Camino Energy

I recently wrote that I was seeing a fair amount of deliquencies in OTB BB companies.  

Four of the companies we track have now been moved to the Pink Sheets due to deliquencies in filings before the SEC.  Pacific Fuel Cell (PFCE.PK) went to the Pink Sheets on 12/19, Intrepid Technology (ITRP.PK) a biogas company, Earth Biofuels (EBOF.PK) a biodiesel company, and Essential Innovations (ESIV.PK) a geothermal heating company all were moved to the Pink Sheets on 12/24/08.

Companies moving from the OTC BB (we now track 39) to the Pink Sheets (we now track 27) are generally exhibiting declining value.   Our average OTC BB company has a market cap of USD 24 million where the average Pink Sheet company has a market cap of USD 4 million.   Buyer beware.

December 24th, 2008 | Tags: EBOF.PK, ESIV.PK, ITRP.PK, PFCE.PK | Category: Market commentary |  Print This Post |  Email This Post | Leave a comment

I’m seeing more activity then usual in delinquent OTC Bulletin Board companies.  In Camino’s last round of updates we found that Pacific Fuel Cell (PFCEE.OB),  Interpid Technology (ITRPE.OB), and Earth Biofuels (EBOFE.OB) have all been deemed delinquent in filings by FINRA.   While these companies can become current, investors in all three companies are in danger of losing all their investment. 

For those following our FCELL and BIOFUEL indices, it’s no surprise that investors in these two sectors face huge risks.  OTC companies face even steeper hurdles in a falling energy market.

December 3rd, 2008 | Tags: EBOFE.OB, ITRPE.OB, PFCEE.OB | Category: Market commentary, News |  Print This Post |  Email This Post | Leave a comment

The Camino solar index has fallen 5.8 % since last Friday continuing its adjustment driven by concerns about slowing market demand.   In addition to plunging 76% YTD, SOLAR is also the most volatile of the sustainable energy sectors we track and approximately twice as volatile as the S&P500: 

Examining similar data shows that Renewable Generation, Fuel Cells, and LED & Lighting may have passed their peak volatility.    Biofuels, like Solar, may not have started to decline.  

A daily volatility tool has been added to the site for subscribers to access at PurePlay Indices>Daily volatility.  Up-to-date plots can be created for the Camino Indices, broad market comparables, and selected sustainable mutual funds and ETFs.

November 18th, 2008 | Tags: SOLAR | Category: Analysis, Indices |  Print This Post |  Email This Post | Leave a comment

Equities and commodities all fell during the week ending November 14th.  US REITs were particularly hard hit (RWR -18.5%).  For a complete summary visit our returns page. 

Sustainable energy also fell sharply with only 10 companies in our indices advancing.

SOLAR has experienced continuted high volatile with a variety of downgrades occuring during the week.    On Wednesday the index hit its 52 week low and closed the week down 74.5% YTD.  

This huge adjustment has left  the market cap of our SOLAR index shrinking to USD 33.4 billion from a peak of over USD 110 billion.   Some of the US traded companies, Yingli (YGE), JA Solar (JASO), SolarFun (SOLF), Trina (TSL), and Canadian Solar (CSIQ), are trading below book value with trailing PE ratios ranging from 4.6 - 6.5. 

These price levels reflect a very negative outlook for profitabilty and growth at the companies.    The negative outlook is stemming from concerns about sales levels,  margins, and negative currency exchange movements.   

Some data is coming out allowing us to assess the current valuation levels.  In its conference call this week JA Solar (JASO) reduced its sales forecast in 2009 to between USD 1.5 - 1.7 billion and EPS to USD 0.90.   These numbers reflect a huge 75+% sales growth over expected 2008 sales of USD 849.5 - 878.9 million and a forward PE of 3.1 on Friday’s close.   Sunpower also lowered its guidance for 2008 to EPS of USD 1.68, a forward PE of 15.2 on Friday’s close.   

Mark has a long position in JASO.

November 15th, 2008 | Tags: CSIQ, JASO, RWR, SOLF, TSL, YGE | Category: Indices, Market commentary |  Print This Post |  Email This Post | Leave a comment

All broader markets and commodities, except EAFA, ended the week down.  Sustainable indices were generally up with the exception of LED & Lighting.

The LED & Lighting  sector showed vulnerabilty to global economic conditions.  Both Orion Energy Systems (OESX) and Rubicon Tehcnology (RBCN) reported third quarter results and both stocks fell sharply on the week dragging the sector down.   Rubicon reported they expect a 4th quarter loss and Orioin expects 2009 sales to be about 15% lower than 2008.   In both cases management noted softness in customer demand arising from economic conditions.   Judging by investor response to these reports, this sector, which is down 64% since April 1, 2008, might have further to fall.

November 9th, 2008 | Tags: OESX, RBCN | Category: Indices |  Print This Post |  Email This Post | Leave a comment

On October 31, 2008 Verasun (VSE) filed for protection under Chapter 11 of the U.S. Bankruptcy Code.  The filing was precipitated by the Company’s disastrous hedging transactions previously discussed here. 

