Is This The Future Of Green Energy?
Where there’s power being produced, there are researchers looking into how it might be harvested and put to use, n...
Tom Konrad CFA
Ten Clean Energy Stocks for 2015 posted a strong recovery in
For the month, the model portfolio rose 7.9% in local currency terms
and, 8.3% in dollar terms. For comparison the broad universe
of US small cap stocks rose 5.9% (as measured by IWM, the Russell
2000 index ETF), and the most widely held clean energy ETF, PBW,
shot up 11.6%.
This year I split the model portfolio into two sub-portfolios of six
income stocks (NYSE:HASI,
four value and growth stocks (NYSE:FF,
PBW (+11.6%) is a good benchmark for the value and growth stocks,
which underperformed with a small gain of 1.6% in both local
currency terms and dollar terms. The six income stocks, on the
other hand, gave a strong performance with a 12.0% gain in local
currency terms and a 12.8% gain in dollar terms. This is
particularly surprising because global utility stocks (as measured
by JXI) fell 3.5% for the month on worries about rising interest
rates. The fossil free Green Alpha Global Enhanced Equity
Income Portfolio (GAGEEIP), which I co-manage, also bucked the
global utility trend and turned in a 5.5% gain for the month.
For the year to date, the portfolio is up 3.1% in local currency
terms, and down 0.2% in dollar terms. This contrasts to a 4.2%
gain for PBW and 2.5% for IWM. The four growth and value
stocks are down 6.1% in local currency terms and down 6.3% in dollar
terms. The income stocks are up 9.1% in local currency terms
and up 3.9% in dollar terms. GAGEEIP has gained 4.6% in
January and February.
The chart below (click for larger version) gives details of
individual stock performance, followed by a discussion of February
news for each stock.
2/28/2015 Price: $16.63. YTD Dividend: $0. YTD
Total Return: 16.9%.
The stock of sustainable infrastructure financier and
Real Estate Investment Trust Hannon Armstrong staged a dramatic
advance of 21.4% in February. I believe this advance was
catalyzed by an article
by Brad Thomas, the author of a leading REIT newsletter. In the
almost two years since its IPO, Hannon Armstrong has been the odd
man out among renewable energy yieldcos, because of its REIT
structure and focus on energy efficiency financing so different
from the higher profile renewable energy project ownership of
other yieldcos. There are also no real comparables among
conventional REITs, meaning that HASI has also struggled to catch
the attention REIT investors.
Thomas’ strongly positive article seems to have changed that, and
now REIT investors seem to be pricing HASI closer to what that
would be expected from traditional REITs that have a comparable
level of risk. Not that I’m selling at this point; I’m happy
to hold a company that pays a 6.3% dividend at the current price,
especially since management expects to continue to increase that
dividend by 12-15% over the next 12 months.
An ironic note to this whole story is that Brad Thomas himself
was surprised by the sea-change his article catalyzed.
Reading between the lines of his comments, he made up his mind
that HASI was very attractive, but decided to share his insight
with his readers before buying himself. He has an admirable
policy of waiting 10 days between publication and trading a
stock. In this case, the stock was trading at $14.57 when he
wrote the article, but it closed at $16.37 10 days after
more recent note from Thomas leads me to believe he is still
waiting for HASI to pull back.
Thank you Brad, for finally bringing Hannon Armstrong the
attention I have been unable to attract with my many articles
about the company since its IPO. For your sake, and for
anyone else who has not yet bought the stock at the very
attractive prices we had for the last 20 months, I hope the
pullback you’re waiting for materializes.
Cable Corp. (NYSE:BGC)
12/31/2014 Price: $14.90. Annual Dividend:
$0.72. Beta: 1.54. Low Target: $10. High
2/28/2015 Price: $15.04. YTD Dividend: $0. YTD
Total Return: 0.9%.
Last month the stock of international manufacturer of
electrical and fiber optic cable, General Cable Corp. declined 23%
because of several analyst downgrades and worries about
Europe. A couple more downgrades followed before the company
released its fourth quarter earnings and outlook for 2015 on
February 4th. The stock sold off that day, but I felt the discussion
of restructuring and outlook were generally positive.
