Alternative Energy Stocks

by Daryl Roberts A potentially paradigm-shifting technology has been under development at an R&D firm in NJ called Brilliant Light Power.   For people monitoring the situation, the question currently is about the status of commercialization.   It is not a publicly held firm, but is in mid-stages of private equity capitalization in the range of $100-120M. I recently read a book  titled "Randall Mills and the Search for Hydrino Energy", offering a detailed and compelling history of the development of this novel renewable energy technology, authored by an insider, an intern who stayed on to work there for several years (published in...

by Tom Konrad, Ph.D., CFA Last week, two of the stocks in my Ten Clean Energy Stocks model portfolio cut their dividends.  Covanta Holding Corp (CVA) dropped its quarterly payout from $0.25 to $0.08 (a 68% cut) while Green Plains Partners (GPP) slashed its quarterly distribution from $0.475 to $0.12, a drop of 74.75%. Before reducing their dividends, both companies had payout ratios near 100%, meaning that substantially all of their free cash flow was going to pay dividends.  In general, companies are very reluctant to cut their dividends because it is a signal that their management thinks they cannot grow...

by Debra Fiakas, CFA Initially investors were worried about a few delayed orders as a consequence of the coronavirus outbreak in China.  The global supply chain, of which China is a critical link, would be temporarily interrupted by work stoppages in that country.  As the virus jumped to other countries it became clear that businesses all over the world could experience business interruption and that could mean significant earnings erosion.  Investor alarm spiked as denial and dysfunctional appeared to be the main themes in the U.S. policy response to the situation.  Panic ensued destroying billions in the U.S. capital base.  Bank of America estimates the...

by Tom Konrad, Ph.D., CFA Of the few survivors of the dot com bust, Ebay (EBAY) is a perennial also-ran.  It owned the market for consumer-to-consumer (C2C) transactions in 2000, but has since repeatedly lost market share.  Nevertheless, the company remains a profitable business that enables the sustainable reuse of easy to ship items while returning cash to investors. Note: My supporters on Patreon got an early look at this article.  Want to support my work and get previews of my writing?  Join them here. The Competition for Sellers In the early 2000s, Ebay lost sellers to Amazon's (AMZN) marketplace, which had the...

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...

by Jim Lane In California comes the news that synthetic biology leader Amyris (AMRS) is stepping out to help fight COVID-19. Amyris may be more well known for its sustainable ingredients for the Health & Wellness, Clean Beauty and Flavors & Fragrances markets, but as you all know, things have changed a lot over the last few months and Amyris is now launching a hand sanitizer to help address the high demand triggered by COVID-19. Additionally, the company has completed initial testing of a leading vaccine adjuvant. Amyris is leveraging its existing capabilities to fast track the availability of a safe...

by Jim Lane If you’ve not heard, NuGenTec is looking for Distillers to help supply Ethanol for Hand Sanitizers in California! We have two automated bottling lines waiting for ethanol to produce 8oz and 16oz gel type hand sanitizers, they write. You can learn more here. And as we reported this morning, Aemetis (AMTX) is one of those companies jumping into the market, even as transport fuel demand falls off, driving fuel ethanol prices into an all-time low range of around $0.70 per gallon. The shortage is real If you’ve been trying to buy hand-sanitizer, it’s been hard to find. Here in Digestville, we’ve...

by Debra Fiakas, CFA After years of promises Ocean Power Technologies (OPTT:  Nasdaq) is finally realizing revenue from its ocean wave power innovations.  Sales in the quarter ending January 2020, was $725,000  -  more than double the same quarter in the previous fiscal year.  Driving the top-line is the sale of one of the company’s signature PowerBuoy ocean wave power generation system to Enel Group (ENEL: BIT; ESOCF:  OTC), Italy’s premier energy company. Some investors might find Enel an unlikely customer for a renewable energy device like the PowerBuoy.  Designed to convert the mechanical energy in ocean waves to electrical energy, the PowerBuoy has been years under development.  Ocean Power has long touted the potential in...

