Monday, December 24, 2007
After today's short session, we can officially call it one year since I began writing this blog. We've had our ups (big winners on Bunge options, riding the LDK Solar explosion to 90%-plus gains in a matter of weeks)...
And we've had out downs (just about every penny or OTC stock we've added to the portfolio).
Along the way, we've stuck to our guns on the trailing stop. And sometimes, as with Starbucks, we've done it just KNOWING the stock was about to rebound. But that's emotion talking... that little twinge I feel seeing that SBUX has rallied over 3% since we sold? That's not logic - that's pure blood-boiling, bug-eyed madman talking there...
And that's the kind of nonesense that most certainly will get you creamed in the markets fast. So we sell, we take out 25% lump on the coconut... and we move on.
Now... here's the thing...
Soon we will tally up how our portfolio has done versus the S&P 500 over the past 12 months. I honestly have no idea, although I am assuming we're going to come out a bit ahead when we tally all our closed positions.
When we tally our closed and open positions, it'll get a bit more dicey, but I'm still confident we'll be okay especially with the strong rally in PZD and even Rio Tinto the last few sessions.
My point is, let's see where we are after tomorrow. Meanwhile, love and blessings be on you and yours. We're in Rochester, New York tonight - where we should be on Christmas Eve. There is snow outside our Holiday Inn. We're heading to my Sisters for some cinnamon rolls and coffee and to catch up with family long missed.
Tonight, let's not talk anymore of stocks or profits or dollars or the economy.
Let's go have some fun... with the people that count. And if you're alone - well, would you mind tallying up how we've done this year? Just kidding.
Thursday, December 20, 2007
Wednesday, December 19, 2007
Starbucks has been starcrossed for an entire year. It has struggled with earnings and has expanded at lightning speed into China and elsewhere. Same store sales have plateaued, but all of this seems a natural part of the business cycle... like a pre-boom preparation.
Unfortunatley, we may have been very right here... but 1 year early.
Keep an eye on this position. Even if we stop out, we may re-enter at a later time.
Monday, December 10, 2007
According to the Associated Press and a London Telegraph report, Blackstone is preparing another rival bid for Rio. This time, it could be a Chinese sovereign wealth fund doing the bidding.
"The Sinosteel bid on Midwest may have inspired another huge mining deal. Blackstone (NYSE: BX - news - people ), the U.S. investment fund giant, is reportedly in the middle of putting together a consortium that may include a Chinese sovereign wealth fund to mount a bid for Rio Tinto (nyse: RTP - news - people ), the Daily Telegraph said Monday.
"Blackstone believes Rio Tinto's iron ore operations are worth at least $110 billion, based on the valuation Sinosteel is placing on Midwest, the British newspaper reported, without citing any source.
"Speculation that Chinese companies might bid for Rio Tinto to counter BHP Billiton (nyse: BHP - news - people )'s unwelcome takeover proposal percolated vigorously until Baosteel Group last Thursday denied any plan to bid for the Anglo-Australian mining group."
Our shares are up 2.45% today on the news. And they're up about 12.4% since we added them to the Evergreen Portfolio.
Meanwhile, consolidation in the minerals and mining sector is getting white hot.
More to come,
Friday, December 7, 2007
The likely reason? The company's sudden move into China's power market... in a big way. Here's the story from AP:
* * * * *
"SEOUL, South Korea (AP) -- State-run Korea Electric Power Corp. said Thursday it will take a 34 percent stake in a $1.34 billion Chinese joint venture that will develop coal mines and buy and build power plants over the next five decades.
"Kepco will "acquire 15 power plants, build nine power plants and develop nine coal mines in Shanxi, China," as part of the joint venture, the state utility said.
"Other partners in the Gemeng International Energy Co. joint venture will be China's state-run Shanxi International Electricity Group with 47 percent and Deutsche Bank with 19 percent.
Gemeng received Chinese government approval for its projects in April this year.
"The 24 power plants will have a combined capacity of 9.33 million kilowatts and the nine coal mines are expected to produce 60 million metric tons of coal a year."
* * * * *
I'll be watching this story closely. This is really good news for shareholders, long term.
But depending on the nature of these coal plants, we might exit KEPCO. If the plants are dirty and not in line with Kyoto, we'll drop this position from our portfolio.
They might be perfectly fine, clean-coal facilities for all I know. Need to research this move further.
More to come,
Tuesday, December 4, 2007
BHP Billiton made a formal offer to buy out the company for about $150 billion. That offer will not get it done, according to Xu Lejiang, head of China's massive steelmaker Baosteel.
According to the latest report in The Guardian newspaper:
"Baosteel, China's largest steelmaker, is considering a bid for Rio Tinto according to the president of the group.http://www.guardian.co.uk/business/2007/dec/04/riotinto.china
"In an interview with a Chinese business newspaper, Xu Lejiang said his company was considering a bid for the mining giant, which has recently rejected a three-for-one share proposal from BHP Billiton, its larger rival.
"He was quoted as saying: "We are considering the matter now. The possibility of a bid is very big. The purchase plan is still at the stage of research and negotiation. We haven't signed any agreement yet."
"He added that a $200bn (£97bn) price tag would not be enough. BHP's current proposal values Rio Tinto at around $150bn."
We said in this space that BHP might have to counter with a $200 billion-plus offer. Now Baosteel is confirming that it could take MORE than that to buy out Rio. Meaning our shares could soar with the next offer, if there is one.
It appears the correction has begun:
Oil prices have dropped about $10 in one week on the belief that OPEC has all but decided to boost production. But the price drop itself has raised questions about whether the oil ministers will follow through during Wednesday's meeting in Abu Dhabi.
I'm guessing there's a lot more correction to come.
So would cheaper oil mean lower demand for alternative energy plays like our Green Energy Resources?
Not necessarily. As long as oil's trading above $50 a barrel, oil's still considered expensive in terms of the industry and its exploration costs.
Monday, December 3, 2007
Today our play on Green Energy Resources (GRGR.PK) is up 33%... in one session. Who needs options?
Anyway, here's what's going on...
Great Britain's energy secretary just announced the construction of the largest wood-biomass power plant in the world. Here are the details...
"Great Britain's Energy Secretary John Hutton approved the largest wood-based biomass plant in the world last week. The 350 megawatt plant will be operating 24/7, 365 days per year on wood energy power. The Secretrary noted, "The wood biomass will be supplied from the United States.Considering that GRGR recently opened a satellite office in London and is pushing aggressively into the European market for wood biomass, this could be a very good omen indeed...
"Green Energy Resources is the only current US exporter of wood biomass energy that can meet present import and environmental standards in the United Kingdom and Europe."
I must say, however, that the company's press releases are sometimes as obtuse and hard to read as tealeaves. Nevertheless...
Saturday, December 1, 2007
Since we added Rio to the Green Investments portfolio last week, the stock has rallied nearly 10%.
That's an enormous short-term jump for a global resources behemoth - especially one with a $150 billion market cap.
Two things are going on here.
One, in a bid to keep shareholders from going for the offer too easily, Rio CEO Tom Albanese is flaunting his companies strong numbers, and profitability. He's also talking about increasing dividends. All of this has the effect of raising the company's perceived value on the world stage, which is good for our shares.
Two, that doens't mean a deal won't go through...
The good news is that many analysts don't see this as a bid to stop a merger at all costs. But rather, this could be the beginnings of the negotiation process. Even through Kloppers and Albanese have not begun talking officially, they have begun the mating dance in the public square.
Already Rio shares are trading at a 10% premium over the offer from BHP. That signals that investors think a sweeter offer is on the way from Kloppers and Company.
In fact, one analyst believes BHP will have to offer a 60% premium to lock up this history-making deal.
We're far, far from ANYTHING happening here, let along an offer that sweet... and that Albanese and his shareholders find acceptable.
Could BHP Offer $200-Plus Billion?
But it's possible that Rio would benefit greatly from either scenario: a merger could make the shares worth 60% more for us... That would require an all-share offer from BHP at levels exceeding $200 billion.
On the other hand, a non-merger would bring every positive aspect of the company sharply into public focus, making their perceived value higher and possibly driving shares upward that way.
Stick around. This is going to be an interesting story to watch... And possibly profitable for us green investors.
Wednesday, November 28, 2007
I'm talking about Rio Tinto (NYSE: RTP).
Not only is this company in the perfect position to take advantage of the global boom in commodities, it's well run, highly competitive and something of a hedge against a worldwide equity slowdown... simply because it deals in commodities and currencies.
And because it is a classic "flight to safety" stock in some ways, having a market cap exceeding $137 billion dollars.
But here's the kicker...