Investors seem to be coming around to my more optimistic point of
view, since the company recovered all of its January losses in
February with a percentage climb even more spectacular than Hannon
2/28/2015 Price: C$13.13. YTD Dividend: C$0.12832
YTD Total C$ Return: 15.5%. YTD Total US$ Return: 7.3%.
Investors and analysts also liked the strong earnings
announcement from Canadian yieldco TransAlta Renewables,
propelling the stock up another 3.6% after strong January gains.
Scotiabank, Macquarie, and CIBC all increased their price targets
for the stock, with the average price target now C$12.71.
2/28/2015 Price: C$3.21. YTD Dividend: C$0. YTD
Total C$ Return: 0.3%. YTD Total US$ Return:
Canadian power producer and developer (yieldco) Capstone
Infrastructure lost ground gained in January, and is now down almost
7% in US dollar terms, although all of that decline is due to the
weakness of the Canadian dollar. I continue to think that this
9%+ yield company remains one of the best values among clean energy
income stocks: it’s high yield and low price are entirely due
worries about a very disappointing decision by the regulator of its
British water utility subsidiary. Capstone is appealing that
ruling, but management has stated that the dividend is not at risk
even if the appeal fails. Insiders has put their money where
their mouths are by buying the stock on the open market.
In addition to the high yield (which alone seems sufficient reason
to own the stock), there is potential for upside if the Bristol
Water appeal is successful. Even if this appeal fails, I expect the
high yield to cause the stock to appreciate as investors gain
confidence that the dividend will not be cut.
Dividend: C$0.585. Low Target: C$10. High
2/28/2015 Price: 13.91$. YTD Dividend:
C$0.0975 YTD Total C$ Return: 3.2%. YTD
Total US$ Return: -4.1%.
Leading North American bus manufacturer New Flyer continues to
announce significant new orders of buses, such as 110 compressed
natural gas (CNG) buses and options ordered by Nassau county, NY,
and smaller orders from Lane Transit in Eugene Oregon and
Hamilton, Ontario for up to 20 hybrids and 18 CNG buses,
respectively. These orders follow on the strong backlog of
orders I discussed in the last update.
Although a date has not yet been announced, the company should
report 2014 fourth quarter and full year results in March.
12/31/2014 Price: €13.60. Annual Dividend:
Varies: at least 40% of net profits. €0.55 in 2014.
Low Target: €12. High Target: €20.
2/28/2015 Price: €16.06.
YTD Dividend: €0. YTD
Total € Return: 18.1%. YTD
Total US$ Return: 9.2%.
The stock of bicycle manufacturer Accell Group also advanced
strongly in February. This does not seem to be due to
company specific news, but rather to growing interest by
institutional investors in the bicycle industry. It seems
that fund managers, especially US fund managers, have become
disappointed in the performance of golf companies, and are
looking to replace these positions with well known bicycle
brands. Fund managers may be beginning to realize that bikes
not no longer just for kids, and are increasingly popular among
high income adults.
Outdoor retailer REI knows this fitness-conscious demographic
well, and has recently begun offering
Accell’s “premium, high-performance, award-winning” Ghost
Bike brand in its stores countrywide and on its website.
While it may seem strange that investment managers’ attitude
towards golf companies should have any bearing on how they feel
about the bicycle companies, this connection is a product of
widespread practice of diversifying and portfolios among
industries. While there is probably little economic
connection between the economics prospects of Accell and Callway
(NYSE:ELY), many fund managers specialize in certain
industries. When such analysts and managers upgrade or buy
one stock in their universe, they often will downgrade or sell
another stock. Hence, if a mutual fund manager who
specializes in sports equipment sells Callaway, it might not be
surprising to see him buy Accell.
Even this annual list shows that effect. I focus on clean
energy companies, so in order to add four new companies to this
2015 list, I had to drop
three clean energy companies I still liked from the 2014
12/31/2014 Price: $13.02. Annual Dividend:
$0.24. Beta 0.36. Low Target: $10. High
2/28/2015 Price: $12.3 YTD Dividend: $0.06.
YTD Total Return: -5.1%.
Specialty chemicals and biodiesel producer FutureFuel, also
recovered (and paid a 6¢ quarterly dividend) in February.
