move is from the Yahoo message boards and an expected announcement of Wall Mart working with United Technologies to supply the PureComfort CHP system for a store in Colorado. The UTX system utilizes the Capstone microturbine. I place zero reliance on message board posts and feel that this news is not the reason. I will keep digging.

Update at 1:25 EST: The Wall Mart story has been confirmed. At least the rumour of a potential big purchase by Wall Mart story has been confirmed. Well even message board posters can get it right sometimes.

Shares of Capstone Turbine Corp (CPTC) , a maker of microturbine generators powered by natural gas, jumped 36 percent on Tuesday on a television report that Wal-Mart Stores Inc. will place a big order for the company's machines. [ more ]

Update at 5:30 EST I should have known this was a Jim Cramer induced rally. He was the one that floated the Wall Mart rumor last night on his TV show. I don't watch him and don't like his hype. The hype is great for traders because it create volatility. So I fully expect this stock to settle back down over the coming weeks as large owners take profits. If you don't have a position in the stock and want to own it for the long term, I would wait and buy below the $3.00 level. I do believe in this company and I have no plans to sell my holdings, I just would not be a buyer at this price level.

Posted by Mark Anderson at 09:51 AM | Permalink | Comments (0)

I purchased shares in
Altair Nanomaterials (ALTI) this morning for both my personal portfolio and also the mutual fund. ALTI is a holding company that specializes in nanomaterials and also contains a life sciences division. The materials company has research in high performance batteries, fuel cells, and photovoltaics.

Altair announced earnings today and the stock is up on the morning trading.

Revenue Increases 68 Percent for Third Quarter and 230 Percent for Nine-Month Period
"An increase in revenue of 230 percent for the first three quarters of 2005 is representative of the significant progress Altair has made over the last nine months," said Altair Nanotechnologies Chief Executive Officer and President Alan J. Gotcher, Ph.D. "We are experiencing solid business development progress and opportunities in both our Performance Material and Life Sciences divisions in several target markets. We expect these opportunities to mature and to produce recurring and sustainable revenues." [ more ]

Today they reported a net loss of $0.04 which is compared to a net loss of $0.03 for the comparable quarter. The increase in this loss is attributed to an increase in investments for new contract R&D projects. The company has been performing well and the number of these new R&D contracts has been increasing.

• Congress to Fund $2.5 Million in Energy and Water Development Appropriations for Altair Nanotechnologies' Nanoscience Research
• Altair Nanotechnologies, University of Nevada Research Foundation and Alternative Energy Consortium Receive $2.5 Million Grant From U.S. Department of Energy

I started a 1/3 position in ALTI today with an average purchase price of $2.54.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 10:52 AM | Permalink | Comments (0)

I placed several trades for the mutual fund this afternoon to start building a position in some of the fuel cell companies. This sub-sector has been under pressure the last couple of months but seems to be building a nice base of support at the current levels. I feel this entire sub-sector is ready for a nice up move and the stocks have been behaving nicely the last week or so. The one stock I seriously considered not adding was Quantum. The stock has been in a steady decline and there is no sign that it’s going to slow down. I'm betting that the general area of support for all the companies in this sub-sector will help to provide some support to this stock. There are also some smaller stocks in this sub-sector that I'm watching as well and may add them soon.

I took a 1/3 position in the following companies for the mutual fund portfolio.
Ballard Power (BLDP) at the average price of $5.03
Fuelcell Energy Inc (FCEL) at the average price of $9.13
Millennium Cell Inc (MCEL) at the average price of $1.63
Plug Power Inc (PLUG) at the average price of $5.91
Quantum Fuel Systems Technologies Worldwide Inc (QTWW) at the average price of $2.72

I also took a position in Millennium Cell Inc (MCEL) as well in my personal portfolio.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 02:47 PM | Permalink | Comments (0)

This morning I purchased shares of Capstone Turbine Corp (CPTC) in both my personal portfolio and the mutual fund. I have been waiting for the stock to show some strength after its recent declines. The stock appears to have some nice support at the $2.25 level as a bottom. They will be announcing quarterly earnings on November 10th.

Capstone Turbine developments and manufactures microturbine generators. The company’s microturbines can also be used as generators for hybrid electric vehicle applications. It also offers Model C60 integrated combined heat and power systems (CHP). A one third stake have been purchased at an average price of $2.75.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 10:31 AM | Permalink | Comments (0)

Scottish Power plc (SPI) is an electrical generation and distribution company primarily focused in the UK. They have two subsidiaries that are based in the US, PacificCorp and PPM Energy. They are currently in the process of trying to sell PacificCorp to Berkshire Hathaway.

PPM Energy is a company with extensive wind energy development and generation. Scottish Power also has extensive wind farms in Scotland and Europe. They are also developing off-shore wind power of the Welsh coast.

