Tom Konrad CFA
September Overview
September was another quiet month for my Clean Energy model portfolio and the stock market in general, with the exception of Finavera Wind Energy (TSX:FVR, OTC:FNVRF), which put itself up for sale last Monday (see below.)
Since my last update, my model portfolio rose a modest 4.5%, shadowing my broad market benchmark, the Russell 2000 index (^RUT), also up 4.5%. Although my clean energy picks rose in line with the broader market, the clean energy sector as a whole lost 0.6%, as measured by the most widely held clean energy ETF, the Powershares Wilderhill Clean Energy ETF (PBW).
For the year, my clean energy model portfolio increased its lead compared to PBW to 26%, but still lags the broad market by 9%. The unhedged portfolio is up 6.5% for the year, while the hedged portfolio is down 0.4%, having lost money on the hedge as the broad market rose. For comparison, PBW is down 16.1% and the Russell 2000 is up 15.4%.
For details on the performance of my individual picks, see the chart and discussion below.
Stock Notes
Among individual stocks,
- Western Wind Energy (TSX-V:WND / OTC: WNDEF) gained 8.2% over the month as management released more details about the sale process, revealing that 14 potential buyers were looking over company data, and five other interested parties were in the process of negotiating non-disclosure agreements so that they could also look over the data. Some uncertainty also was dispelled when management saw off an attempted by Savitr Capital to replace the board at the company’s annual meeting on September 25th with 74% of the vote.
- On October 1st, Finavera Wind Energy (TSX:FVR, OTC:FNVRF, up 30.4%) shot up after announcing that it had put itself up for sale and was already in discussion with three serious bidders. This was most likely prompted by the termination of a planned sale of the company’s Wildmare wind project to Innergex Renewable Energy Inc. (TSX: INE, OTC:INGXF), leaving Finavera desperately short of liquidity. On Friday, Finavera revealed that it had entered discussions with a fourth potential acquirer, and that initial bids are expected soon. The fourth bidder is most likely B9 Energy of Northern Ireland, since Finavera director Robert Ian Harvey stepped down because of a “conflict of interest with one of the bidders” the same day the fourth bidder was announced. Harvey is a founding director, shareholder, and CFO of B9. B9 is the largest independent operator of wind farms in the UK.
- New Flyer Industries (TSX: NFI / OTC:NFYEF) was up1% from last month. The company declared second-quarter earnings of $3.6 million, compared to a $7.3 million loss in the second quarter of 2011. Canaccord Genuity increased it’s price target for NFI from $7.25 to $8.00, but BMO Capital markets reduced it’s price target from $7.50 to $7.25. The stock was helped by the rising Canadian dollar, but hurt by lower production caused when New York City delayed an order for 90 buses in order to complete an independent review.
- Waste Management (NYSE:WM) fell 6.7% on a downgrade to neutral from overweight by JP Morgan, which also lowered its price target to $34 per share.
- Rockwool International A/S (COP:ROCK-B, OTC:RKWBF) advanced 11.3%, riding the improving outlook for Europe and a strengthening Danish Krone, but did not release any significant company news.
- Lime Energy (NASD:LIME, down 1,6%) continued to tread water as investors wait for the results from an internal investigation into the company’s revenue reporting. Early in the month, I thought Lime had found a bottom at $0.70 because it looked like everyone who wanted to sell had sold. I was wrong about that: Volume selling resumed in force on September 27th, knocking the stock down to $0.69 at the close on October 5th. I picked up a little more at $0.65 with a limit order.
There was little change for Alterra Power (TSX:AXY / OTC: MGMXF, down 5%) , Accell (Amsterdam:ACCEL, down 1.5%), Veolia (NYSE:VE, up 2.1%), Honeywell (NYSE:HON, up 5%), or Waterfurnace Renewable Energy (TSX:WFI, OTC:WFIFF, up 3.5%).
DISCLOSURE: Long WFIFF, LIME, RKWBF, WM, ACCEL, NFYEF, FNVRF, WNDEF, MGMXF, VE.
DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results. This article contains the current opinions of the author and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