While there has not been significant company news, the EPA has
made strong statements about getting “back on track” setting
quotas under the Renewable Fuel Standard (RFS.) The lack of
quotas in 2014, and the delay of the 2015 quota are the main
reason the stock is currently so cheap. EPA transportation
chief Christopher Grundler recently told a
meeting of ethanol producers that the agency would combine three
years’ worth of standards — for 2014, 2015 and 2016 — into a
single regulatory action. EPA plans to release a proposal this
spring and finalize it by the end of November. The RFS is at
least as important to biodiesel producers like FutureFuel as it is
for ethanol producers.
Rail and solar investment trust Power REIT reversed some of its
January gains. Investors await a decision (or more likely,
non-decision) in the summary judgment stage of its civil case with
its lessee Norfolk Southern Corporation (NYSE:NSC) and sub-lessee
Wheeling & Lake Erie Railway (WLE). Unless the court
renders a very strong summary judgement, a trial will begin in the
next couple months. I expect few of the outstanding issues to
be resolved in summary judgment, so a trial is very likely.
Power RET released a new investor
presentation on its website, which includes a management
estimate of the net asset value of the company’s assets if they were
sold on the open market (page 19.) Management feels that, even
without a win in the civil case, its railroad asset is significantly
undervalued compared to NSC’s bonds, which have similar credit and
cash flow characteristics. However, the company has not
revealed any plans to sell any of its assets, and would not consider
a sale of the railroad asset before the civil case is resolved, even
if a buyer could be found.
Energy service contractor Ameresco will release fourth quarter
and full year 2014 results before the market opens on March 5th.
Over the last two quarters, the company has spoken of signs that
its market for may be recovering from a multi-year slump. If
the trend continues, the stock should reverse its long decline,
Dividend: $0. Beta:
0.78. Low Target: $5. High Target: $20.
2/28/2015 Price: $5.65. YTD Dividend: $0. YTD
Total South African Rand Return: -12.3%. YTD Total
US$ Return: -13.1%.
Vehicle and fleet management software-as-a-service provider MiX
Telematics released its third quarter fiscal 2015 results and
increased its guidance for the full fiscal year ending March
31st. I found the outlook and results discussion
moderately encouraging, but other investors do not seem to see
it that way. The stock slipped 3.6% for the month.
MiX also signed
its 500,000th subscriber in February. To put this in
perspective, US-based competitor Fleetmatics (FLTX) announced
that it had achieved 500,000 vehicles under subscription in
January. I’m not sure how comparable MiX’s “subscribers” are
to Fleetmatics’s “vehicles under subscription” but, if they are not
the same thing, I have trouble seeing how MiX could have less
vehicles under subscription than it has subscribers. Further,
Fleetmatics’ offering is suitable to the small and medium sized
businesses to which it caters, and so its offering is less
sophisticated (and hence lower value) than the solution MiX delivers
to the large multinational companies which are its core clients.
Given the similar size of the two companies’ client bases, one would
expect that the two companies would also be valued similarly.
In fact, Fleetmatics’ enterprise value is $1.4 billion
(approximately $2,800 per vehicle under subscription in January)
compared to MiX’s enterprise value of only $106 million, or $212 per
“subscriber” in February. Based on this metric, the market
seems to be undervaluing MiX compared to FLTX by a factor of
I found the January declines of many of the stocks in this list
inexplicable, and wrote that the start of February was an excellent
time to buy any of them. The rapid rises in Hannon Armstong,
General Cable, and Accell Group show that I was right in at least
these three cases.
Several excellent values remain. Capstone Infrastructure and
MiX Telematics look particularly attractive at their current
prices. Ameresco also looks quite attractive, but its near
term performance will hinge on the March 5th earnings announcement
and management’s outlook for the rest of the year.
Disclosure: Long HASI, CSE/MCQPF, ACCEL/ACGPF, NFI/NFYEF, AMRC,
MIXT, PW, FF, BGC, RNW/TRSWF. I am the co-manager of the
DISCLAIMER: Past performance is
not a guarantee or a reliable indicator of future results.
This article contains the current opinions of the author and
such opinions are subject to change without notice. This
article has been distributed for informational purposes only.
Forecasts, estimates, and certain information contained herein
should not be considered as investment advice or a
recommendation of any particular security, strategy or
investment product. Information contained herein has been
obtained from sources believed to be reliable, but not
By Jeff Siegel
One of Governor Arnold Schwarzenegger’s dreams may soon be coming
During his time as governor, while singing the praises of
renewable energy progress in the Golden State, the Terminator
would often tell tree-hugging Californians about his dream of
building a hydrogen highway that would enable hydrogen-powered
vehicles to run from Mexico to Canada — via California.