The "Surprise Bid" that Could Send Rio Soaring
Right now, BHP Billiton - another global goliath of commodities and resources - is trying very aggressively to buy Rio Tinto. The terms of the deal are very reasonable, according to my sources.
And if this deal goes through, it would be one of the largest mergers in the history of the commodity business... and likely provide a nice pop in Rio Tinto shares.
Action: Buy Rio Tinto (NYSE: RTP) at $426.75 or better. We'll use a 25% trailing stop on this position.
Friday, November 23, 2007
Today Green Energy Resources rallied 30.7%. This is one of our Green Investments that, for some reason, has dogged since we added it to the portfolio. Despite tremendous news on all fronts, this stock has suffered with the volatile markets.
But today was good news.
Frankly, we still believe this stock has tons of upside. It's scoring contracts that are well beyond its entire market cap (admittedly, a small number). And it's riding two very powerful and converging trends: commodities and cleantech.
There will be more to come on this front. If only the markets could get themselves in order for a whole week, we might see some of our positions rally before the Dec.25 date that is both Christmas... and the 1-year anniversary of this blog's birth.
Thanks for sticking with us... and reading Green Investments.
Please feel free to send comments, ideas, gripes, philosophical observations and vague proclamations to this blog and join the fun.
Thursday, November 22, 2007
Land of the 9% GDP growth rate...
Land of the billion English speakers...
Land of the well-educated workforce...
Land of the lagging infrastructure.
Here's where it gets very, very interesting for green investments and those who tend toward them.
India's infrastructure is massively underdeveloped. I'm talking about roads, bridges, electricity, communications, ports and buildings.
However, the country is undertaking a massive infrastructure buildout that - with the help of hundreds of billions from the government - is striving to address the infrastructure shortfall.
Two Forces Combining... for Big Gains: Cleantech and India
Bottom line: India can choose to build out its energy and building infrastructure any way it pleases. Of course, in an energy-starved nation, efficiency is absolutely paramount, much moreso than it is, say, here in the U.S.
Where my neighbor trims his rose bushes with what looks like a small, gas-powered 2-seater airplane.
Of course, that means that India will incorporate the very latest in energy efficient technologies (cleantech) into its infrastructure buildout.
The big opportunity here for investors is in India's cleantech future. Right now I'm researching a company that could be perfectly poised to take advantage of this long-term boom... not only in cleantech but in India itself.
Indian Cleantech... Two Ways to Play It?
It's called Conergy.
If you're a greenie, you've probably heard of this alternative energy company. If not, you should check it out. This could be the ultimate India cleantech play right now. Unfortunately, the shares only trade on overseas markets at the moment, so unless an ADR is made available, we might have to delve into the international markets... or wait.
The other possibility here is Sterlite Industries. This company is providing copper and power plants across the country and IPO'd in the U.S. just 7 months ago. I like it as a cleantech India play but need to do more research into the fundamentals here, and the specific green policies of Sterlite.
More to come, along with an official recommendation if we can find a good one.
Renewed Vow: No More OTC Stocks
NOTE: I'm renewing my vow to never recommend bulletin-board or over-the-counter stocks at Green Investments again. For some reason, Green Energy Resources and D1 Oils are both sucking wind, majorly. No bad earnings announcements... no bad management decisions. Just huge contracts, good news, dividend announcements... and sinking stock prices.
As Einstein said: Insanity is doing the same thing over and over and expecting different results. Shoulda learned my lesson on BB stocks.
Happy Turkey Day,
Thursday, November 15, 2007
I think we were right, but early.
Tomorrow, some 30% of crude oil options will expire worthless... because they are owned by speculators and hedge funds betting on (or hedging against) $100 oil.
When these options expire, it will take the pressure off the crude oil markets. And a major price pullback will begin.
As the Wall Street Journal reports:
Wall Street's speculators, who contributed to oil's 49% rise since the beginning of the year, have shifted direction this week. Yesterday marked the expiration of a key deadline in the crude-oil options markets. As it became clear that oil wouldn't hit $100 a barrel by the deadline, a chain reaction of selling ensued as traders unwound bets pegged to the risk of $100 oil.
The pullback has already begun. We called it early. But then again,
you don't have to be a genius to call a massive reversal... You only have to be
And then you need the audacity to say I told you so when you are eventually right!
Not that we're doing that of course.
What Oil's Coming Correction Means for Us
What this could mean for our portfolio is some relief, as oil and stocks have traditionally moved inversely (although in recent years, this hasn't been the case). A nice winter rally would certainly help our battered portfolio.
As will our next upcoming recommendation... a cleantech firm poised to clean up in China.
More to come,
Saturday, November 10, 2007
Green Investments Weekend Edition... GRGR's 5% pop... Rugby Return... Visiting Austrailians... And the "Boat Race"
Our Green Energy Resources (GRGR.PK) play bucked the Frankenmarket this week and bumped up more than 5.8% in Friday's session. Why? It's a short, sweet story.
Remember that when we recommended GRGR we talked about the company's expanding presence in the European and Chinese markets.
European regulatory schemes are playing right into this little company's hands, and Green Energy company just announced that it has secured 2 more sizable shipments to Europe.
"Nov 9, 2007 - Green Energy Resources (Other OTC:GRGR.PK - News) has landed two contracts to supply woodpellets to European power producers. The contracts total 110,000 tons through 2008 and have a total value of $19 million. Export shipments are underway. The company expects 4th qtr revenues in the $2-5 million range."
To read the full report, go here: http://biz.yahoo.com/iw/071109/0326670.html
Considering that these two contracts are more than twice Green Energy's total market capitalization, you can see the potential for growth here is great, no?
Green Energy, as you'll recall, produces wood pellets that can burn in coal-fired plants, reducing emissions, and taking advantage of the ONLY renewable energy resource that can be transported.
Why We Love Australia... And Australians
Green Investments is officially long Australia. Not only does an old friend live and work there now (also in the investment business)... it's also where the America's Cup was... ahem.
Now we have another reason to love Australia. At the moment we have a house guest who is Australian. He's also one of the world's premiere rugby players (a #8). This gent is visiting with his girlfriend, a Quebecor and fellow rugger (and a cute one at that).
So we've been talking about rugby, and playing some rugby. And then tonight I learned a whole new language: Cockney rhyming slang.
Used by the criminal underground (which explains why my friend knows about this language), Cockney rhyming slang was developed to throw off the coppers. So instead of saying you've put some SPF 30 on your "face"... you say: "I already slapped some SPF 70 on muh boat race." Boat race is the Cockney ryming slang term for face.
More to come,
Tuesday, November 6, 2007
In his article, Rex Moore list Starbucks as one of several companies that are poised for a possible triple from here.
His reasons: SBUX has high net margins and high return on assets when compared to its peers in the restaurant industry.
Starbucks: A Green Investment Poised for a Comeback
Starbucks is, of course, part of our Evergreen Portfolio. So far, this enigmatic stock has drifted down from our entry by about 5.5%.
The stock has drifted down about 25% over the past year. Meanwhile, it's opening stores at breakneck pace in China... earnings are falling in line with expectations... Starbucks is doing all the right things with its employees, the model of a socially responsible business.
AND the company's green track record is unparalelled in the industry.
Yet... and yet.
It's rather depressing. And it doesn't make much sense. But the markets are not a logical place.
Stocks, like people, have their cycles and patterns... ups and downs. Right now, SBUX isn't "feeling very pretty." Its confidence has ebbed. But it's working out at the gym, getting back in shape and paying its dues (expansion into China and other emerging markets).
And that's why I agree with Moore's assessment: SBUX is overdue for a serious bounceback. Let's just hope it doesn't hit our trailing stop before the bounce begins.
What I'm zeroing in on right now are companies with hefty public contracts. In other words, cleantech companies that will get paid even if a recession hits - or if the markets crash.
While the stock might dip, regardless, it shouldn't crater, in the event of a broad market turndown. If a pullback hits suddenly, companies without fundamentals will feel it the most (if you need a reminder of this phenomenon, just look back to the tech wreck of 2000).
Till then, good day. And hello to our new friends at http://agreenearth.blogspot.com/, an excellent website (with some pretty nice artwork, too) on all aspects of living green and having fun.
Monday, November 5, 2007
And I usually listen when he has an idea. Because he's a smart guy. Very smart. Plus he was one of the top analysts at The Street. And before that he was a fairly major player on Wall Street itself for years... a former sell-side analyst.
Anyway, his idea is this: With sub-prime imploding, now is the time to find the perfect "contrarian" play on the sector. Go for some real value by finding a bank, say, with small subprime exposure and loading up.
