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In this article, via an analysis based on the latest available Q4 institutional 13-F filings, we identify the alternative energy stocks that are being accumulated and those being distributed by the world's largest fund managers. We have included in this group companies operating in the solar and wind groups, as well as biofuel-based companies. These mega managers, managing between $50 billion and over $700 billion in 13-F assets, control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Taken together, they are bearish on the group, cutting a net $95 million in Q4 from their $8.77 billion prior quarter holdings in the group.

The following are the alternative energy companies that these mega fund managers are most bullish about, that are trading at their lows, and that are also projected based on consensus analyst estimates to grow their revenues at a high growth rate over the next two years (see Table):

Maxwell Technologies Inc. (MXWL): Maxwell is a leading developer and manufacturer of innovative, cost-effective storage and power delivery solutions, including the manufacture of high-voltage capacitors, ultra-capacitors and radiation-mitigated micro-electronics. Mega funds together added a net $5 million in Q4 to their $60 million prior quarter position in the company, and taken together mega funds hold 26.6% of the outstanding shares. The top buyers were Wells Fargo ($3 million) and Los Angeles-based Capital World Investors, with over $262 billion in 13-F assets ($2 million), and the top holders were mutual fund powerhouse Fidelity Investments ($18 million) and Vanguard Group, with $1.6 trillion in assets under management ($12 million).

MXWL shares plunged the week before last, on Friday, after the company reported that in its Q1 (March), while it beat analyst earnings estimates (7c v/s 4c), it guided down on both Q2 ($41-$42 million v/s $47 million) and FY 2012 revenues ($181-$189 million v/s $201 million). The stock gapped down huge the morning after the report, and is currently down 44% since the report came out, and is trading at multi-year lows. A number of brokers, most notably Ardour Capital and Needham, came out in support of the stock, arguing that the projected softness was temporary and that the stock was an even more compelling buy after the drop given that the long-term fundamentals remain intact. Specifically, Ardour lowered their target price to $18 from $25, but that's still well above the $8.88 close today.

Currently, consensus estimates from about ten analysts covering the company project that revenues will rise from $157 million in 2011 to $183 million in 2012 and on to $224 million in 2013, at a very respectable growth rate of 19.5%. At the same time, analysts are also projecting that margins will rise during the period, with earnings rising from 17c in 2011 to 26c in 2012 and on to 56c in 2013, at an annual growth rate of 82%. Of the twelve analysts that cover the company, ten rate it at buy/strong buy and the remaining two at hold, with a mean target of $18, well above current prices in the $9 range.

Amyris Inc. (AMRS): AMRS sells ethanol produced by third parties under short-term agreements through a network of storage terminals. Mega funds together added a net $4 million in Q4 to their $12 million prior quarter position in the company, and taken together mega funds hold 15.1% of the outstanding shares. The top buyer was mutual fund powerhouse Fidelity Investments ($4 million), also the top holder at $11 million.

AMRS reported its Q1 (March) on Tuesday, missing on both analyst revenue ($30 million v/s $46 million) and earnings estimates ($1.02 loss v/s 65c loss). The stock as a result was down about 22% Wednesday, tracking all-time lows. This is at least the fourth quarter in a row that AMRS has missed estimates, and shares as a result are down about 85% YTD and more than 90% in the past year. Looking forward, however, analysts consensus estimates based on about eight analysts project that revenues will rise going forward from $147 million in 2011 to $234 million in 2012 and on to $404 million in 2013, at an annual growth rate of 65.8%, while losses fall from $3.42 in 2011 to $1.81 in 2012 and on to a projected 78c loss in 2013.