This stock has been moving strong recently and it looks like it is building a base at the $40 level. I purchased a 1/3 stake of this stock for the mutual fund at a price of $27.00. I will purchase additional thirds on any pull backs to lower my cost basis. This stock also pays a 4% dividend.

ENDESA (ELE) generates and distributes energy in Spain, Italy, France, and Portugal, and Latin America. They have extensive wind farms in Spain. They are currently trying to fight a hostile bid by one of its competitors Gas Energy. The stock currently pays a 3.5% dividend. Endesa has forumulated a plan to increase the dividend payouts to 7 Billion Euros over the next 5 years to combat the hostile bid. They will accomplish this by disposing of non-strategic assets to generate the future dividend payouts. Full details about their plans can be found on the Endesa website [ pdf ].

The stock has been moving strong over the last month and I have been waiting for a pull back to enter the stock. That pull back has never materialized and I wanted to step into this position before it gets away from me. I'm purchasing a 1/3 stake in the mutual fund at $40.91. I will purchase remaining thirds on any pullbacks from here.

With these purchases I'm now at a 50% invested position in the mutual fund. My plans are to still try to maintain a conservative stock entry strategy as I get closer to 100% invested in the mutual fund. I'm already at an 80% invested amount in my personal portfolio. I will be selling some of my stake in PBW to gain cash as I find new names I want to own in my personal portfolio.

Posted by Mark Anderson at 09:50 AM | Permalink | Comments (0)

The fears of Rita have fallen away and the market is finally moving to the upside again this morning. I have been watching IdaTech (IDA) for purchase for a couple of weeks and I had previously mentioned I have been looking for a good entry point on this stock.

IDAcorp is an Idaho power utility with electrical generation using Hydro, Natural Gas, and Coal. They also own IDATech which manufactures fuel cell solutions. I'm waiting on this one until the technical picture of the chart improves. I would be a buyer if we can either get a retest of the recent $29 support level or a break out to the upside above $33.

I may be jumping the gun on this one in anticipation of a bounce from here so I determined to purchase a starting position. I determined a fixed amount of money of the mutual fund I would be willing to invest in this name. I then decided I will take 1/3 of that total and invest it at this point. Shares of IDA were purchased at a price of $30.11.

IDA is a solid company with good financials and also pays a 4% dividend. I feel that this is one of the safer investments in this sector. The 3 year chart shown below shows a nice uptrend for the last 3 years and it is currently sitting at the lower end of the upward trading channel.

I also purchased some additional shares of Calpine Corp. (CPN) today for the mutual fund and also opened a position in my personal portfolio at a price of $2.61. I used a similar 1/3 approach for Calpine when I made my first purchase. This is my second third of the total amount I'm willing to invest in this name. This brings my average cost down to $2.98 for CPN in the mutual fund. This is still a very risky investment and you should use caution with this one.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 10:32 AM | Permalink | Comments (0)

I currently don't have time to do a complete writeup on this stock, but wanted to let everyone know that I purchased shares in Active Power Inc (ACPW) this afternoon for both my personal portfolio and the mutual fund. The average price was at $3.77. I will updated this post later this afternoon with more details.

Updated at 10:00 PM

As I mentioned above I purchased shares in Active Power Inc (ACPW) this afternoon for both the mutual fund and my personal portfolio. Active Power designs and sells battery-free uninterruptible power supply (UPS) systems. They accomplish this through the use of flywheel technology and they have also developed their CoolAir^TM DC: Thermal and Compressed-Air Storage (TACAS) technology that uses compressed air and heat to provide clean power backup.

Last week the stock made a bullish technical signal with a golden cross using the 50/200 day moving averages. The stock is currently sitting at some support at the $3.50 level and the potential downside could be all the way down to $2.50 by looking at the technical picture. As a long term purchase, I would be willing to buy all the way down to the $2.50 level. My gut is telling me that we will not see anything below $3 for sometime.

However, keep in mind this is a speculative purchase. The company is still not profitable and analyst estimates are not seeing profit opportunities for 2006 either. There is also nobody willing to float an estimate for profits looking out 5 years. The key driver for future growth in this company are more contracts and running the company efficently.

There is plenty of interest in the company and I see positive signs in the company and also the potential for a higher stock price in the future.

On the plus side, there is a history of steady buying of the stock by the Chairman, Mr. Pinkerton. The number of shares short have been steadily declining. They have been making postivie progress on the revenue estimates and also reporting better than expect losses for the most recent quarter. Finally, they have also been securing some large orders recently that have helped the stock on its recent up move.