by Jim Lane In Washington, what must have become a weary if vigilant posse of the nation’s biofuel and farm advocates are out on the hustings again this week, over a fresh attack on the US Renewable Fuel Standard, this one led by officials in the Trump Administration, if a story reported by Bloomberg stands up against scrutiny. What has been described as a “misinformation campaign spearheaded by Senator Ted Cruz” is seeking to overturn a unanimous court decision that would halt the Environmental Protection Agency’s abuse of Small Refinery Exemptions (SREs) under the Renewable Fuel Standard.   The backstory In a unanimous panel, the...

by Tom Konrad, Ph.D., CFA This monthly update for my Ten Clean Energy Stocks model portfolio is in two parts.  I published my thoughts on the current market turmoil on March 2nd.  You can find them here.  I'm not even going to get into the Fed slashing interest rates like they were a furniture warehouse going out of business on March 3rd except to say that apparently they are more afraid of the effects of covid-19 on the economy than they are of appearing to panic. You can see overall performance for January and February in the following chart.  Not that...

by Tom Konrad, Ph.D., CFA On February 21st, I was helping an investment advisor I consult with pick stocks for a new client's portfolio.  He lamented that there were not enough stocks at good valuations. This is one of the hardest parts of being an investment advisor: a client expects the advisor to build a portfolio of stocks which should do well, but sometimes, especially in late stage bull markets, most stocks are overvalued.  I reminded him, "The Constitution does not guarantee anyone the right to good stock picks."  He agreed, but he still had to tell his client that...

Tom Konrad, Ph.D., CFA A reader asked: Read your recent article on Pattern Energy (PEGI). Great summary and thoughts. Would like to ask your view on TERP potential takeover by BEP (via shares swap) and whether you reckon the recent run-up on TERP is too excessive? It's a good question, and one that Robbert Manders on Seeking Alpha did a thorough analysis of here.  For the details of the merger, I refer you to his work. While his analysis is careful and complete, I disagree with his conclusion.  TERP shares are not trading at a significant premium to the merger value.  The reason is...

by Tom Konrad Ph.D., CFA This morning, hedge fund Water Island Capital called on Pattern Energy (PEGI) Shareholders to vote against the merger with the Canada Pension Plan Investment Board (CPPIB). Water Island claims the merger is undervalued compared to the recently surging prices of other Yieldcos, and that PEGI would be trading at over $30 given current valuations.  There are not a lot of other Yieldcos left, especially if we eliminate those with their own special circumstances.  These are Terraform Power (TERP) which is subject to its own buyout agreement with Brookfield Renewable Energy (BEP), and Clearway (CWEN and CWEN/A) where...

by Prashant Vaze, The Climate bonds Initiative In January, authors from several institutions under the aegis of BiS, published The Green Swan Central banking and financial stability in the age of climate change setting out their take on the epistemological foundations for, and obstacles against, central banks acting to mitigate climate change risk. The book’s early chapters provide a cogent and up-to-date analysis of climate change’s profound and irreversible impacts on ecosystems and society. The authors are critical of overly simplistic solutions such as relying on just carbon taxes. They also recognize the all-too-evident deficits in global policy to respond to the threat. In short, they accept the need for central banks to act. The Two Arguments  The paper makes two powerful arguments setting out the challenges central banks face using their usual mode of working. Firstly, climate change’s impact on financial systems is an unknowable unknown – a...

by Tom Konrad, Ph.D., CFA January 2020- where do I start?  A year of market-shaking news in a month. The Brink of War The month started off with a literal bang when Trump decided that a good way to distract the public from his impeachment trial would be to try to start a war with Iran by assassinating one of Iran's top military leaders, Qassem Suleimani.  A week later, the world and markets heaved a collective sigh of relief when Iran decided that their honor had been satisfied with two missile strikes on US bases.  While Trump reported no casualties, Iran's Foreign...