New Energy Finance - NEX - Week in Review
If this is Tuesday, I must be writing about renewable energy. Time for my weekly update on last week’s results for the WilderHill New Energy Global Innovation Index of renewable energy companies-NEX. For investors, the NEX is tracked by the ETF: PowerShares Global Clean Energy Fund (PBD: 29.29 +0.43 +1.49%). The NEX offers a broad, global snapshot of renewable and clean energy companies.
For last week the NEX gained 2%, outgaining the NASDAQ at a +1% and the S&P500 which was off -0.3%. Solar energy came in as the top sector for the index, gaining 4%. Five of the 7 sectors in the index were positive. The only two negatives were renewable-other (mini-hydro and geothermal) and hydrogen/fuel cells losing 0.9% and 0.3%, respectively.
Here are the winners and losers from the index for last week:
NEX top gainers since 06/05/08
Energy Conversion Devices ENER + 54.7%
Capstone Turbine CPST + 16.8%
Centrotec Sustainable CEV + 14.0%
American Superconductor AMSC + 13.2%
Brasil Ecodiesel Industria e Comercio de Bioc ECOD3 + 12.2%
NEX top losers since 06/05/08
Aventine Renewable Energy Holdings AVR - 12.2%
Cree CREE - 7.0%
Conergy CGY - 6.5%
Byd Co 1211 - 6.4%
Verenium VRNM - 6.0%
Note: I currently do not have a position in any security listed.
VeraSun Energy beats the odds
VeraSun Energy (VSE: 6.19 -0.01 -0.16%) has reported 1st quarter earnings and the results could be considered very good, given the current sentiment for ethanol producers. VSE increased quarterly revenue by 257%, primarily by increasing the volume of ethanol sold by 223%. VeraSun sold 191.7 million gallons of ethanol, including 49.5 million gallons they purchased from other producers to resell to their customers. VeraSun’s own production increased 138.6% from the 1st quarter of 2007.
The first thing I notice from this information is that there seems to be a very strong demand for ethanol! Who would have guessed that from recent news on ethanol.
Corn costs increased from $1.43 per manufactured gallon of ethanol to $1.68. This is pretty in line with the additional 20¢ per gallon the company realized on the average sale of product to $2.33. This reinforces my contention that corn and ethanol prices are now inelastically tied. Corn and ethanol prices will rise and fall together, keeping the crush spread fairly constant. For an efficiently run company like VeraSun you can see that margin is about 50¢ to 60¢ per gallon of ethanol. Less efficient producers will have much tighter spreads and will only be profitable by efficiency gains.
On to profitability: For the first time in quite a while, VSE showed a increase in profits for YoY quarters and consecutive quarters. The company earned 8¢ per share for Q1,2008 vs. a small loss of less than 1¢ for the same quarter of 2007 and a 4¢ profit in Q4 of 2007. Not great profitability but a turn in the right direction.
Going forward from here, the shorter term (2-3 quarters), looks like tight profitability, but definitely in the plus column. Further out, VSE will increase capacity a further 50% by the end of 2008 and overall capacity growth will level off at about the same time. Ethanol blending in gasoline will continue to grow for both economic and environmental reasons. One thing many pundits do not realize is that ethanol companies are able to sell everything they produce and that trend will not change. VeraSun Energy as the largest, leanest producer of ethanol will see profitability increase over the next couple of years.
Note: I currently have a long position in VSE.
Beer for Fuel?
Osage Bio Energy bringing barley ethanol to the U.S. | Cleantech.com
I am pretty OK with using corn for ethanol production. The U.S. produces the vast majority of the world’s corn, and if other countries want our corn, they can pay for it and make American farmers rich or U.S. ethanol companies will make it into tax-break loaded auto fuel.
But the article linked above hits me where I live. This company, Osage Bio, wants to make ethanol out of barley. As you probably know, barley is a main ingredient of beer. Who knows what this will do to beer prices! If barley prices double and triple, what effect will that have on a pint of my favorite brew? How much barley do you think goes into making that $5.50 glass of beer? More than the 5¢ worth of corn in the box of corn flakes?
At this point I think the only option is to petition my Senator to issue a press release requesting that the tax on beer be reduced without him actually having to vote on a tax reduction!
New Energy Finance - NEX - Weekly Review
Each week I post how the New Energy Finance Index, NEX, faired for the previous week. The NEX is a global index of renewable energy companies. The NEX is tracked by the ETF: PowerShares Global Clean Energy Fund (PBD: 29.29 +0.43 +1.49%). If you want to see former weekly reviews, look on my articles page under renewable energy.
