Money and Investing Thoughts

I follow the NEX to track the results for the PowerShares Global Clean Energy Fund (PBD: 9.70 0.00 0.00%). This ETF is my choice for investing in the renewable energy sector. New Energy Finance, the managers of the index, release weekly performance number (through the previous Friday) and I pass along some of the facts here.

Last week was positive for the NEX, up 4.9%. The NASDAQ and S&P 500 were flat for the week. Power storage was the top sector, up 9.4%. Hydogen and fuel cell developers lagged with a 0.2% gain. Notable was wind energy, 13 of 15 companies were gainers, but Zoltek (see below) trimmed the sector’s gain to 3.5%.

Here are the winners and losers for the week:

NEX top gainers since 12/02/08
Renewable Energy Corp REC + 28.3%
Sanyo Electric 6764 + 25.2%
SolarWorld SWV + 24.8%
Q-Cells QCE + 21.9%
ErSol Solar Energy ES6 + 21.4%

NEX top losers since 12/02/08
Zoltek ZOLT - 20.7%
Ultralife Batteries ULBI - 13.5%
International Rectifier Corp IRF - 9.1%
Solaria Energia y Medio Ambiente SLR - 6.1%
Plug Power PLUG - 5.8%

Note: I currently do not have a position in PBD.

This subheadline on the front page of MarketWatch.com caught my eye:

U.S. agriculture department recalls 143 million pounds of frozen beef , most of which has probably already been eaten. (emphasis added)

This appears to be another case of a government agency taking good care of the public. With the market closed today this is probably as good as it is going to get.

Nordic American Tanker (NAT: 14.59 0.00 0.00%) has released their 4th quarter results, and they are not at the level of income and dividend I expected. You can read the press release here:

http://www.nat.bm/IR/press_releases/1190674.html

With per day spot rates averaging $27,000 for the quarter, the company was able to raise the dividend to 50¢ from the 40¢ in Q3. I was expecting them to get closer to the $1.00 paid a year ago. Spot rates for tankers did not pick up until January when the company was making $45,000 per day. So the 1st quarter should show improved results.

Investing in NAT is an experience for the patient. The company makes all of its money leasing their dozen Suezmax tankers on the spot market. The majority of the free cash flow is paid out as dividends. The challenge is the tanker spot market, and thus the dividends, can and will fluctuate wildly. The last couple of quarters have been some of the lowest in the company history. I like Nordic American because they have the lowest expenses per day in the tanker space, so when things are good they are really good. They have also been growing the fleet, up from 3 ships in 2004 and 2 more currently on order.

A note of humor, CEO Herbjorn Hansson had this interview on CNBC. Bad information and bad questions abound. For starters, I am pretty sure NAT is not even near the top for being the largest tanker company. Take a look and judge for yourself.

Nordic American Tanker (NAT: 14.59 0.00 0.00%) is a component of this site’s 20 Stock Portfolio. I currently do not have a position in NAT.

The NEX is an index of over 80 renewable/alternative energy companies, worldwide. The PowerShares Global Clean Energy Portfolio (PBD: 9.70 0.00 0.00%) is an ETF that tracks the NEX and I have it in this site’s 20 Stock Portfolio to give exposure to the renewable energy sector.

This formerly high flying sector has definitely come back to earth over the last few months. My main reason for picking an ETF for the 20 Stock Portfolio was the outrageous valuations many of the companies in this sector had, so I considered it prudent to spread the risk by using an ETF.

On to the results for the week ending last Friday (2/8). The NEX fell by 7.4% with the solar energy sector leading the way downward -10.9%. Here are the best and worst performing stocks for the week:

NEX top gainers since 05/02/08
Cree CREE + 8.4%
MEMC Electronic Materials WFR + 6.7%
BKW FMB Energie BKWN + 6.5%
Japan Wind Development Co + 5.8%
Fortum Oyj FUM1V + 5.4%

NEX top losers since 05/02/08
Conergy CGY - 36.6%
Renewable Energy REC - 23.5%
VERBIO Vereinigte BioEnergie VBK - 19.6%
Q-Cells QCE - 16.0%
Solaria Energia y Medio Ambiente SLR - 15.5%

Source: New Energy Finance

Note: I currently do not have a position in PBD.

Terra Nitrogen Company, L.P. Reports Fourth Quarter and Full-Year Results; Declares Cash Distribution: Financial News – Yahoo! Finance

Terra Nitrogen’s (TNH: 200.00 0.00 0.00%) $4.45 fourth quarter dividend is over double the 3rd quarter distribution and 4.5 times the 4th quarter 2006 distribution. Thing appear to be good in the fertilizer space. Taking a look at the earnings release shows the company has been able to raise the price on their primary product 75%. If corn and other grain prices stay high, TNH should generate some excellent profits for 2008.

I have been a little skeptical of TNH recently, the strong runup in price over the last 6 months made me wonder if they could sustain profit growth. So far they have. The possible problem is that this L.P. generates revenue from a single fertilizer plant that has been running at 100% capacity. The only room for increased profitability is increased prices. If or when the agriculture bull market turns south, the health distributions from Terra Nitrogen will be in serious jeopardy.

At this point, however, the company is still on the upward curve of prices and profits. The spring quarter is usually strong for fertilizer sales, so it appears there is at least another quarter of good news coming.