Money and Investing Thoughts

Each week I recap the results of the WilderHill New Energy Global Innovation Index, symbol NEX, and published by New Energy Finance Ltd. The index consists of approximately 90 stocks from 22 countries. The NEX is the tracking index for the PowerShares Global Clean Energy Portfolio ETF (PBD: 9.70 0.00 0.00%).

For the week the NEX was down 2.4%. This week the index did a little better than the NASDAQ and S&P 500 which lost 6.3% and 4.9% respectively. AMEX Oil, standing in for conventional energy, gained 1.7%. The top sector in the NEX was power storage with a gain of 11.6%. The wind sector was 7.3% and both sectors benefited from very strong gains from Japanese components.

The worst performing sector for the week was hydrogen and fuel cells, losing 13.7%. All 3 companies in the sector lost ground. The solar sector was also down 10%. Wind and solar are the two largest sectors in the NEX and have about an equal weighting.

Here are the top and bottom performing stocks from the index for the week:

NEX top gainers since 04/11/08
GS Yuasa Corp. 6674 +47.5%
Japan Wind Development 2766 +46.4%
Sanyo Electric 6764 +30.3%
Verenium Corp. VRNM +21.4%
Takuma 6013 +14.6%

NEX top losers since 04/11/08
JA Solar Holdings JASO -34.5%
Aventine Renewable Energy AVR -27.5%
SunPower Corp. SPWR -26.2%
Suntech Power STP -25.6%
Maxwell Technologies MXWL -24.5%

I check in on the front page of Marketwatch.com and I spy a new index over there on the right side with the other indexes, oil price, bond yields and gold. It is called the Global Dow at MarketWatch and as I hover over it I see it just started tracking today, 11-11-2008. So I am curious and start digging to see if there is any new news but find very little.

The Global Dow, symbol GDOW, started tracking yesterday on Google Finance, half-way through yesterday on MarketWatch and this morning on Yahoo Finance. A couple of search tries at WSJ.com came up empty.

Here are some interesting facts on this new index. They have back dated to get returns back to 2001 (base value 1000 on 12/31/2000), but we will consider the index newborn yesterday. The GDOW opened on Monday, 11-11, with a value of 1,558.34. It is sitting right at 1,500 as I write this. The index consists of 150 stocks from both established and emerging markets and both established and emerging industries. The component stocks were chosen at the whim of the folks at Dow Jones. More data:

• Median market cap: $33 billion.
• Mean market cap: $51 billion.
• Smallest and largest market cap: $1. billion and $385 billion.
• Dividend yield: 2.98%
• Trailing PE (including negative): 11.52

Breakdown by region:

• North America: 43.91% (U.S.: 42.27%)
• Europe: 31.99%
• Asia + Australia: 21.29%
• Latin America: 2.82%

All data is as of October, 31, 2008. Source Dow Jones.

I like having a single global index to keep an eye on and it will be interesting to see how the components change as time goes along. You can see the complete list of companies in the index and obtain more information at www.globaldow.com.

I have started writing a new blog with a focus on WordPress blogging and general computer use with a little wine drinking and travel thrown in. I only have a few post up, but the most recent is about the programs I use to protect my computer: firewall, anti-virus, spyware remover, etc. I have put together a list of completely free security programs that work very well. I am constantly trying out new software options so I thought it would be a good idea to share my findings with others.

So hop on over to my other blog a check out: Build your own free security suite.

IEA doubles forecast for oil price by 2030 – International Herald Tribune.

The International Energy Agency apparently believes the current pull back in energy prices is just a downward blip in the longer term increase of oil prices. Last year the agency forcast a nominal oil price of $108 per barrel by 2030. This year they have increased their projected price to $200.

They forecast global demand to grow by 1% per year from the current 85 million barrels per day to 106 million barrels per day in 2030. Demand for all energy is forecast to grow by 1.6% per year.

Energy costs are very cyclical and have dramatic increases or decreases against small changes in global economic growth. Speculative excesses play a major roll in the dramatic price swings, but this current down turn in energy prices may be short lived.

At the risk of repeating myself, I really do not understand why the market values Aircastle Ltd. (AYR: 14.14 0.00 0.00%) as low as it does. The aircraft leasing company has great cash flow, pays a nice dividend and has a low debt to value ratio. Let me lay out the facts and remember the current share price as I write this is $5.63 and the market cap of the company is $442 million. Figures are from today’s 3rd quarter earnings release.

• Aircastle’s modern fleet of aircraft has a book value of $4.0 billion. The company debt is $2.5 billion. They have $1.5 billion of equity in their aircraft vs. a market cap of $442 million.
• For the 3rd quarter AYR had free cash flow (net income plus depreciation) of $1.12 per share, or annualized $4.48 per share of free cash flow against a $5.63 share price.
• The annual dividend is $1.00 per share giving the stock a yield of 17.7%. They have 4.5 times coverage of the dividend in free cash flow.

These results are pretty much the same as Aircastle has produced for the last 3 quarters. Their aircraft are 99% leased out and all financing is secure until 2013. Every time the stock gets hammered I wonder what I missed and each quarter the results come out with strong earnings and cash flow. I do not see any reason why this is not a $15 stock. If it was a $15 stock, the board might be tempted to start increasing the dividend, which they could easily do. At the current stock valuation they are just as well off keeping the cash or paying down debt. AYR is a component of this site’s Income Portfolio.