Last week the NEX diverged from the broader U.S. markets. NEX had a negative 1.8% return, while the S&P 500 was up 0.8% and the NASDAQ gained 1.6%.
The leading sector for the week was power storage, up 3.5%. The “top” losing sector was solar energy, off 3.9%. On my interest radar, biofuels and biomass gained 1.1% with ethanol producer, Aventine (AVR: 4.81 +0.06 +1.26%) gaining 13.3%.
Here are the top and bottom stocks from the index for the week:
NEX top gainers since 29/04/08
Xingjiang Goldwind Science & Technology 2202 + 18.1%
Aventine Renewable Energy Holdings AVR + 13.3%
LDk Solar LDK + 10.7%
Umicore UMI + 10.2%
Saft Groupe SAFT + 8.9%
NEX top losers since 29/04/08
Echelon ELON - 18.6%
Zoltek ZOLT - 11.9%
Yingli Green Energy Holding YGE - 10.3%
JA Solar Holdings JASO - 8.9%
VeraSun Energy VSE - 8.3%
Note: I do not have a position in any security mentioned here.
End of the month with new portfolio system
On this blog I have been tracking a portfolio of selected stocks since September of 2007. I started with a 20 stock portfolio of those companies I had researched and believed had great potential for profit. As my portfolio evolved, I discovered I was interested in stocks of two distinct varieties so Starting in April 2008 I have divided the stocks I track into two separate portfolios, an Income Portfolio and a Growth Portfolio.
I have been tracking my portfolios on a quarterly basis, starting with an equal dollar amount of each stock at the beginning of each quarter. If I add a stock in the middle of a quarter, it starts with the same dollar amount. I have not tried to time any buying or selling in the portfolios.
After one month with the dual portfolios, the results have been interesting. The Income Portfolio significantly out performed the Growth Portfolio for the month. The outperformance does not include any dividends, most of which have record dates in May.
The Income Portfolio had a total stock price gain of 7.57% for the month of April. This was primarily driven by an almost 30% gain in Terra Nitrogen (TNH: 149.53 +1.49 +1.01%) and Nordic American Tanker (NAT: 39.46 +0.56 +1.44%) up over 20%. NAT was boosted by the company announcing at least a doubling of the dividend for this quarter. TNH has been riding the agricultural products boom. As of yesterday, I have dropped TNH from the Income Portfolio for reasons I have written on here and here.
The Growth Portfolio was up 1.8%, significantly under performing the major stock market averages. Hardinge Inc. (HDNG: 14.38 -0.09 -0.62%) and KHD Humboldt Wedag International Ltd. (KHD: 31.1699 +0.2799 +0.91%) were the stars, both up around 20%. The portfolio was pulled down by Silver Wheaton (SLW: 14.44 +0.20 +1.40%), Headwaters (HW: 11.44 +0.29 +2.60%) and VeraSun Energy (VSE: 6.19 -0.01 -0.16%), all down about 15%. SLW and HW were hit by negative earnings news and VSE is stuck in the negative ethanol news and commodity trend.
The results for April were very interesting, and I look forward to what happens from here. Someone with the Income Portfolio would be tempted to take the 8% gain and go money market for the rest of the year!
Note: of the stocks listed I have positions in KHD, HW and VSE
New Energy Finance - Nex - Weekly Review
Time again for my weekly recap on the performance of the New Energy Finance renewable energy index -NEX for last week. For investors, the performance of the NEX is tracked by the PowerShares Global Clean Energy Fund (PBD: 29.29 +0.43 +1.49%).
Last week the NEX gained 0.8%, tenths better than the NASDAQ and S&P 500. The top performing sector was wind energy, gaining 4.3%. Solar energy was the laggard sector, losing 1.4%. Overall, 3 sectors were positive and 4 in negative territory.
Here are the winners and losers from the index for last week:
NEX top gainers since 22/04/08
Baldor Electric BEZ + 18.8%
Novozymes A/S Series B NZYM’B + 17.8%
Theolia TEO + 16.4%
Aventine Renewable Energy Holdings AVR + 13.9%
REpower Systems RPW + 13.6%
NEX top losers since 22/04/08
Medis Technologies MDTL - 20.3%
Zhejiang Yankon Group 600261 - 18.5%
Cree CREE - 13.8%
Evergreen Solar ESLR - 11.8%
Gushan Environmental Energy GU - 10.8%
Note: I currently do not have a position i
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