Is There a "Best Way" to Invest in Wind Power? 11 comments
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Yesterday, I saw many interesting articles about wind power. The main bit I'm seeing is Boone Pickens' alternative energy plan found on the new website. Longer-term readers will know I monitor Pickens simply because he's an energy maverick, has made a lot of money in the industry, and now runs BP Capital, an energy centric hedge fund. I've posted his thoughts numerous times. (I tracked his hedge fund portfolio holdings here, and I linked his thoughts on energy here). Although he's made the bulk of his money from oil, he's now turning his focus to wind and natural gas; and rightly so.
I've been bullish on alternative energy for some time now, saying that you need to play energy for the future. I've been assembling baskets of names in the wind, natural gas, solar, and nuclear spaces. However, that's not to say that Boone isn't still going to be invested in oil and other current energy plays. Besides playing energy for the future, you've got to play it for the intermediate term as I posted about here. Oil, coal, and natural gas aren't going anywhere, anytime soon, so you've got to invest in those as well. In addition, if you think about it, natural gas is the only type of energy overlapping in both the current energy picture and numerous people's plans for the future. Therefore, I like to take a basket approach, pick a few names in each class, and then have a dedicated percentage weighting to each type of energy.
However, let's get back to wind. The main problem with investing in wind power is the lack of tangible options for the retail investor. Although there are a few companies that trade on the main exchanges, wind is only a small sliver of their business. General Electric (GE) is the perfect example of this. It has wind exposure which is great, but many people don't want the other stuff that comes with that company - they only want the wind exposure. The majority of wind-centric companies trade on the OTC and pink sheets [such as Vestas Wind Systems AS (VWDRY.PK), Broadwind Energy (BWEN.OB), Clipper Windpower (CRPWF.PK)]. In addition, the majority of investors either aren't comfortable investing over the counter, or simply don't know how to.
Therefore, it’s good to see wind getting more media exposure and 'hype' if you will. In addition, as investors, we've got to be playing it. I've said all along to spread your bets across all alternative energy classes, to cover your bases. Because in the end, there's no real way to know which ones will be prominent 20 to 30 years from now. If you're looking for a direct way to play wind, you could simply go through the new FirstTrust Global Wind Energy ETF (FAN). In addition, for your convenience, Jeffrey McLarty has sorted through the ETF holdings here. Trader Mark also highlights a new Wind IPO, Noble Environmental Power [NEPI], here.
Lastly, I'm starting to see some wind names really breakout with heavy buying. Stewie highlighted Aerovironment (AVAV) over on his blog as a great technical setup. Some of you might remember me writing up a piece on AVAV, after I learned they were the makers of architectural wind products (wind turbines on tall buildings). However, disappointingly, it is primarily a defense company and the wind segment of its business is tiny (although growing).
If you want a trading vehicle, AVAV looks to be breaking out right now as Stewie pointed out. The overhead resistance in the high 26's has been taken out and should now act, as support, and I'd be a buyer on the re-test of that support if you want to trade it. But, that's the main emphasis here, its a trading vehicle, not an investment (yet). I've got to monitor its wind segment growth over the next few quarters to really see if it's a viable wind investment. Just like many other 'wind' investments, the company is primarily NOT a wind company. It just have a wind segment of its business. At any rate, AVAV is breaking out and you can trade it if you like.
click to enlarge
Whether it be through natural gas, wind, nuclear, solar, you-name-it, you've got to be thinking ahead and playing energy for the future. Boone Pickens is a great person to follow in this regard as he is taking proactive steps to make wind power a viable alternative through his wind farms in Texas. However, wind isn't the only option and he discusses that in the following video.
Enjoy.
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This article has 11 comments:
whose contribution so far is the nonsensical, "Drill it or lose it.
Hello, is anybody in there...? It's PAST TIME to get a move on!
The easiest way is to play for ex. number 1 turbine manufacturer vestas, wich btw has been up quite a bit YTD despite the crisis. Solid stable company, strong financial situation, constantly in a state of expansion with great growth prospects still despite their solid size, sold out for years. Low risk company with very good return.
Attractive electric cars are less than 1 year away. 4 wheel versions are a little bland due to safety laws. 3 wheel versions are exotic and generating a lot of interest because they only have to measure up to motorcycle safety guidelines.
Add solar heat which is already economically viable and maybe solar PV with a little more improvement over the next couple years and his pie charts look great.
100% solar hot water alone would reduce U.S. energy demand by 4%. That alone is 3 years energy growth stabilized to execute Pickens' plan. Solar hot water pays 6% ROI with uninflated energy costs before subsidies. Add in minimal 2%/yr energy inflation, the lifetime ROI more than doubles.
Leadership, education, cooperation can get it done!
re: energy::
3) The biggest inefficient energy consumption in the USA is housing! Add some insulation to antiquated NE housing stock and see energy consumption go down. Curbing the amazingly inefficient process of craftsmen home construction certainly would help. 2.5 to 4 tons — about 3 to 5 pounds per square foot — of waste is created during the construction of a typical home, consistingly mainly of lumber and manufactured wood products, 35 percent; drywall, 15 percent; masonry materials, 12 percent; and cardboard 10 percent. The remainder is a mix of roofing materials, metals, plaster, plastics, foam, insulation, textiles, glass and packaging. So energy to make, ship, and use for building is then hauled to a landfill and buried.
ps - seeking alpha desperately needs user moderation and filters so lame political comments can get modded down and filtered out per each user's settings....
tinyurl.com/6f8k8p [cleantechnica]