Camino does not include companies under bankruptcy protection in its indices and has adjusted the equal weight BIOFUEL index accordingly.  Only nine biofuel companies remain in the index.

November 3rd, 2008 | Tags: VSE | Category: Indices |  Print This Post |  Email This Post | Leave a comment

How epic has this correction been?  The answer is worse than the 1987 programmatic crash (S&P -32%) but not as bad, to date, as the 1973 oil crisis (S&P -48%) or the dot-com bubble (S&P -49%).   For an excellent graphic of these events and the current housing bubble (S&P -45%) visit here. 

But for sustainable energy the correction has been even more severe.   Our graph from the October 7, 2007 S&P 500 peak to now shows the changes to the four sectors we have been tracking since the S&P peak.   At their minimums the four indices were down between 65 - 80%.

The month of October was particularly bad for sustainable energy where 100% of the companies in our indices had negative returns.

So what am I optimistic about?  Simple, I’m optimistic the sustainable energy industry will continue to exist and at some point prices get so low that the stocks represent attactive buys.  I think this is particularly true for solar as the statistics below show for 10 of the US traded companies I track in the Camino SOLAR idex (detail here).

SOLAR growth rates would have to slow dramatically to make the companies overpriced at current levels.   Even if their earnings growth slows by a factor of 4 these ten companies would still be fairly priced.  And I don’t see many reasons to expect such a slowing.  Modules prices are expected to fall which should boast sales and improve customer ROI.  Retail electric prices are virtually unaffected by oil prices in many economies so the basic economic benefit of solar isn’t going away.   Subsidies are locked in in the US.  Financing should be available with the massive governmental pushes to create liquidity while lowering rates.   And the technology continues to improve further driving down costs and improving solar’s competitive position. 

There may be other bargins in the sustainable energy sector but the solar sector is a good place to start with plenty of potential investment targets.

Mark has positions in JASO, SOL, CSIQ, STP, SOLF, and LDK

November 1st, 2008 | Tags: CSIQ, JASO, LDK, SOL, SOLF, STP | Category: Analysis |  Print This Post |  Email This Post | Comments (1)

I’ve stumbled on an exciting investment idea. I found a company that has no need for financing for the next 2 years, is doubling capacity by 2010 using existing funds and cash flow from its profitable operations, has its capacity contracted for 10 years, has a 30% US federal tax credit for its product for the next 6 years, and is in an industry targeted by the US presidential candidates as very important.  The shares are reasonably valued with a forward PE of 3.25, a PEG Ratio of 0.11, and cash and equivalents equal to about 20% of market cap.

Apparently I’m in the minority thinking this is an attractive opportunity.  LDK Solar Co Ltd’s (LDK) stock went down 5.95% today.

In my screens I have identified at least 5 other solar companies with similar characteristics. Having watched solar stocks for the last two years, I have never committed funds due to their lofty valuations or their extreme volatility.  But after the recent massive correction that has driven Camino’s SOLAR index down 75.0% YTD, I think many solar company valuations are compelling.  I don’t know if an investment in these companies will perform tomorrow or next week, but unless there is a total meltdown in solar industry demand these valuations have my attention.

Mark has a position in LDK

October 27th, 2008 | Tags: LDK | Category: Analysis |  Print This Post |  Email This Post | Leave a comment

Effective October 21, 2008 the RELEC and SOLAR indices were updated and rebalanced.  The recent steep declines in sustainable energy stocks (RELEC -58.7% YTD,  SOLAR -63.5% YTD) has resulted in the removal of a number of companies from these two Modified Market Capitalization indices. The removals were partially offset by addition of several companies that pass all Camino’s index screens.    For complete return information on the indices and a variety of comparables please visit our returns page.     

The RELEC index includes wholesale producers of electricity, and their equipment suppliers, using renewable energy sources, currently bio-waste, biomass, geothermal, hydro, ocean, solar, and wind.  Hanwei Energy Services Corporation (HE.TO), EarthFirst Canada Inc. (EF.TO), and Plambeck Neue Energien Ag (PNE3.DE) were removed from the index due to their market capitalization going below USD 100 million.   EDP Renovaveis (EDPR.LS) was added.    Currently 20 PurePlay(tm) companies headquarted in 11 countries are included in the index.

The SOLAR index includes companies pursuing business activities related to the end-use of solar energy by producing photovoltaics, conducting photovoltaic related activities, or producing end-use heat systems.  Ascent Solar Technologies, Inc. (ASTI), Akeena Solar, Inc. (AKNS), Centrosolar AG (C3O.DE), Day4 Energy Inc. (DFE.TO), Solar Integrated Technologies, Inc. (SIT.L), and Sunways AG Koblenz (SWW.DE) were removed from the index due to their market capitalization going below USD 100 million.   Motech Industries Inc. (6244.TWO) was added to the index.   Currently 31 PurePlay(tm) companies headquarted in 9 countries are included in the index.

October 21st, 2008 | Tags: 6244.TWO, AKNS, ASTI, C3O.DE, DFE.TO, EDPR.LS, EF.TO, HE.TO, PNE3.DE, SIT.L, SWW.DE | Category: Indices |  Print This Post |  Email This Post | Leave a comment