Will Climate Advocacy Pay for Shareholders?
On Monday, we learned about big coal companies pushing back against the major US corporations of the US Climate Action Partnership (USCAP,) which advocates for mandatory regulation of greenhouse gas with their own lobbyists. Since I have advocated buying companies that take a proactive stance on climate change, I thought it might be instructive to compare the returns of the original ten members of US-CAP with the returns of the big coal coal companies (more companies have since joined,) over the six months since the Climate Action Partnership issued their Call for Action on Climate Change. The Payoff ...
The Catholic Church Shouldn’t be Investing in Abortion Clinics
Tom Konrad CFA Jesus Saves, but where does he invest? Photo via Bigstock. This article is not about the Church, or abortion. As far as I know, the former does not invest in the latter. This article is about investing, and morality. Since 350.org began its campaign to get endowments and pensions to divest from fossil fuels, I've heard two basic criticisms of the movement from my colleagues in the investment management profession. Endowments selling their fossil fuel investments won't stop us from using fossil...
An Elephant Hunter Explains Market Dynamics
John Petersen Friday afternoon was a strange time for Axion Power International (AXPW.OB). After trading 200,000 shares early in the day, Axion filed $28 million mixed shelf registration with the SEC at about one o'clock and the fly on the wall reported the filing within minutes. It seems that some stockholders were spooked by the news and assumed that Axion would sell stock right away instead of waiting for the fall deal season. Their knee-jerk selling shoved another 1.1 million shares into the market in three hours and made Friday the second heaviest trading day in Axion's history....
Climate-Risk Adjusted Returns and the Weasel Coefficient
By Tom Konrad, Ph.D., CFA
An 80% Weasel Coefficient
Some activists, including a friend of mine, recently had a conversation with representatives of TIAA to try to persuade them to divest from fossil fuels. The conversation was mostly cordial, but predictably did not get anywhere.
One of the activists summed up the response from TIAA as “a non-response with a weasel coefficient of at least 80%.” Regarding the weasel coefficient, he also asked,
Can anyone explain to me what "our overarching strategy which targets climate-risk adjusted returns over the long-term” means in plain English?
Well, yes. Yes I can.
Climate Risk Adjusted Returns
When an investment...
Short Demand for Cree High and Rising
I got a call from my broker this morning asking me if I'd be willing to loan out my shares of Cree, Inc. (NASD:CREE) to a short seller. Since the only cost to me is that I will not be able to vote my shares, and I will earn 2.5% per annum on the value, I said "yes." Normally, brokerages get the shares they lend out to shorts from margin accounts with a margin balance. Since I never carry a balance (although I do have a margin account in order to trade options) they must ask my permission...
How Weather Risk Transfer Can Help Wind & Solar Development
by Daryl Roberts
The Need To Accelerate Renewables Adoption
Renewables are growing rapidly as a percentage of new electric generation, but are still being assimilated too slowly and still constitute too small of a fraction of total generation, to be able to transition quickly enough to scale into a low carbon economy in time to mitigate climate change.
The issue of providing public support, with subsidies and other reallocation methods, is a politically charged subject. High carbon advocates, for example American Petroleum Institute, argues that support for renewables distorts the market. On the other hand, it has been argued, for example by...
Pop Goes the Clean Energy Stock Bubble
by Tom Konrad, Ph.D., CFA
2020 ended with a massive spike in clean energy stock prices. From the end of October, election euphoria drove Invesco WilderHill Clean Energy ETF (PBW) from $63.32 to $136 at the close on February 9th, a 114% gain in 100 days.
Joe Biden is as strong a supporter of clean energy as Donald Trump was a supporter of big fossil fuel companies, but even with control of the presidency and both chambers of congress, there is a limit to what a president can do in a short time. This is especially true when their top priority...
Voting and GameStop
Only a couple weeks ago, I quoted the market aphorism, “In the short-run, the market is a voting machine, but in the long-run, it is a weighing machine.”
It comes to mind again now that Robinhood types are short squeezing hedge funds with GameStop (GME) and other nostalgia stocks.
