One of the criticisms I often hear about cleantech is that, as an asset class, it is too risky and volatile for the average investor. That is a misconception Tom attempted to dispel a few months ago with his Blue-Chip Alternative Energy Portfolio. In fact, some of the most interesting work in cleantech and alternative energy is currently being conducted by large companies.
A Clean Car Pick
Last year, we told you about a report on investing in clean automotive. We have some interesting follow-up information on one of the companies discussed in that report.
During Magna International's (NYSE:MGA) latest Q2 earnings call, the Co-CEO reiterated his company's interest in hybrid and other emerging technologies. The exchange went as follows (I changed a few things that, as originally transcribed, made the response difficult to follow. Despite my changes, parts of the response were clearly mistyped and I couldn't make sense of them):
Fadi Chamoun - UBS Warburg
One question perhaps, Don… you have growing cash balance and then a lot of balance sheet to keep up with these, I am wondering if there is more willingness to step in perhaps in new technologies like diesel hybrids to improve the gro[wth] prospects.
Donald J. Walker - Co-Chief Executive Officer
Well, we have been looking at a hybrid strategy in hybrid diesel [which] means a lot of different things to a lot of different people. I think the… we expect hybrids [...] to grow. I think there is going to be a lot of new technology. Its whether it be in the [power train] side or the battery side, like triple electricity generation driving the wheels of… so we are doing a fairly in depth analysis of what we have internally with the new emerging technologies. We think we will be winners. Two potential players are among their jointed partner with potentially looked at buying somebody. So, I would say given our product portfolio right now [this] is an ongoing process. [W]e have been focusing on what product we think we are going to [produce] the most upside going forward.
The automotive sector is already a significant area of focus for policy-makers with regards to environmental impacts, and exposure to clean and efficient cars has proved to be, in the context of rising oil prices, a positive differentiator for industry leaders. This is definitely an interesting area to follow, and I think the next few years will see some significant transformations with regards to automotive technology.
Here's one more piece of the puzzle for people wanting exposure to cleantech without the risk associated with smaller and more volatile pure-plays.
Disclosure: The author does not have a position in the company's shares.