With all respect to my investing brother - and with apologies to my son, who's line I'm about to steal - WRONG-O!
The problem with this kind of thinking is that nobody knows for sure what the exposure to subprime really is for any given bank. Hell, even the banks themselves don't know!
Citibank, for example, is in the crapper. But according to indepent analysis, as reported in today's Financial Times, Citi could have an additional $4 billion worth of bad debt hidden in the books related to subprime.
My point is, looking for value in the subprime mess - at this early stage - is like looting during a riot. High risk behavior. And you're more likely to get injured or killed by playing around in the war zone than you are to find long-term satisfaction in that "stolen" TV set.
I dunno. But you will NOT see Green Investments taking any chances with subprime, or banking, or financial stocks right now. Wait until the dust settles a little before making that kind of move.
Friday, November 2, 2007
Since last Christmas, this bull has slowly gone into what I believe are its death throws. Soon it will be replaced by something different. A long period of up-and-down volatility followed by a year or two of slow times.
This is where our approach to the markets will get a real test. Anyone can be a stock-picking genius in a broad bull market.
So how do you survive and thrive through a bear?
How Do We Survive This Crazy Volatility?
Use trailing stops and stick to your discipline.
In that interest, we're placing a 25% trailing stop beneath our KEPCO (KEP) position. That means we'll sell if the position closes 25% (or more) below the highest closing price since recommendation.
We added KEP to the portfolio at $22.66 and it has drifted down a bit since then. So our trailing stop will be $16.99 to start.
That means if the stock continues down and closes below $16.99, we'll sell on the next day's open.
Thursday, November 1, 2007
I'm not liking what I've been seeing in the banking sector generally, of late. And while I don't like to invest on what "the crowd" is doing, I can smell a rush to the exits as well as anyone.
The 3rd quarter earnings report wasn't convincing. The company's leadership had to do a lot of explaining about special circumstances and "ifs" and hypotheticals. This is not normally a problem if the earnings statement is coming at an otherwise stable time in the markets, or if there are strong forces driving the sector higher as a whole.
But neither is the case here.
Buffett saying South Korea's a bubble waiting to explode probably isn't helping matters here.
Action to Take: Sell Kookmin Bank (KB) upon the open at $77.80 for a 2.81% gain. We'll keep our powder dry and wait for some stabilization in the market before making our next pick.
As oil climbs higher, jatropha is looking like a more sensible fuel-oil alternative. And D1 Oils is the only pure jatropha play on earth right now. This could be the beginning of a nice runup in the pink sheet shares, the only D1 shares trading here in the U.S.
Meanwhile, Bunge plunged 10% today. In one day. That is a truly eye-popping sell-off for one of the world's major food and seed producers. And it probably speaks more to the general sense that the company has run up lately (profit taking, in other words) than to anything fundamental about the company or global food shortages.
Let's stay calm, mind our trailing stops here and stick to our discipline. The market will do what it must... And we'll respond when and if needed.
We've cut losers from this portfolio before. And it always hurts. But I've got the scissors in hand just in case.
Wednesday, October 31, 2007
And an upcoming Initial Public Offering out of that sun-splashed land should be viewed along those lines as well.
I'm talking about a company called Green Power Enterprises, which is preparing to IPO on the Nasdaq at $8-a-share just days from now.
Green Power Enterprises is a pretty amazing company. Not only is it run by a savvy team of Brazilian venture capitalists, it could become one of the best plays on the erupting Brazilian economy over the next 3-5 years.
A Play on Brazil's Exploding Ethanol Market
Why? Because the company's intention is to become a sizable player in Brazil's market for ethanol. Brazil is the leading consumer of ethanol in the world. Ethanol accounts for more than 20% of the country's transport fuel market already and is looking to increase that percentage as oil supplies dwindle (or at least become more artificially inflated).
One other thing to consider is that Brazil is one of the BRIC economies expected to assume a leadership role in the world between now and 2050 (the others being Russia, India and China). All that development will require lots of fuel. You get the picture.
Back to Green Power Enterprises...
Become a Green Venture Capitalist... for $8 Bucks
Recall that I said the company intends to become a major ethanol player. Well, that's because as of now, the company has no business.
I mean, literally, it has no business. The whole point of the IPO is to raise approximately $250 million dollars to use in the acquisition of ethanol producer(s) in Brazil. Although as of now, Green Power - based in Sao Paulo - has no particular acquisition in mind.
To be fair, it's actually not allowed to have a target yet. That's part of the rules of filing as a "blank check" company with the SEC.
Instead, the 3-person team at Green Energy will seek to acquire an existing ethanol producer over the next 24 months.
If it succeeds, it will reverse merge with that company, and your shares of Green Power will suddenly morph into shares of the acquired company. This is another way for a small company to IPO without going through the hassle of filing and paying Wall Street's money men for the privilege.
If Green Power Enterprises doesn't find a target within the next 24 months, it will liquidate the company and you'll get your money back, minus any fees. I'm not sure on this company, but often blank-check firms cannot hand you back less than 75% of your initial investment ($8 per share), so there is downside protection in some cases.
Early In Could Mean Big Gains... but Commensurate Risk
Since 2004, about 125 blank checks have begun trading on major exchanges in the U.S. About 60 of them have found targets, producing gains of between 50-100% with some regularity. Other firms have fared less well, piling up losses in the 60% range according to a new report just released by CNN Money.
With Green Power, you would be paying about $8 a share, which I believe would include 2 warrants excercisable in the case of an aquisition (more to come on this). The pricing structure of blank checks (otherwise known as Special Purpose Acquisition Companies, or SPACS) has typically been $6 a share at IPO, but with inflation, the price is going up!
The company plans to sell 25 million shares, and I imagine it will succeed.
The Ultimate "Early In" Way to Play Brazilian Ethanol
Should the company find a target amid Brazil's booming ethanol economy, shares could double quickly, and you could own a very hot little publicly traded Brazilian ethanol producer before anyone else gets in.
Right now, your choices in that area are very limited.
So this could be the only way to get in early.
Will we recommend this play in Green Investments? Only time will tell. But I certainly would wait until the aftermarket settles down to make our move.
Till then, good investing,
Tuesday, October 30, 2007
Then again, you cannot make predictions about the markets.
Onward, with the prediction.
(Or as Samuel Beckett said: I can't go on; I must go on.)
Very soon, there will be a sudden, unexpected report that U.S. oil reserves are much higher than expected. That will begin a trickle in downward oil prices. Then we'll start hearing about a mild-to-average winter being expected. And that will send oil down a bit more sharply.
But not too sharply.
Sound fantastic? Keep in mind, oil was trading at $85 about a week ago. We're in uncharted territory here. And if you expect the market to act rationally and continue on some upward trend that makes sense for any fundamental reason, you're smoking something green... not just investing in green.
The other thing is the economic slowdown in the U.S. and - soon to follow - abroad. Since we can't leverage our houses for cash anymore, we can't buy giant-screen TVs every weekend anymore. That means lower demand and lower production, lower shipping, lower transport, less oil consumed.
That's my story and I'm sticking to it.
What do YOU think? Is oil headed for a correction?
Monday, October 29, 2007
Of course I'm talking about Green Energy Resources (GRGR.PK). One of two bulletin-board stocks in our portfolio, Green Energy recently scored a contract to supply more than $5 million worth of wood-chip biomass to European energy partners.
This "bio-coal" as some call it can be co-burned in coal-fired plants. This both reduces the carbon emissions and also helps to recycle wood that would otherwise rot in the slag heaps of the world.
The company's main - and lofty - goal is to create a tradable commodity out of wood chips, just as there are spot markets for coal, gold, wheat, et cetera.
Who knows if that will ever happen. But we like Green Energy's guts for moving into the European and (soon) the Chinese markets with gusto.
The really amazing thing is the stock jumped 12.5% today... and closed with the gain intact. As you might have noticed, BB stocks have an annoying tendency to soar during midday trading only to settle back at the opening price by end of session.
Powershares Cleantech Fund Starts Fast for Us...
Our recommended green ETF, the Powershares Cleantech Fund (PZD) also rallied nicely today, gaining about 1.64%. This is a broad, conservative play on cleantech. More about what cleantech is and why it's going to become increasingly important, in an upcoming episode of Green Investments.
Since we recommended this ETF a couple weeks ago, it has rallied about 5% for us... a promising beginning.
Waste Management: Don't Call It a Comeback... Yet
Our green energy and recycling play Waste Management (WMI) has been pilloried by the financial press and the analysts alike. The company flubbed earnings last week thanks largely to a strange tax loophole that rather suddenly closed, choking off some bottom-line income for the company.
But it's been quietly fighting back over the last couple sessions, and ended today up more than 1%.
