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.
- December (9)
- 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... ...
- October (36)
- September (24)
- August (11)
- July (7)
- June (1)
- April (2)
- March (18)
- February (8)
- January (17)