danno

Smart Investing in the Smart Grid

Nice article, but I have some issues here.

Many of the utilities and ISOs in particular, have been real foot draggers when it has come to smart grid, competition, de-coupling, etc. which are key issues here. I'm not sure I'd like to be investing in utility industry particularly with its legacy "we're still a monopoly so screw the customer" mentality. Also any rate increases still need political approval which is a real political hot potato.

I am an investor in PZD, and it doesn't have or hasn't had investments in "tiny biofuel companies" for long time. If it did, I'd probably dump it. So you are off the mark on that description.

I would think the best pure plays of public companies for smart grid are Telvent and MYR Group. Otherwise what I see is a business that will be dominated by giants like ABB, Siemens, Honeywell, GE, Schneider, IBM, Johnson Controls, Cisco, etc. but the best technology is still with many non-public companies like Silver Spring Networks, Fat Spaniel, BPL, C-Powered, Eka Systems, etc.

That said, I wouldn't want to bet on any of the public companies individually, because they are very diversified and don't have enough exposure overall to the Smart Grid. PZD seems to have the highest exposure to this "sector", at about 12% or so, but I think it avoids companies in industries that are doomed, too. such as grain-based fuels and "clean coal". I think that it's easier to outperform by avoiding investing in what you know is doomed and focusing on sectors that you know will do well such as smart grid, energy efficiency, or water purification technologies. Avoiding the dogs is half the game, and there don't seem to be too many dogs in smart grid, yet.