Long-term, this is an excellent company. That's probably why we have yet to see any downgrades by major houses...
I fully expect at least one analyst downgrade to hit within the next week. And it could hit our shares again. So if you're weak of heart, perhaps best to exit now. As for me, I like this play for the long term.
Friday, October 26, 2007
Earnings fell from $300 million to $278 million for the quarter, year over year - a drop of around 7%. The stock, a recent addition to our Evergreen Portfolio, is down 6% this morning.
Here's the ironic thing. Most of this was due to the fact that oil prices have increased to the point where using gas and diesel is as expensive as using alternative fuels like natural gas and biodiesel. As the disparity between traditional fuels and alt fuels has diminished, so have the tax benefits to corporations under Section 45K.
The credits are based on the disparity, and designed to help companies pay for going green. But when the disparity decreases, the amount of benefits decrease.
It's rather ironic. But this is an odd case of WMI being punished for high oil prices... because of its efforts to go green.
Nonetheless, the company's fundamentals are still the same as when we recommended WMI. We still believe this is a good company, and that it will bounce back from this snafu.
Wednesday, October 24, 2007
Oil will begin to level off and show some weakness, but will finish around $89. But if the winter looks even a bit warm as we head into November, get ready for a wild ride with oil. I wouldn't be surprised to see it fall back below $80 before Thanksgiving, as equities take off.The funny thing about this one is that it might not have been boldly idiotic enough. As reported by the AP this morning:
Oil prices extended their decline Wednesday as traders shrugged off the latest threat to Iraqi oil flows from a possible Turkish military incursion and focused on the impending release of weekly U.S. fuel data expected to show crude inventories rose last week.
Oil's already back down to about $85! But it could be a long time before it challenges the $90 cieling again on its inevitable march to $100 a barrel.
What Oil Prices Mean for Green Investments... And Our Energy Plays in ParticularCrude oil is expensive right now. In fact, as long as it stays above $50 a barrel, it remains expensive (and profitable) enough for the big oil companies like Exxon and BP to continue "edge" exploration techniques such as deepwater wells... retapping old wells... and long-range bi-directional projects that require expensive technology and expertise.
In other words, as long as oil stays above $50 a barrel, our green energy plays should continue building upwards price pressure. That assumes the companies continue to do the job on the fundamentals side, of course.
I'm talking here about Green Energy Resources, Waste Management Inc., D1 Oils and to an extent, KEPCO.
The point is, oil's not going below $50 any time soon (although it could certainly happen). And if it does, we could certainly reexamine our weighting toward green energy stocks.
Tuesday, October 23, 2007
Since there is no exchange, there is little transparency surrounding these securities.
Our two OTC (over the counter) stocks are Green Energy Resources (GRGR) and D1 Oils (DOOIF.PK).
Both of them have plenty of information available, unlike many OTC stocks.
D1 Oils is connected to the sizable British energy company that just formed a major partnership with British Petroleum to develop jatropha oil in Africa. D1 Oils trades on the London Stock Exchange in England.
Green Energy Resources is an American company with growing earnings and a history of paying dividends.
How Market Makers Can Screw OTC Stock Investors... Beware
Normally, I avoid OTC stocks. They're just a bad idea most of the time. Since volume is so scant with most of them, it's very easy for a market maker to manipulate the prices. In other words...
Say you tell you broker to buy 100 shares of OTC Company A. You see on Yahoo or www.pinksheets.com that the stock's trading at 10 cents.
So you figure you'll pick up a 1,000 shares for $100 bucks. You place your order. But the next day you see you've paid 20 cents a share!
Well, the market maker simply demanded 20 cents a share for your order. Your broker paid it. And you're toast, because the stock suddenly is trading back down at 10 cents.
That's why you MUST use limit orders if you're wild enough to venture into OTC territory. And if your broker buys shares beyond your limit price, go ballistic on him. I had to do it once, and the broker ate the difference between my limit price and the price he paid!
Why Do We Recommend OTC Stocks on the Blog?
The reason we recommended D1 Oils is simple. It is the ONLY pure jatropha stock in the world right now. This company is producing jatropha seed stock... jatropha strains... and is in the process of planing 1 million acres of jatropha. This last project is being done on several continents, including Africa. It's in parternship with BP.
And we feel that D1 Oils is in perfect position to soar, especially once people realize its importance in the emerging market for jatropha oils, which can be mixed directly with diesel.(Jatropha berries are the size of golf balls and ooze the stuff!)
In this case, I found several other plays on jatropha. But none of them was direct enough for my tastes. If you buy BP, you're not buying jatropha; you're buying crude oil. And I think that crude oil is about to correct downward fairly sharply starting in the next couple of weeks.
Why We Bought Green Energy Resources
As for Green Energy Resources, we think the company's on the right track with its wood chip biomass products. It's a true "BIG IDEA" company. And the idea is this: wood chips are destined to become a traded commodity, much like oil, gold, wheat, corn and soybeans.
If that's the case, this is THE company to own. It's proprietary wood-chip processing technology and vision... and push into Asia and Europe... all make it an interesting play.
Both companies have great potential, in fact. And once the rest of Wall Street catches on... and we see volume jumping... these companies could both pay off for us.
Monday, October 22, 2007
For the Evergreen Portfolio (the blog's portfolio in other words) we are up 266.47% since inception on December 25, 2006. That's including two losers, of course.
During that same period, the S&P 500 is up about 6%.
Our stated goal all along has been to beat the S&P 500 with nothing but green investments. So far we are doing that. But we'll have to be vigilant to stay this far out ahead of the broad markets.
We've got two micro-cap positions that are volatile beyond belief. Both have great potential for huge gains (GRGR and D1 Oils). We've got volatile markets all around, in fact. So I might institute a very rangy trailing stop on either of these positions, or both. Something in the neighborhood of 50%.
Idiotic Sunday Afternoon Market Forecast Update:
I just wanted to quote, well, us from Monday morning before the session started:
"This week will be a humdinger. The markets will rally broadly across the board, with some significant intraday volatility all week, but with a closing tally that'll put a smile on our faces."
And if I may, I'll follow that up with a summation of Monday's session from the Associated Press. In an article headlines "Stocks End Volatile Session Higher" - ahem - they reported:
Wall Street finished a back-and-forth session higher Monday as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector.
Okay, we've been right for one whole day. Tune in to see if our prediction for the week holds up!
That just paid off with the company's first major European contract to supply wood biomass coal supplement. It's worth $5.5 million dollars. That's more than HALF GRGR's total market cap ($9.6 million).
As the company stated in its press release:
Green Energy Resources (Other OTC:GRGR.PK - News) has received a $5.5 million contract to deliver 36,000 tons of pellets to Europe. The order is effective immediately and will begin hipping in 6,000-ton increments starting in November, and will continue through April 2008. The pellets are used in the commercial power industry mixed with coal (co-firing) to reduce harmful greenhouse gas emissions. The pellets are being produced in the Gulf Coast and will ship from Georgia.In addition, GRGR notes that the contract will paid in Euros, which hit a new record on Friday of $1.43 against the dollar.
No wonder the stock jumped out of the gate today. Although it lost those 18% gains, it is now trading up about 6% on the day.
We have taken some risks. And that has burned us on occasion. Right now we have two microcap stocks in the portfolio that are sucking wind.
However, on the main... we are smashing the S&P 500. That index has risen about 5.14% on the year thus far (although I'm betting it will make up TONS of ground over the next two months to finish somewhere around 8% on the year). That means we've outstripped the index by 2,000% (5% vs. 100%).
Not to brag. But we're happy to report this fact, even in these volatile times.
I'll soon begin calculating our entire portfolio return for the year, starting from Jan. 1, 2007 and going through Dec. 31 2007.
Then we'll really see how we stack up not just against the S&P... but against the Wilshire and even the "sin stock indexes" too.
Till then, keep the faith. And stay cool.
Tokyo, London, Shanghai... all were down sharply in a delayed reaction to Friday. And perhaps the record rise in oil prices.
But this morning, Green Energy Resources (GRGR.PK) popped 18.75%. It has almost recovered to our entry price.
That's the nature of these micro-cap options - er, stocks.
They really do behave like options. The good news is that they don't expire like options. Unless the company expires. Of course that is always a possiblity.
GRGR is a tiny company. But we think it's onto something: turning wood chips into biomass energy. Wood chips burn as hot as coal... emit far less pollutants... can be burned in coal plants... and use recycled wood products.
GRGR has developed and is perfecting technology to convert wood chips into burnable biomass on a grand scale. Even if it doesn't become a leading producer, it could sell the technology... or sell the whole company to a bigger suitor.