Active Power Ships Continuous Power System for Use at Chinese National Olympics
announced the shipment of a continuous power system to China for use at the country's National Olympics being held in Nanjing in October. The system integrates an Active Power CleanSource® flywheel UPS, diesel engine generator and transfer switch, all enclosed in a standardized mobile container that allows it to operate in harsh outdoor environments. Control software is also included that allows the user to remotely monitor all aspects of the power system at one central location. [ more ]

Active Power Receives 5.4 MVA UPS Order; Largest Megawatt-Class UPS Order to Date
announced receipt of a new order from Caterpillar Inc. for four 1200 kVA flywheel uninterruptible power supply ("UPS") systems and two 300 kVA UPS systems. The units will be used to protect the state-of-the- art high speed printing operation of a large communications company in the Southeast United States. Shipment is expected to take place within the next two quarters. [ more ]

As I look at this trading for this stock today, I ended up purchasing it at the high of the day and will look for an opportunity in the near future to average down to a better price point for the mutual fund. My plans for my personal portfolio is to let it stand as is.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 01:37 PM | Permalink | Comments (1)

This morning I purchased shares for the mutual fund in two large utility companies that both have extensive research and power generation via renewable energy.

FPL Group Inc (FPL) is an electric utility that is primarily based in the South East. This company owns Florida Power and Light and has been in much of the recent news due to hurricane Katrina. FPL also owns FPL Energy which is a division that provides wholesale electric power that is generated from Natural Gas, Wind, Solar, Hydro, and Nuclear. They currently produce more Wind generated power than any company in the US and they also own two of the largest solar fields in the world. This stock also pays a 3% dividend and I feel is one of the more conservative investments. I wanted to get some money into this name as soon as possible so I purchased shares in this company this morning for the mutual fund with an average purchase price of $45.98. I plan on averaging down my cost basis over time since it is at the high end of its trading range currently. I will be buying more once it comes back down to its 50 day moving average (currently at $43.)

Calpine Corp. (CPN) is the other utility that I started a position in today. This one is a more aggressive play, but has the potential to generate better results. Calpine supplies electricity from natural gas-fired and geothermal power plants to wholesale and industrial customers in North America. This company has had some serious financial difficulties in the past and is trying to right itself. This is a very speculative purchase and I did not commit very much money into it. I purchased this stock with an average entry price of $3.35 for the mutual fund only.

Other utility companies that I'm also looking at are IDAcorp (IDA) and Endesa SA (ELE). Both of these companies are very stable and also pay decent dividends. I will be adding these two stocks to the portfolio eventually, just not now.

IDAcorp is an Idaho power utility with electrical generation using Hydro, Natural Gas, and Coal. They also own IDATech which manufactures fuel cell solutions. I'm waiting on this one until the technical picture of the chart improves. I would be a buyer if we can either get a retest of the recent $29 support level or a break out to the upside above $33.

Endesa (ELE) is a Spanish electric utility with an extensive footprint in Europe and Latin America. They are also heavily involved in Wind power generation. They were recently part of some intense hostile takeover interest earlier this month and the stock has actually soared. I'm waiting to see if the stock can hold these new highs or come back to the mean before I purchase these shares.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 10:40 AM | Permalink | Comments (0)

Energy Conversion Devices Inc (ENER) opened up trading this morning with a gap down to the $33 level. For the last hour it has been steadily rising up from this point.

As I said in my earlier post, I have been looking for a good entry point in this company and feel that the near term support of $33 is an ideal area to place an order. The stock has been on a run for several months and it is always hard to take a new position in a stock that has already seen dramatic increases in a stock price. When this happens I have learned to look for short term pullbacks, or a retest of support lines to start new positions.

The fear (and potential downside) is that the support will not hold and you could be looking at a very big loss. This is where you need to look back at the fundamentals of the company. There is alot of good news about the future of this company, and the most recent earnings announcement points to several optimistic opportunities to look forward to.

"...Cobasys' success in winning purchase orders for its proprietary NiMH battery system solutions for the automotive markets is another big plus for our business," continued Stempel. "Cobasys' ongoing work in hybrid vehicle prototype development will hopefully lead to more opportunities down the road."

"ECD Ovonics is well positioned to capitalize upon the current government and consumer focus on new sources of energy," Stempel said. "We're extremely pleased with the pace of production and shipments at United Solar Ovonic. In the fourth quarter, we manufactured a record level 5.7MW of products with a sales value of $18 million and we're now running essentially at our rated production capacity of 25MW." [ more ]

I purchased shares this morning in both the mutual fund and my personal portfolio at an average price of $34.75.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 10:07 AM | Permalink | Comments (0)

DayStar Technologies Inc (DSTI) has been on my radar for some time and the recent operational update created some renewed interest in the company. The stock traded up nicely over the past couple of days and it is now trading back down to the near term support due to some profit taking on the news. I have been looking for a good entry point on this stock and I feel like today is the day to make the move. Technically, the downside of this stock is that it may not be able to hold its currently levels and could be facing a sharp +30% decline below the $10 level. The cause for this type of decline would have me reevaluate my long term hold on this position.