The following are some additional alternative energy companies that mega fund managers accumulated in Q4 (see Table):

  • Archer Daniels Midland (ADM), mainly a processer and marketer of agricultural commodities, and also the largest ethanol producer in the U.S., in which mega funds together added a net $32 million in Q4 to their $5.25 billion prior quarter position in the company;
  • Sunpower Corp. (SPWR), that is an integrated solar products and services company that designs, manufactures, and delivers solar electric systems for residential, commercial, and utility-scale power plant customers worldwide, in which mega funds together added a net $19 million in Q4 to their $37 million prior quarter position in the company;
  • Solazyme Inc. (SZYM), engaged in the production of renewable oils from low-cost sugar feedstocks for use as fuels and chemicals, nutrition, and for skin and personal care, in which mega funds together added a net $12 million in Q4 to their $56 million prior quarter position in the company;
  • First Solar Inc. (FSLR), that manufactures and sells solar modules using a thin-film semiconductor technology for residential and commercial markets in the U.S., Europe and Asia, in which mega funds together added a net $4 million in Q4 to their $517 million prior quarter position in the company;
  • EnergySolutions Inc. (ES), a provider of specialized, technology-based nuclear services to government and commercial customers, in which mega funds together added a net $3 million in Q4 to their $43 million prior quarter position in the company; and
  • Yingli Green Energy (YGE), that is a Chinese manufacturer engaged in the design, development, marketing, manufacture, installation, and sale of photovoltaic products, including PV cells, PV modules, and integrated PV systems, as well as poly-silicon ingots, blocks, and wafers, in which mega funds together added a net $1 million in Q4 to their $42 million prior quarter position in the company.

Besides these, mega fund managers based on their Q4 trading activity indicated that they are bearish on the following alternative energy companies:

  • GT Advanced Tech Inc. (GTAT), that provides poly-silicon production technology and multi-crystalline ingot growth systems, and related photovoltaic (PV) manufacturing services for the solar industry worldwide, in which mega funds together cut a net $17 million in Q4 from their $296 million prior quarter position;
  • Trina Solar Ltd. (TSL), that is a vertically-integrated Chinese manufacturer of mono-crystalline ingots, wafers and cells to the assembly of high quality solar modules, in which mega funds together cut a net $14 million in Q4 from their $95 million prior quarter position;
  • A123 Systems Inc. (AONE), that manufactures rechargeable lithium-ion batteries and battery systems for transportation, utility and consumer markets, in which mega funds together cut a net $9 million in Q4 from their $37 million prior quarter position;
  • JA Solar Holdings (JASO), that is a Chinese manufacturer of mono-crystalline and multi-crystalline solar cells for solar modules and systems, in which mega funds together cut a net $8 million in Q4 from their $22 million prior quarter position;
  • Ormat Technologies Inc. (ORA), that designs, develops, and operates geothermal and recovered energy-based power plants worldwide, in which mega funds together cut a net $6 million in Q4 from their $92 million prior quarter position;
  • Suntech Power Holdings (STP), that is a Chinese manufacturer of photo-voltaic cells and modules for worldwide distribution, in which mega funds together cut a net $3 million in Q4 from their $27 million prior quarter position;
  • LDK Solar Co. (LDK), that is a Chinese manufacturer of multi-crystalline solar wafers that are the principal raw material used to produce solar cells, in which mega funds together cut a net $4 million in Q4 from their $41 million prior quarter position;
  • Green Plains Renewable Energy (GPRE), that is among the top five ethanol producers in North America, operating ethanol plants in Indiana, Iowa, Nebraska, and Tennessee, in which mega funds together cut a net $3 million in Q4 from their $42 million prior quarter position;
  • Power One Inc. (PWER), that designs, manufactures, and markets power conversion and power management solutions for the renewable energy, communications infrastructure, and other high technology markets, in which mega funds together cut a net $2 million in Q4 from their $100 million prior quarter position; and
  • Rentech Inc. (RTK), that is engaged in the commercialization of its proprietary Rentech-SilvaGas biomass gasification process that converts multiple biomass feedstocks into synthesis gas (syngas) for the production of renewable fuels and power, in which mega funds together cut a net $1 million in Q4 from their $73 million prior quarter position.

Table

(click to enlarge)

Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.

Source: Top 2 High Growth Alternative Energy Stocks Trading At Lows Being Bought By Mega Funds