Plus the company is making inroads and overtures to the Chinese and European energy markets already, further increasing its value.
Let's keep an eye on this one. If it somehow soars on us, we might take profits quickly and re-enter the position at a later time. You have to move fast in these markets with micro-cap positions.
Sunday, October 21, 2007
Can you imagine how oversubscribed that IPO would be? I bet Goldman would load UP... Tom Brady Incorporated.
The P/E ratio on that would be about 324.1 by the second day. But who cares? ANYTHING to own just a little piece of that Brady magic. You could buy the $500 January calls and watch them soar as Tom wins the Superbowl single-handedly, 45-10!
Frankly, Marsha will always be the hottest Brady to me. But I have to hand it to Tom. The guy's pretty cool.
The writer in the local paper today even declared him the national Alpha male. And to think the man is single. His member must be screaming with pain from overuse.
Ahem... ramblings of a tired person on a Sunday night after a long, ugly week in the markets.
Moving right along.
Other IPOs I would like to see: Newsgator... about five different jatropha companies... Green Investments... that's about it.
But here's the good news...
Boldly Idiotic Market Predictions: Stocks Rally, Oil Shows Weakness
This week will be a humdinger. The markets will rally broadly across the board, with some significant intraday volatility all week, but with a closing tally that'll put a smile on our faces.
Oil will begin to level off and show some weakness, but will finish around $89. But if the winter looks even a bit warm as we head into November, get ready for a wild ride with oil. I wouldn't be surprised to see it fall back below $80 before Thanksgiving, as equities take off.
So there you have it. Let's see what happens. Meanwhile, we'll keep a close eye on our stops and let the portfolio settle out a bit.
Friday, October 19, 2007
People want to cash out before the weekend, to pay for rentals in the Hamptons... and divorces... and who knows what else.
But we recommended WMI yesterday in spite of the forebodings...
And amazingly, even as the broad markets sink like a rock (dropping almost 1% before 10 a.m.), our WMI position is rallying mildly!
Six Steps to Weatherproof the Evergreen Portfolio
Well, we'll just have to see where this all goes. But the more I see of this volatility, the more I want to turn defensive with this portfolio.
My take would be: batten down the hatches, which would include:
- Less U.S. equity exposure
- Selling off bank stocks
- No more micro-caps
- More income and dividend plays
- More large-cap foreign stocks, especially the BRICs - Brazil, Russia, India, China
- More commodities
But certainly not retreating from the stock markets altogether. Till then, let's stay the course and see what happens next week.
More to come,
Thursday, October 18, 2007
I've waited until almost the last minute to reveal the "Dirtiest Green Stock in America."
It certainly wouldn't be the first company you might think of mentioning to your Green Party friends at the next cocktail party. But perhaps it should be.
Not only is this company America's #1 recycler on a volume basis... It's at the very forefront of the battle against pollution and for a cleaner environment. It is, in a nutshell, the biggest trash-disposal company in the country.
21 Million Customers... and Growing
Headquartered in Houston, the company's network of operations includes 413 collection operations, 370 transfer stations, 283 active landfill disposal sites, 17 waste-to-energy plants, 131 recycling plants, 95 beneficial-use landfill gas projects and 6 independent power production plants.
The company provides collection services to 21 million customers, including individual homes, municipalities and commercial sites.
But it also happens to be the most aggressively green waste-management company on the planet.
And that's why we're adding Waste Management Inc. (NYSE: WMI) to the Evergreen Portfolio today...
WMI's Been "In Training"... And It's Ready for a Title Run
This $20 billion behemoth is rated a four-star "buy" by Standard & Poor's... and for good reason.
WMI has it been buying back shares to the tune of more than $1 billion annually (starting in 2006 and continuing into this year)... It's in a non-cyclical business with high cash flow. But here's why the stock could be prepared to take off...
Over the past two years, WMI has quietly been divesting itself of underperforming assets, paring back losing operations and getting the company's massive operations into fighting shape.
It currently plans on divesting some $900 million dollars worth of annual revenue producers... In 2006 alone, it dumped $325 million worth of going-nowhere enterprises off the books. So far this year it has cut another $230 million in underperforming assets.
Such waste-trimming doesn't do a lot to make you sexy to shareholders when it's happening...
But now is about the time when we can expect this efficiency increase to start paying dividends.
As stated in the S&P report:
"We think the company will benefit from its intention to simplify its organizational structure by placing more emphasis on the day-to-day decision making at its regional operations, and by reducing costs at its group and corporate offices."
And that brings me to another point: WMI is yielding 2.49% as I write, which betters the S&P 500's average dividend of 1.9%.
Overall, this stock should provide a nice, stabilizing influence on our portfolio.
Now... for the Green Part
WMI has long prided itself on earth-friendly, effiency-oriented initiatives. And indeed, this company is the perfect example of the idea that greener business means smarter organization... more efficiency... and bigger gains.
Just a few examples...
- WMI recovers and processes methane gas, which is naturally fermented from landfills, and sells it to power plants to produce energy. Right now the company supplies enough landfill gas to generate 250 megawatts of energy each year... enough to power 225,000 homes or replace about 2 million barrels of oil (www.wm.com/wm/about/overview.asp).
- It has converted 495 of its vehicles from diesel into natural gas and has one of the country's largest natural-gas-powered heavy-truck fleets.
- WMI helped found the Chicago Climate Exchange, which is fast becoming the leading exchange for carbon trading (offsets), favored by the likes of Al Gore, the Nobel Prize Winner (tee-hee!).
Increasing waste-based energy production. Today, Waste Management creates enough energy for the equivalent of 1 million homes each year. By 2020 it expects to double that output, producing enough energy for the equivalent of more than 2 million homes.
Increasing the volume of recyclable materials managed. Waste Management currently manages 8 million tons of recyclables; by 2020 it plans to capture enough of the increasing volumes to manage more than 20 million tons.
Directing its capital spending of up to $500 million per annum over a 10-year period to increase the fuel efficiency of its fleet by 15 percent and reduce fleet emissions by 15 percent by 2020. The company also expects to invest in technologies to enhance its waste business.
Preserving and restore wildlife habitat across North America. By 2020, Waste Management plans to increase by more than four times the number of facilities – from 24 to 100 – certified by the Wildlife Habitat Council, and increase the number of acres set aside for conservation and wildlife habitat to approximately 25,000.
For all these reasons, and more, we like WMI right now.
Action: Add Waste Management Inc. (NYSE: WMI) to the Evergreen Portfolio at $38.11. Use a 25% trailing stop to protect your principal and profits here.
But there's a snag.
Due to the volatility in the markets, and the slew of bad earnings reports today, I'm hesitant to add the company to the portfolio right now. It's always nice to add a new picks on a nice, market-wide upsurge.
And Friday's aren't typically bull days.
Either way, you'll have the name of the company before midnight tonight. And trust me, this is a great stock regardless of whether we add it in time for tomorrow's session... or if we wait until early next week.
Till then, good day,
Wednesday, October 17, 2007
So far in today's trading session, the producer and seller of wood biomass has jumped 11.76% for us.
Now keep in mind: those gains could be gone by the end of the day.
This is a micro-cap we're talking about here and it's not likely rising by double-digits today based entirely on fundamentals.
But I believe that long-term, GRGR makes a LOT of sense for our Evergreen Portfolio, especially because it's moving into China and Europe, two huge developing markets for biomass energy.
Let's keep a close eye on this one.
That's a nice 21% pop.
But why? Why would this happen to teeny-tiny, British D1 Oils on a day when the rest of the markets were taking a giant poop for the second straight day?
Why D1 Oils Is Looking Very "Slick"
In my humble opinion, D1 Oils shot up yesterday *not* because the entire world suddenly fell in love with jatropha, per se. (Jatropha, of course, is the biofuel-bearing weed that D1 Oils is cultivating around the world to the tune of 1 million acres over the next 5 years.)
Instead, it comes down to oil prices.
Yesterday, crude oil continued to surge... big time. It's pushing $88 a barrel, an historic high to say the least.
As Crude Oil Gets Pricey, Jatropha Makes Even MORE Sense
The higher oil gets in price, the more jatropha's apparent solution to the energy problem becomes more obvious. In other words, expensive oil means jatropha gets more econonomical to farm and produce by comparison.
Knowing this, speculators are likely to pile into D1 Oils the higher crude oil gets.
That's part of the reason we added D1 Oils to our Evergreen Portfolio in the first place:
Meanwhile, the global economic expansion continues forward, led by India and China. With all that expansion, we'll continue to see increasing demand for fuels and commodities. And with biofuels taking center stage as the leading alternative to oil and gasoline, D1 Oils stands to benefit over the long haul.Let's hope this little pop in shares is just the beginning of a very long runup for our favorite jatropha stock... Hell, this is the ONLY true jatropha stock on the planet right now as far as I know.