Currently the company is trading at 5x book value and holds little debt. They are not close to showing a profit, but the prospects of California solar initiatives and the new energy bill are stirring some interest in this company. They are a growing company and plan on adding new manufacturing space and employees to keep up with the research and demand of their products and services.

Today I purchased shares in this company at an average price of $13.46 for both my personal portfolio and the mutual fund. I will continue to be a buyer of this stock below the $15 price level.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 12:42 PM | Permalink | Comments (0)

Hydrogenics Corp (HYGS) is a developer of fuel cell technology and hydrogen generation. They are also working with wind farm technology in the generation of hydrogen. Back in January of this year they successfully completed the purchase of Stuart Energy which compliments their product portfolio.

Shares of the stock have been under pressure for the last couple of months due to missed expectations on Q1 revenue results. There is also some major concern about an increase in product backlog.

In August, HYGS issued their most recent quarterly earnings and are attempting to reassure the shareholders that they are making great strides in incorporating the Stuart Energy division and also working on fulfilling the backlog of orders.

"We believe that the increase in revenues, combined with synergies derived from the Stuart Energy acquisition, will accelerate our path to profitability," continues Rivard. "All in all, we believe we are delivering on the commitment we made at the beginning of the year to achieve renewed financial performance for our shareholders by applying discipline and sound business fundamentals." [ more ]

I have successfully owned this name in the past with some nice gains in one of my trading portfolios. Right now I feel it is poised to move to the upside for a long term uptrend and I purchased shares in both my personal portfolio and my Marketocracy mutual fund portfolio at an average price of $4.00. The stock is currently sitting right against some resistance at the $4.00 and I think it has the momentum to take it out to the upside. The stock has some nice support at the $3.50 level and I would be willing to average back down if it comes back down to this price level.

There are also some other Marketocracy gurus adding this stock to thier portfolios as well, which may (or may not) be a good sign. [ more ]

For those of you that are adventurous, the HYGS MAR 2006 5 Calls look good here if you can get a fill in the $0.50-$0.60 range. There is very little open interest for options on this stock and getting a fill at a decent price may be difficult.

DISCLAIMER: I am not a registered investment advisor. The information and trades that I provide here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Mark Anderson at 12:10 PM | Permalink | Comments (0)

I finally got around to setting up a virtual mutual fund at Marketocracy.com. This virtual fund gives me 1 million in play money to prove my worth. If they like what they see, they will set up a real fund.

Just like every real mutual fund you need to setup an investment charter and style. They will report on performance once you have maintained the mutual fund compliance rules.

In a nutshell they are as follows:

• No position can exceed 25% of your total portfolio value.
• Half your portfolio must be comprised of positions under 10% each.
• Your cash position isn't limited by this guideline, although you must be 65% invested.
• No fund can hold more than 25% of invested assets in Exchange Traded Funds (ETFs) for a majority of the quarter.
• Once you setup an investment style, you can't drift into another style during any specific reporting period.

Once you have met these compliance rules, you will start to be eligible for tracking. The next quarter starts on October 1st. Since I want to run this portfolio like it was REAL money, I feel hard pressed to become within compliance in that short of a time. So I'm going to aim for full compliance starting on January 1st and I will have all of 2006 to prove myself and the value of this investment style.

The style I want to follow with this money is primarily conservative in nature with minimal trading. I plan on keeping a minimal cash position. The main difference and value added I think I can provide compared to the PBW ETF is that I can rotate holding percentages into the various sub-sectors (i.e. Fuel Cell, Solar, Wind, etc.) So if I feel that I will get more bang from my investment buck, I may sell some holdings in the Fuel Cell sector to add to the Solar as an example.

I will start to place my trades in the coming days and will detail each of the trades and why I like them here on the website. Some of these trades will overlap with the real trades I make with my real portfolio and I will detail the specifics here as well along with more details about this program.

As an aside, I tried to place a trade in LSGP when I purchased it in my portfolio. They would not allow a purchase of this stock since it trades so thinly. So some of these early stage development companies will not be included in the mutual fund holdings.

Posted by Mark Anderson at 01:54 PM | Permalink | Comments (0)

Investing in a portfolio of companies involved in alternative energies such as wind, solar, and hydrogen fuel cells has been challenging, but it is now getting easier. Last month saw the launch of the WilderHill Clean Energy Index (ECO), a benchmark comprised of publicly traded companies involved in alternative energies that is published by the American Stock Exchange. [ more ]

A listing of the index components for this ETF can be found at the AMEX website. This is great news and also a great way to invest in Alternative Energy Companies. I feel that ETF's are much more cost efficient and easier to use than mutual funds. This ETF is scheduled to launch in October and I will post the ETF ticker symbol when it starts trading.

Posted by Mark Anderson at 08:13 AM | Permalink | Comments (1)