Top Public Pension Funds Shun Solar Stocks

A recent HedgeTracker.com Public Pension Fund Study has revealed that top funds have limited exposure to leading US-listed Solar companies. While US politicians have been touting a clean-energy future, very little public pension investment dollars are being funneled into the most promising solar companies. Overall, the 11 pension funds reviewed by the study managed $227,226 million in US equities and only held a paltry $182 million in the Solar Sector as of 12/31/08.

The majority of the assets, over $121 million, were held in First Solar Inc (FSLR), the largest US-listed Solar company by market capitalization. The only other companies with top pensions as investors included SunPower Corp (SPWRA) with $47.2 million, Energy Conversion Devices (ENER) with $10.3 million, Evergreen Solar Inc. (ESLR) with $2.3 million and Suntech Power (STP) with $1.3 million. The New York State and Local Retirement Systems had previously held approximately $1 million each in Trina Solar Ltd. (TSL) and LDK Solar Co. Ltd (LDK), but liquidated those positions over the 4th Quarter of 2008.

The other four solar companies that had no top pension investors were all foreign small-cap companies with US-listings. These included Canadian Solar Inc (CSIQ), Solarfun Power Holdings Co (SOLF), Yingli Green Energy Holding (YGE) and JA Solar Holdings Co. (JASO).

The top solar investors were CalPERS (total of $51mn in FSLR, SPWR, ENER, & ESLR), State Teachers Retirement System of Ohio (total of $30mn in FSLR, ENER, & ESLR), the Teacher Retirement System of Texas (total of $24mn in FSLR & SPRWA), and Florida State Board of Administration (total of $23mn in FSLR, SPRWA & ENER). Notably, the New York State Teachers' Retirement System was the only pension fund that had no exposure to any of the solar companies in the study.

The analysis looked at 11 pension funds from some of the US’s most populous states, including: CalPERS, CalSTRS, NY State and Local Retirement Systems, NY State Teachers' Retirement System, Florida State Board, Ohio Public Employees ERS, State Teachers Retirement System of Ohio, Teacher Retirement System of Texas, Texas Permanent School Fund, ERS of Texas and the State of Wisconsin Investment Board. The analysis also looked into the pension fund’s ETF holdings, and none of them had any exposure to the leading clean energy funds (PowerShares WilderHill Clean Energy (PBW) Mkt Vectors Glb Alternative Energy (GEX), PowerShares Global Clean Energy (PBD), Claymore/MAC Global Solar Energy (TAN), etc.).

Disclosure: Long FSLR.

Comments

[jabba:]

that's okay to me, so i can buy more at these prices... later on the pension funds may buy them from me :-)

May 05 06:33 AM

[tessant:]

they will just miss out on the next big solar run...but i wont..

May 05 08:11 AM

[Ming-Wei/Ming:]

Now you can understand why the analysts bad mouthed Chinese solar company only.

May 05 09:33 AM

[coreopsis:]

Very useful info well summarized, thanks Todd.

May 05 09:33 AM

[Fred W:]

"Pension" funds should stay clear of speculative investments (this includes almost all solar manufacturers).

May 05 10:31 AM

[coreopsis:]

This is nonsense -- pension funds, like all fiduciaries, are subject to the notion of the 'prudent man rule'. So they don't hold any spec investments, eh? Like C, AIG, BA for example?


On May 05 10:31 AM Fred W wrote:

> "Pension" funds should stay clear of speculative investments (this
> includes almost all solar manufacturers).

May 05 11:05 AM

[Jade Queen:]

What I'm looking at is the ones they do own: STP and SPWRA, for example, which I also own. It seems likely they don't see quick earnings in this market, and they are back into fossils, betting on a run-up. Production capacity has been scaled back so much in that sector. If demand picks up, prices will rise. I won't act on this for myself, but I understand the logic. A worry about foreign stocks is xenophobia rising. I rather doubt that will happen concerning clean-tech, since clean-tech seems to be fading on the radar. Policies of Brazil and China are getting them some good public attention, in relation to behaviors of our congress. I do not believe U.S. corporations want to lose access to markets in Brazil and China. While they defend themselves from confiscation, I don't think they will want congress to start trade wars. They may bust their off-shore operations into outsourcing arrangements, especially where they like and trust their off-shore partners more they they trust the U.S. federal government. Anyway, that seems logical to me. Shoot away if I'm not seeing all the variables.

May 05 12:43 PM

[Salman Khan:]

No doubt, solar industry is one of the sunrise industry. There will be some initial hiccups, but it will turn out to be a winner in long term as the world move towards green energy. If pension funds are avoiding solar stocks, then they gonna miss all the fun. Check out the following link for a really illuminating article on solar stocks.

www.stockozone.com/200...

May 06 05:43 AM

[Chad Brown:]

Pension funds are mostly long-only, long-term investors. Buy and hold for the most part. Solar stocks are extremely speculative and volatile. Most are only a few years old. Many may not be around in 5 or ten years, having been replaced by some other solar company. I would say there is no proven business model in the solar sector yet. Meaning solar has to be past needing subsidies, has to figure out if it should be integrated or not, what technology works, how to finance solar. This niche is a long way from being the kind of industry where an investor can be confident that it is a good investment. If natural gas is plentiful enough, maybe solar is not even needed for a few decades. I don't think so, but that is one of many risks facing solar. Pension funds SHOULD stay away. Their job is not to provide equity funding for a needy industry. It is to give their beneficiaries assured source of benefits.

Jul 29 10:57 PM