If you know of another good jatropha play for green stock investors, please let us know.
Meanwhile, good trading,
Tuesday, October 16, 2007
This company's primary business is photovoltaics... the solar technology that converts sunlight directly into energy.
The stock has soared since IPO'ing about two months ago, up most than 100%.
But get this: YGE still has a single-digit PE ratio... has plenty of cash on the books... low debt... and it's still positioned right in the middle of the most important green energy movement on earth: the one just beginning to take off in China.
YGE: Ready to Clean Up the Most Polluted Country
As readers of this blog may know, China is the most polluted country on earth... It's paying for decades of double-digit economic expansion in the form of soot-covered cities... cancerous drinking water... birth defects... the list goes on.
And YGE could become an increasingly profitable recipient of the clean-up dollars that are already flooding the country courtesy of the government in Beijing.
We could be adding YGE to the portfolio soon as well.
More to come.
Monday, October 15, 2007
Earnings were horrible for Citigroup, even by bank standards these days... Oil is closing at record highs, finally looking as if it might challenge the $100/barrel threshold that Jim Rogers has been talking about for some time.
(Jim Rogers, I've come to realize, is simply ALWAYS RIGHT. It's almost annoying how brilliant that guy is.)
Anyway, I just realized that our Green Investments blog here is almost 1 year old... It was born on Christmas 2006, and we're fast approaching the holidays again.
I know this because my sister in Rochester, NY, is officially preparing the most audacious party ever hosted there. I also know this because Andy Rooney was talking about how freakin' GREAT it is to shovel tons of snow on 60 Minutes this weekend.
I must say, it's been an extremely fun ride so far. The only real drawback is that my alternative-lifestyle budgies (named Chirpy and Tweety) have gotten the short end of the stick as I've spent evenings and weekends researching companies and markets for Green Investments.
Indeed, my man-budgies are, in their subtle way, threatening to pack up their tiny, parakeet-sized leather vests, their little Rob Halford records, captain's hats and chain wallets and finally break south for Key West...My wife thinks I'm having an affair, but I try to tell her it's only with Al Gore, so no need to be jealous.
Sometime on or around Christmas Day we will reflect back on our year of investing... and tally up the numbers to see how we really are doing in our ongoing quest to beat the S&P 500 with nothing but true green investments.
It's been a wild one, filled with a horrendous market pullback this summer... a 10% drop in the Chinese equity markets hitting in ONE DAY... and of course a volatile rally that we're still in the middle of as I write.
I appreciate you being along for the ride. Please join us for the rest of the journey, spread the word and get our readership up so we can all be famous and rich together.
"Dirty Green" Update
The more I research the "Dirtiest Green Stock in America" the more convinced I become that we'll likely end up adding it to the portfolio on Thursday. More to come on this, but tune back in to confirm this recommendation.
It could be one of the safest, smartest and most lucrative income-paying stocks in the world right now... and we'll unviel it here in just three more days.
The company's numbers look very promising, but I still need to confirm the price trend and fundamentals to make sure everything's moving in the right direction before officially adding the stock to our list.
Meanwhile, here are a few hints:
- This is a Fortune 200 company.
- It's America's largest recycler.
- It provides enough waste-based energy to replace more than 10 billion barrels of oil every year.
- It recycled enough paper last year to save 41 million trees.
- It pays a nice dividend, which could bolster our growth portfolio with some stability and income.
- It just announced the most aggressive green agenda in its long history, which will dramatically increase its sustainability program over the next 13 years.
- It could be the "dirtiest" green company in America.
Thanks to My Wife... for What Promises to Be a Great Pick
That honor goes to my wife, an avid reader and fan of this blog (erm, she kinda has no choice).
Owing to the fact that I have a full-time job... a 4-year-old son... and two high-maintenance parakeets... I don't plan on revealing the stock in this space until Thursday morning, Oct. 18.
My point with this blog is to seriously research every investment before telling you about it, so you can be somewhat assured that it's not just me shooting from the hip and trying to sound cool.
So... a bit more research is required. Till then, more hints... more updates... more news... more fun.
Sunday, October 14, 2007
While I'm not sure we're there yet, the list you'll find at the bottom of this blog space (My Big List of Green Stocks) already contains more than 400 companies... and every one of them has been vetted by a major financial concern as a green or sustainable company.
My goal is to put together the 1,000 top sustainable companies on the planet to create a truly global, green index that we can track... I think we'll call it the Global Green 1000 Index.
My Big List Is a Start... Can You Help Me Finish?
My Big List is a very rough beginning, because many of the companies on the list will have to come off.
I will screen out old-thought oil producers such as Schlumberger... and probably knock out the booze producers as well.
Not that I have any problem with drinking, per se... Just because booze can and does destroy a lot of lives, and part of the inspiration I had in that big old redwood forest last year told me to avoid these kinds of companies.
Same will probably go for tobacco companies.
A Confession: I Have Beer in My Fridge... And Cigars in My Humidor!
This is a funny question, however, because we have beer in our refrigerator right now, and I have a humidor containing some long, sweet-smelling products that are definitely derived from sot weed (the Partagas Sabrosso 1845's are pretty good by the way, and not expensive).
The question is: How GREEN am I going to be when it comes to my investments? Will we look at green criteria first, and stick only with companies that provide wind, solar and biomass energy... or natural food companies that don't transport their products via internal-combustion-fueled vehicles?
I rather think not.
We Should Put Gains First... Then Screen for Green
Instead, I believe we should seek maximum gains first from a company, and then screen it for our green criteria... criteria which, I must admit, are still being formulated in my mind.
So how green will our portfolio be? And how green will our Global Green 1000 Index be?
More will be revealed...
However, I think it's safe to say that we want to look at profitability first... then weed out the truly dark operations in the booze, oil and tobacco industries. I am not making any final pronouncements here.
So How Green Is YOUR Portfolio? And Your Lifestyle?
But what do YOU think? I would love to hear from YOU on this question: What should the criteria be for our Global Green 1000 Index? Heck, we're inventing the thing, so we can make it whatever we want.
I don't often hear from readers of this blog, but it would be nice to start...
Is Coke Really a Green Company?
I encourage you to send in your ideas, your personal thoughts about green investing... and if you think there are any companies that should NEVER be considered... If so, let me know what you think.
Meanwhile, check out My Big List of Green Stocks, which I've cleaned up and edited this morning. You'll see there that many companies might not be your typical green plays, but should we consider them anyway?
Can companies such as Coca-Cola, Nike or Schlumberger really be considered acceptable as sustainable investments? What do you think?
So far, we're sitting on 46.23% in potential gains here, as the stock has jumped about $32.82 per share.
I'm inclined to lock in some of those gains by placing a 25% Trailing Stop under this position... meaning we'll sell if it closes 25% below the previous closing high since recommended.
I do this not because I'm worried about a major downturn in BG based on anything reasonable or fundamental... but simply as insurance against a market I still consider to be unstable.
Action to take: Place a 25% Trailing Stop below our Bunge (BG) position, at $77.86.
Friday, October 12, 2007
Under this partnership agreement, the two companies will plant 172,000 hectares (about 425,000 acres) of jatropha curcas (the oil-bearing plant) in parts of India, southern Africa and Southeast Asia... and up to 1 million hectares over the next 5 years.
So why are we bullish on D1 Oils and jatropha in general?
Let me count the ways...
1) It is the ONLY pure play on jatropha right now... and appears miles ahead of all competitors when it comes to planting programs, partnerships and aggressive growth planning... Whenever you see a major publication covering jatropha, you almost always see one company mentioned: D1 Oils. The New York Times piece is one example:
2) Jatropha plants, like any other species, vary from strain to strain in terms of hardiness and productivity... and D1 Oils not only is a producer... It's a seed bank and runs an entire program designed to identify and refine the best jatropha seed stocks in the world... (In this way, D1 Oils is similar to Bunge, another Evergreen Portfolio pick.)
3) Jatropha can grow where foodcrops cannot... in arid, poorly irrigated soils... Already massive planting projects are underway in places like China, India, Africa and Southeast Asia... Poor African farmers have long used Jatropha bushes as natural fences for their animals...
Jatropha oil can be extracted right from the fruits that grow from these bushes (the fruits are about the size of a golf ball)... And it can then be added to diesel and burned almost directly, without excessive processing.
This has led to stories of poor farmers growing small patches of jatropha, trying to make money with "liquid gold." But since the infrastructure and markets are not yet robust enough to absorb their harvest, they've had trouble making money.