It's another example that any strategy that relies on valuation affecting prices in the short run (like stonks betting that GME would go down because it lacks a viable business) is incredibly risky. It's also incredibly risky to bet that any trend driven by popularity will last. Eventually, there are going...
Money Managers See Value in Clean Energy Sector, but Hesitate to Call the Bottom
Tom Konrad CFA Three green stock specialists see individual stocks at attractive values, but think it's too soon to call the bottom for the sector as a whole. Last month, I wrote that I'm again finding clean energy stocks that I think are bargains, and listed ten. I was not ready to call a bottom for clean energy, and in fact said I expected the market to get worse before it gets better, so investors should keep some money on the sidelines to wait for more opportunities to emerge. In a little over a month...
Shorting The Least Green Companies
Newsweek recently released its 2009 Green Rankings for America's 500 largest corporations. Investors would do well to examine the bottom of the list, as well as the top. Tom Konrad, Ph.D., CFA I'm getting more and more company in worrying about a market peak. If you, like me, are Interested in green investing, and hedging your exposure to a market decline, you should probably also be interested in turning Newsweek's Green Rankings upside-down, and use some decidedly un-green companies as a hedge against the market risk of your greener portfolio. If you believe that...
Ten Clean Energy Stocks for 2020: Trades
by Tom Konrad Ph.D., CFA
Four weeks ago, I predicted that the 12% market correction we had seen would turn into a true bear market. Bear markets are often defined as a decline of more than 20% for the major market indexes, but I find it more useful to focus on long term changes in investor sentiment.
What I did not predict was just how severe the effect of the coronovirus shutdown would be on the economy. I thought we would need the combined of the effect of the shutdown and investors re-assessing their risk tolerance to bring us into full...
A Quick Clean Energy Tracking Portfolio
Yesterday, I outlined a strategy to approximately replicate the performance of a Clean Energy mutual fund at much lower cost, with only a couple hours of effort. I gave a cost example based on $5000 invested in 5 stocks, with another $1000 worth of a single stock added in each subsequent year. This is the procedure I would use to select the initial five stocks. Collect all the top five or ten holdings of the available Clean Energy mutual funds. This data is available from Morningstar, and on fund sponsor's home pages. A few of these holdings may...
Do You Need To Invest In Oil To Benefit From Expensive Oil?
Two months ago, Tom told us how he'd dipped a toe into the black stuff (i.e. bought the OIL etf) on grounds that current supply destruction related to the depressed price of crude oil would eventually lead to the same kind of supply-demand crunch that led oil to spike during the 2004 to mid-2008 period. If you need evidence that the current price of crude is wreaking havoc in the world of oil & gas exploration, look no further than Alberta and its oil sands. The oil sands contain the second largest oil reserves in the world after...
The Big Win You Missed
by Tom Konrad, Ph.D., CFA
My friend Jan Schalkwijk, CFA of JPS Global Investments just asked me if I had any thoughts on Kontrol Energy (KNR.CN, KNRLF), a Canadian smart building firm I had never heard of. (I just added it to AltEnergyStocks.com's Energy Efficiency and Smart Grid stock lists.)
The stock had just shot up after the client sold and went on a kayaking trip. It had disclosed a sensor for detecting COVID-19 from the air.
While I didn't have anything to say about the company, I did have some thoughts on dealing with the emotions around missing out. Since it's...
Navigating the Clean and Bloody Streets of Europe
Tom Konrad CFA Blood In the Streets Walter Rothschild, 2nd Baron Rothschild Image via Wikipedia Baron Rothschild was an 18th century British nobleman who supposedly originated the phrase "Buy when there's blood in the streets, even if the blood is your own." Although accounts differ, Rothschild was a successful banker, and supposedly made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. True or not, the...
Green Energy Investing For Beginners, Part III: Before You Invest
Tom Konrad, CFA Before you consider green stock market investments, invest in yourself. A reader of my article on asset allocation for green energy investors brought up an important point: we may have green opportunities in our own lives, such as improving the energy efficiency of our homes, which will return much safer and higher returns than green stocks, especially when the market as a whole is as overvalued as I currently believe it is. Homeowners typically have a large number of high-return energy efficiency investments they can make. Since energy efficiency reduces energy use, it both produces returns...