Not only did Prius drivers and vegans applaud the governor’s
dream, but it even got a decent amount of support from former GM
Chairman Bob Lutz and President George W. Bush.
Since that time, California has managed to build only 10 hydrogen
fueling stations in Los Angeles and San Francisco. But we got word
over the weekend that the California Energy Commission is about to
spend $20 million to build about 50 new hydrogen fueling stations.
According to the LA Times…
Starting in October with a new fuel station in the city of
Coalinga, near I-5 in the San Joaquin Valley, hydrogen cars will
be able to get from Los Angeles to San Francisco. Such vehicles
can go about 300 miles on a fill up.
Hydrogen is Silly
Those who believe hydrogen represents the future of personal
transportation have been quick to applaud this news.
Certainly it represents a small but meaningful step in
instigating some early growth in the hydrogen vehicle market.
But here’s the problem…
No one really cares now that Elon Musk has shown the world a much better
mousetrap… and in the process, has been quite vocal about why he
actually thinks hydrogen is “silly.”
Sure, the guy’s got plenty of reasons to criticize potential
competitors. But hydrogen isn’t really much of a competitor, as
Musk pointed out recently:
Hydrogen is an energy storage mechanism. It is not a source of
energy. So you have to get that hydrogen from somewhere. if you
get that hydrogen from water, so you’re splitting H20,
electrolysis is extremely inefficient as an energy process…. if
you say took a solar panel and use the energy from that to just
charge a battery pack directly, compared to try to split water,
take the hydrogen, dump the oxygen, compress the hydrogen to an
extremely high pressure (or liquefy it) and then put it in a car
and run a fuel-cell, it is about half the efficiency, it’s
terrible. Why would you do that? It makes no sense.
If you’re going to pick an energy storage mechanism, hydrogen
is an incredibly dumb one to pick. You should just use methane,
that’s much, much easier. Or propane. The best case hydrogen
fuel cell doesn’t win against the current case batteries, so
then obviously it doesn’t make sense. That will become apparent
in the next few years.
Although I agree with Musk, there’s no doubt that plenty of
automakers are still getting quite aggressive on hydrogen.
Hyundai, Toyota, Honda, and Volkswagen don’t really seem to be
too interested in what Musk has to say about the issue. Of course,
they also weren’t too interested back when he first came on the
scene with a silly dream of mass-producing a quality electric car.
You know how that dream turned out…
In any event, while there will likely be a few more opportunities
to profit in the fuel cell space with companies like Plug Power
and Hydrogenics Corp. (NASDAQ: HYGS),
over the long term, I wouldn’t put too much faith in hydrogen
vehicles getting as much love as electric vehicles.
In terms of price, performance, ease-of-use, and infrastructure
demands, by the time the few automakers pursuing hydrogen actually
have a decent number of these cars in the showrooms, electric cars
will be even further advanced. Prices will have fallen further,
driving ranges will have doubled (if not tripled), and high-speed
charging infrastructure will be nearly as common as
the infrastructure in existence today for internal combustion
In other words, it’s too late for hydrogen, because no one can
put the electric vehicle genie back in its bottle.
To a new way of life and a new generation of wealth…
With more than 3.7 GW installed, 2014 was the best year yet for utility-scale solar installations, besting the nearly 3.4 GW installed in 2013 by 10% and bringing the U.S. to a total of 10.6 GW of operating utility-scale solar capacity.
Obama speaking our language doesn’t necessarily mean iMessages full of emojis, though his recent experiment with a “selfie-stick” suggests that it may not be far behind; instead we are seeing an Executive that is acting on our issues.
300 pounds: That’s how much coal was not burned in a distant power plant in December as a result of the solar panels we installed on our house in Wyoming this fall. Being December, it was our lowest monthly generation period, with low sun angles and periodic snow covering our panels. The Copelands’ home solar project. Photo: Creative Energies An as
The total thickness of a single cell and separator is just 0.4 mm, which is approximately one tenth the thickness of conventional technology. Because it is so thin, The Printed Fuel Cell (™) achieves 5 kW/L, which is the highest level in the world.