Jatropha: A Major Biofuel Revolution in the Making?
Another problem is the inconsistent quality of the crops. But this is a little-understood facet of the jatropha story... and D1 Oils' seed-development program makes this company perfectly positioned, right in the center of what could be a major biofuel revolution in the making.
I anticipate this being a long-term holding, so let's be patient and I think we'll see this one bear major fruit down the road.
Thursday, October 11, 2007
We may re-enter this position, or another BG covered call, at a later time.
Action: Sell the Bunge $125 April 2008 Calls (BGDE.X) to lock in a 10.26% gain... The options have gone from $3.90 to $4.30 today.
No big shocker there (why is it that stocks always go down at first after you add them to your portfolio?).
But I have to agree with Jim Cramer, who, despite all his rantings, strikes me as a pretty smart guy.
This morning, the Mad Money Man reported that he sees absolutely "no reason" for today's pullback in BG's share price... and that he expects it to resume its upward trend posthaste. He compared it to a recent "random dip" in Nokia shares that represented a short-window buying opportunity.
As Cramer writes:
"Today Bunge is down almost two bucks. There is no real reason for that decline. Deere is running. Mosiac and Agrium are running. Bunge will come right back."Hallelujah, Jimbo! We here at Green Investments couldn't agree more.
If he's right, and we're right, then we stand to lock in some nice gains as this seed company rides the continuing bull market in commodities. Remember, we bought the outlying April 2008 options, giving us plenty of time to be correct in our assessment.
Wednesday, October 10, 2007
We've seen strong action in Bunge (BG) for months on end, and are now up more than 50% on this position.
Continued higher grain prices, the demand for ethanol and corn, and Bunge's positioning as a supplier of foodstuffs to the exploding consumer populations in China and India are all helping push the stock higher.
Commodities in general could continue strong over the next six months (crystal ball warning!) because of the continued volatility and uneasiness in the equity markets (which can drive people into real assets like commodities)... and also the continuing bull cycle for commodities in general, which should run for another few years more at least based on past 16-year bull cycles in the sector.
This is a pure speculation on BG continuing its upward march. And we have a few months to be right... or wrong.
Action: Add the Bunge April 2008 $125.00 call (BGDE.X) options to the portfolio at $3.90.
Tuesday, October 9, 2007
It was a rather sad day in a way, because LDK had been up more than 100% for us... for several weeks... before finally triggering our trailing stop (having sunk 25% from its high).
I couldn't help but smile when LDK rose about 5% the very next day... But we stuck to our guns. When you sell, you sell... Stick to your discipline, even when it hurts I say.
But who could have predicted what would have happened right after we sold at $53 levels?
LDK's Sudden, Shocking Free Fall
Since then, the stock went into a freefall... sinking into the low $40's before bouncing back some today... some meaning about 19%.
Still, the stock is trading around $44 as I write... well below our exit price.
Unfortunately, a former official at the company has announced that he believes LDK's technology is not up to snuff... and a Midwestern lawfirm has filed a class action lawsuit against the company on behalf of shareholders!
The suit alleges that LDK management overstated the company's profitability, and therefore defrauded shareholders (some of whom have booked 95%-plus gains). Who knows whether there's any truth to these allegations?
The lawsuit was just announced, so we'll have to see how it plays out.
This could have been pricing into the stock before the news even went public... illustrating the opacity of the markets, especially when it comes to individual investors (and perhaps lending some small credence to Burton Malkiel's nefarious efficient-market flapdoodle).
For more on the lawsuit against LDK, visit:
This just reaffirms my commitment to our Green Investments system... whereby we place trailing stops underneath certain positions to lock in gains as they come, and to ensure that we never lose our shirts.
Our System Is Functioning Perfectly
To read more about this system, please read my prior post on the topic:
Anyway, it's not often that you see one of your former positions soar almost 20% in one session... and breathe a sigh of relief for having sold it... But this is one of those rare days.
Let's hope LDK irons out its problems (which could be at least half PR-related) and gets back on track. If it does, we might re-enter the position at a later date.
Till then, good trading all,
That was accurate, in a pure sense. But...
What I really meant to say was less than 20% of them are able to do this! In other words, some 80% of actively managed mutual funds fail to beat their benchmarks!
For more on this topic, check out this article:
Monday, October 8, 2007
In other words, whatever news or information there is available on a stock is already priced into that stock by the market.
This is clearly a bunch of crap.
With all due respect to Professor Burt, the "strong form efficiency" model (i.e. that share prices reflect ALL information and no one can outperform the broad markets) would fail to explain about 90% of what I see happening in the markets on any given day.
And there are boatloads of analysts smarter than I who would agree.
Where Malkiel Is Getting It Right
However, I do agree with one of Malkiel's most persistent ideas: For most investors, it makes better sense to put your money into an index fund and park it there for the long term, rather than pick individual stocks.
Hell, less than 20% of professional money managers beat their indexes on a yearly basis. That tells you something right there.
Malkiel's major point is that funds provide instant diversification, and therefore lower your downside risk the moment you add them to your portfolio.
4 Advantages to Green Investing through Index Funds
The other advantages he cites in his excellent book The Random Walk Guide to Investing are:
1) Index funds simplify investing... Like the sector or the index? Buy the fund.
2) They're cost efficient... because many offer low or no expense charges and most index funds do little trading
3) They're predictable... You know you'll at least keep up with the index's model portfolio
4) They're tax efficient... By owning index funds that don't trade from security to security, you can avoid taxable gains
Of course my point here is that sustainable investors should consider adding at least one good index fund to their portfolio.
Our Powershares Cleantech Portfolio ETF (PZD) would be a perfect example. Not only does it give you broad exposure to this exploding clean tech sector in one investment... it lowers your overall portfolio risk in the process.
A great one-two punch, and further proof that you can invest sustainably, and prudently at the same time.
Our next recommendation could be even further along these lines... including a possible hedge or zero-downside play as the markets continue into a period of slow growth and volatility.
Sunday, October 7, 2007
It's already showing us a modest 2.44% gain, and I believe there's much more to come here.
We chose this fund over several competitors because of its valuation, price action and higher volume.
But if you'd like to take a look at the "losers" in the competition to become our primary cleantech ETF holding, check out this excellent website: http://www.sustainablebusiness.com/stocks/
You'll also find dozens more stock plays in the sustainable area categorized and linked to their Yahoo! Finance pages.
A great way to spend an afternoon, if you're a serious nerd like me.
Green investing is not mainstream... yet.
This proposition - that now is the time to begin a dynamic, purposeful, long-term shift to new energy - is still very much in the balance.
We don't know for sure whether the sea change we need in the mindset of the world's corporate decision makers will take hold.
Of course, anyone with common sense can understand the benefits of moving toward more sustainable businesses involved in solar, recycling, efficiency, clean water, biofuels and the like... and away from crude oil, cigarette makers and the military-industrial establishment.
As long as we use oil at our current rate, we'll be beholden to dictatorships in the Middle East, including Saudi Arabia... which could be worse than Iran when it comes to human rights... and certainly in terms of the number of screaming maniacs it put on the 9/11 planes (actually, I don't believe there was a single Iranian involved, was there?).
Green Investments: An Effort to Change the Way Humans Think
The point here is that this is an effort to change the way human beings think. There's nothing automatic about it. The Dark Ages would have continued forever were it not for advances in technology, art, philosophy and political freedoms.
In a way, we have been in a crude-oil-and-coal-fueled dark age in terms of energy production and consumption patterns, and it is costing us.
Not only with polluted rivers and streams... smog... cancer... and all the rest... but in terms of opportunity costs...
The longer we continue whistling in the dark, the further behind we'll be left by competitors such as China, India and Europe.
Already, Europe is way ahead of the U.S. in terms of developing wind infrastructure.
Already China is pulling ahead of us in terms of solar-panel production, jatropha cultivation and wind production.
The time to begin developing an alternative-energy infrastructure in the U.S. is right now, and the government needs to get behind it full-force... not merely through setting standards, but by pouring money into this nationwide project.
(Just as importantly, we can help our friends and family to understand the urgency of the situation as well.)
Green Energy Could Create 3 Million New Jobs
Another reason to do so: jobs.
As pointed out in a recent article on CNN/Money, some 3 million new jobs could emerge over the next 12 years or so as a direct result of our shift toward green energy such as solar panel production and installation.
These are jobs that aren't going to be exported to China and other places either.
Unless, of course, they're already so far ahead of us that it will make no sense to develop these new technologies and products here in the U.S. going forward.
