Money and Investing Thoughts

Time again for the weekly update on renewable energy. The NEX is the benchmark for the PowerShares Global Clean Energy Fund ETF (PBD: 9.70 0.00 0.00%). PBD is my choice on this site for exposure to the renewable energy sector and is a component of my hypothetical 20 Stock Portfolio. I receive weekly updates from NEX via email and pass along some of the highlights here. All data is for the week ending the previous Friday.

Last week the NEX was in line with the broader market falling 2.4%. Solar was again the worst performing sector, down 8.3%. It appears that solar power companies are starting to feel the effect of competition, high raw material costs, expiration of the investment tax credit at the end of 2008 and very optimistic stock valuations.

Four of the 7 sectors in the index had small gains for the week, led by the 2.8% gain in power storage. Wind energy came in 1.3% higher. Here are the stars and dogs of the index from last week:

NEX top gainers since 26/02/08
Brasil Ecodiesel Industria e Comercio de Bioc ECOD3 + 35.1%
Japan Wind Development 2766 + 25.4%
American Superconductor AMSC + 12.3%
Babcock & Brown Wind Partners Group BBW + 10.2%
Anhui BBCA Biochemical 930 + 9.2%

NEX top losers since 26/02/08
EnerNOC ENOC - 41.1%
Comverge COMV - 28.1%
Solaria Energia y Medio Ambiente SLR - 21.4%
LDK Solar LDK - 20.3%
Schmack Biogas SB1 - 19.5%

The current overall crappy market plus a lull in the excitement for new renewable energy investments will probably hold this sector back for a while. I do think that long term renewable energy companies will make investors some serious profits.

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

Every time it looks like Thornburg Mortgage (TMA: 0.00 N/A N/A) is back on track to profitability, it gets whacked by more bad news. Last week they announced they had to cough up $300 million to meet margin requirements. Today, they are on the hook for another $270 million. They do not have the cash!

The margin calls come as the mortgage securities are marked-to-market and prices are falling. Although TMA plans to hold the securities until repaid, they must still meet margin requirements. Since Thornburg does not have a default problem with their portfolio, it seems someone is putting the squeeze on them, or just rampant fear rules the mortgage security market, no matter what the quality.

If Thornburg can survive this round, I assume the security prices will recover at some time and the company will the cash. Also, today the company announced they had successfully securitized $1 billion in high quality hybid ARMs. How does that work out?

A week ago the stock was $12+, now $4. A month ago, CEO Larry Goldstone was very high on the company’s prospects. Now many in the financial press are predicting bankruptcy. I have had a lot of faith in the management of TMA, but this time I am not sure they can fight the entire mortgage market meltdown. I will be hanging on to my long positions in TMA but can really understand those who have or are tempted to bail out.

Official press release here. Read it and make your own decision on what is between the lines.