Fact is, it is possible for us to lose the battle against retro energy very slowly, over the course of years or even decades.
In order to avoid this, we need a "tipping point" of the mind whereby all sensible people - including those at the heads of industry and politics - finally agree that a shift in inevitable... and that the only question is: how can we accomplish it quickly enough to make a difference for the next generation?
Friday, October 5, 2007
Normally, I will place a trailing stop of 25% behind the positions we add to our portfolio. That means that we'll sell the stock the morning after it closes 25% or more below its high since being added to the portfolio.
The simplest way to understand it is with this example:
If we buy Stock XYZ at $10 and it closes at $7.50 (25% off its high) the next day, we sell upon the opening bell the following morning.
The reason we do this is simple: Rather than holding on and hoping the stock will rebound, we cut the losers and, as Alexander Green of The Oxford Club says, we let the winners ride.
Hey, it's not like we aren't giving the stock a chance to soar... just as long as it doesn't retrace too dramatically.
If it does, we sell and move that money into another stock poised to take off.
Our System Ensures that We Never, Ever Take a Catastrophic Loss
The beauty here is that you'll never, ever take a major bath on an investment this way. The Trailing Stop discipline makes sense, and I use it with this blog because my purpose isn't just to add stocks to the portfolio and hold onto them randomly until I get some big numbers to crow about.
We're seriously trying to beat the S&P 500 over the long haul... and we're willing to take our losses when we have to in order to accomplish this goal.
Anyway... more on trailing stops at a later time. For now, let's let the portfolio settle in and see if we can lasso another LDK-like return.
Thursday, October 4, 2007
D1 Oils has the rights to more than 198,000 hectares of jatropha worldwide already, across arid parts of India, Africa and Southeast Asia... and is in the process of planting and acquiring more every day. Its recent joint venture with British Petroleum marked a turning point for the company...
Here's what D1's Chairman had to say recently:
The establishment of D1-BP Fuel Crops Limited [the joint venture] is a transforming event for D1. BP’s decision to join us in this new venture is a significant endorsement of our feedstock strategy. The joint venture will enable us to speed up the development of jatropha for the production of sustainable biodiesel and to deliver commercial volumes of jatropha oil at competitive prices, benefiting both the economies of developing countries that will grow the crop and the rural communities where planting will be based.
D1-BP Fuel Crops will commence operations on 1 October. The new joint venture also represents a turning point for biodiesel globally. Although biodiesel is a young industry, it has rapidly become not only an established part of the global renewable energy landscape, but also a commercial and strategic requirement in the global transport fuel market. BP’s decision, as a major global supplier of transport fuels, to focus on jatropha as the source of sustainable biodiesel is a recognition of the pressing need to base more biofuels on inedible crops that are not subject to the same demand pressures as food oils and that are grown on marginal land.
Indeed, while the company is not yet turning a profit, it's got plenty of cash on the books and appears poised to catch lightning in a bottle, so to speak.
The Most Direct Way to Play the Coming Jatropha Boom
This is the most direct play on jatropha available in the world today. You could look to invest through Brazil's Renova... or perhaps China's CNOOC... or even British Petroleum, D1's partner in Swaziland.
CNOOC is particularly tempting, because of its recent agreement to Panzhihua Municipal Government to cultivate the plant and process jatropha. However, oil is looking toppy right now, and so is China.
I also sense that the general professional trading community and, to some degree, the markets, are becoming a bit more careful about China. And they're flat-out preparing to run from biofuels... so even stepping into this arena right now is a calculated risk.
In addition, CNOOC is a massive oil producer. And I just have a hard time adding a major oil company to this portfolio, although I am not against it entirely.
I'll file a complete report on D1 Oils shortly, which lists on the London Stock Exchange. Till then, let's get on the jatropha bus and see how far it takes us.
Action: Add D1 Oils (DOOIF.PK) to the portfolio at $4.15. We won't use a Trailing Stop on this position because I expect heavy, heavy volatility to precede an eventual momentum burst upward.
Again, LDK Solar is dropping from the Evergreen Portfolio effective this morning.
We bought the stock at $27.20. So while we stopped out of the position, we did book a solid 95.88% gain on the position.
Our next investment will be coming soon.
Tuesday, October 2, 2007
A couple things about this report really stand out to me...
First, 62% of these Top 100 retail companies have reported increasing their green investments over the past two years. That's a pretty solid number. It shows these CEOs are putting their money where their mouths are.
But what I found really fascinating was why they're doing it... why they're going greener.
Surprise Surprise: Corporate America Hasn't Grown a Conscience... Yet!
I'm not sure if they were given the option of saying: "Because I'm interested in keeping a nice planet for myself and my posterity."
But whatever the case may be, only 25% said they were going green for zoning or tax-break-related reasons. About 13% of CEOs said they were greening because they wanted to improve their image with shareholders...
But a whopping 54% of the CEOs polled cited "image among consumers" as their primary reason for instituting sustainable business practices.
That tells me that the sustainability movement is winning the war against ignorance... in the place where it matters most: the marketplace of ideas. That tells me that we can bring about major change in the thinking of the PEOPLE who run America's biggest corporations... not by hitting them over the head and preaching, but by sharing information, sharing the facts.
Al Gore did it with his book and his movie. And it's a great paradigm for enlightening people in general.
After all, everything comes down to the human beings behind the corporations... From the CEOs to the board members... to the management to the entry-level employees. That's why this movement seems so perfectly suited to grass roots efforts.
Sustainability is not a political movement, in my opinion... It's much bigger than that... And more important, too... This is about humanity waking up to a brighter, healther, sustainable future... one person at a time... and not only because we need to in order to survive... which is true... but because we want to...
- A Very Special Green Investments
- SBUX Hits Our TS - SELL
- Starbucks Could Stop Out
- Rio Tinto Rising Again Today... Up 12%
- KEPCO Surges on China News
- China's Baosteel Joins the Rio Tinto Bidding Party...
- Stupid Prediction Update: Crude Oil Sinks
- Green Energy Resources Jumps 33%
- Our Rio Tinto Shares Jump 10%... Could Could Rio T...
- Add Rio Tinto to the Green Investments Portfolio
- Green Energy Soars 30.7% in One Session
- India Cleantech... A HUGE Opportunity for Investor...
- Our Crude Oil Correction Call Cometh
- Green Investments Weekend Edition... GRGR's 5% pop...
- Starbucks... Ready for a Triple?
- Green Investments Cleantech Pick On the Way
- Green Investments Says: Flee Subprime... This Ain'...
- Volatile Is Not the Word... Use Trailing Stop on K...
- ALERT: Sell Kookmin Bank for 2.81% Gain
- Plunging Markets Fall on Our Green Investments... ...
- Become a Brazilian Ethanol Venture Capitalist for ...
- The Big Oil Swoon Cometh? Whaddya Think?
- Green Energy Resources Rallys 12.5%... And Keeps t...
- WMI Hit Hard After Earnings Announcement
- Update On Our Oil Prediction
- A Note About Over the Counter Stocks and Green Inv...
- Our Green Investments Portfolio: Up 266%... Includ...
- Green Energy Resources Scores $5.5 Million Contrac...
- Beating the S&P 500 by 2,000%... with ONLY Green I...
- Our Green Energy Resources Position Jumps 18.75%
- Tom Brady IPO... The Coming Stock Rally... Oil Loo...
- Markets Meltdown... WMI Rallies... Plus 6 Steps to...
- Add Waste Management (WMI) to the Evergreen Portfo...
- Our New Pick Is Coming Soon
- Our Green Energy Resources Play Jumps 11%!
- Our D1 Oils (Jatropha) Play Jumps 21%
- Yingli Green Energy: The Hottest Green Energy Stoc...
- Ugly Markets... Gay Budgies... And Green Investmen...
- This Thursday, Oct. 18, I Reveal... "The Dirtiest ...
- Please Give Me Your Ideas for Our New Global Green...
- Our Bunge Play Is Up 46.23%... Lock In Profits Usi...
- D1 Oils: The Only Pure Jatropha Stock in the World...
- Sell BG Options and Lock in 10% Gains in 8 Hours!
- Bunge Trips... As Expected
- New Recommendation: Bunge April 2008 Call Options
- LDK Solar Bounds 19%... Glad We Sold It!
- Correction: Professional Money Managers Are Even W...
- Random Walk Down Green Investment Street
- The Best of 4 Cleantech Indexes
- Green Investments and the "Tipping Point" of the M...
- Why We Use Trailing Stops
- Add D1 Oils to Our Portfolio at $4.15
- LDK Stops Out at $53.28... Hands Us 95.88% Gain
- Why Big Retailers Are Going Green
- ▼ December (9)