The first of the “2010-12 IPO kids” completes its
transformation to a lively, product-driven commercial company with
revenues in fragrances, emollients, solvents and fuels.
In California, Amyris (AMRS)
announced Q4 2014 revenues of $11.6 million and $43.3M for the
full year, a 5% increase over 2013, and Q4 net income of $58.0
million and $2.3 million for 2014 as a whole.
The company noted that product sales increased by nearly 50%
despite lower than expected fuel sales in the second half of the
year, due to drop in crude oil prices and currency headwinds.
Collaboration and grant revenues were lower due to timing of
government-funded project completion and previously outlined shift
from upfront to milestone collaboration payments.
“2014 was a transformative year for Amyris. We delivered on the
promise of our technology by manufacturing at industrial scale two
breakthrough molecules now used in a range of product sectors —
from consumer care to transportation. We realized record-low
production costs at our Brotas industrial biorefinery, further
reduced operating expenses and, with successful financing efforts,
achieved our strongest year-end cash position in three years,”said
John Melo, President & CEO.
“In 2015, we expect to build on our track record by expanding our
renewable product portfolio and, more importantly, expanding our
collaboration partnerships into new markets, such as
biopharmaceuticals. Based on our plans and current performance
during the first part of the year, we expect to achieve positive
cash flow from operations in the first quarter, paving the way to
exceed $100 million in total revenues for the full year,”
In announcing the full-year results, Amyris highlighted:
• Record-low farnesene cash production runs below $2.50 per liter
due to robust yeast strain performance and continued operational
improvements at our industrial biorefinery.
• Better-than-planned cash production costs for our first
fragrance molecule, meeting critical milestones for a leading
• In marketing, the company introduced several new products,
including a new emollient under our Neossance line; a
high-performance solvent for industrial cleaning under brand name
Myralene; and renewable jet fuel with our partner TOTAL, now
included in global aviation specifications.
• Operationally, Amyris upgraded the Brotas plant during current
sugarcane inter-harvest season, “allowing us to continue our focus
on reducing production costs in 2015.”
At the same time, Amyris announced that it entered into a Common
Stock Purchase Agreement under which Amyris may from time to time
sell up to $50 million of its common stock to Nomis Bay Ltd. over
24-month period. Amyris will control the timing and amount of any
sale of common stock to Nomis Bay, and will know the sale price
before instructing Nomis Bay to purchase shares. When and if
Amyris elects to use the facility, the company will issue shares
to Nomis Bay at an undisclosed discount to the volume weighted
average price of Amyris’s common stock over a preceding period of
The company’s cash had dwindled to $43.4M by year end.
“This facility provides us with a flexible source of common stock
financing as our business grows, allowing us to strategically
manage whether and when to draw on the facility based on market
dynamics and other considerations,” said Melo.
Cowen & Company’s Jeffrey Osborne writes:
“Amyris posted soft Q4 results, with revenue of $11.6 mn down 25%
y/y and non-GAAP EPS of ($0.40) below Street of ($0.29). Soft
product sales were a function of timing and a decline in fuel
sales due to oil economics. The shift of collaboration revenues to
contract milestones provides better perspective going forward.
Management guided $100+ mn revenue for ’15, carried by an expected
Raymond James’ Pavel Molchanov comments:
“Recommendation. After a period of retooling while in the
“overpromise and underdeliver” penalty box, 2013-2014 were Amyris’
first years with operations truly in commercial mode. There is
visible scale-up progress, but the historical reliance on
partner-based R&D payments makes quarterly financials choppy.
There was a sizable miss on the top line, with product sales
falling from 3Q’s $11.5 million to only $4.7 million, partly due
to dollar headwinds. Cash on hand ended the quarter at $43
million, down from $69 million as of 3Q.”
“Over the past month, Amyris entered two brand-new market
segments – both in the high-value, non-oil-levered category.
January marked the launch of industrial cleaning products based on
the Myralene renewable solvent platform, with the goal of selling
into the auto service market and other industrial end users.
“Even more intriguingly, the microPharm discovery and production
platform aims to provide the pharma industry with an integrated
process for developing therapeutic compounds. While microPharm may
seem like a departure from Amyris’ business focus, it’s worth
recalling the company’s past (pre-IPO) work on antimalarial drug
As Osborne noted: “Management has guided an ASP range of $6 to $8
per liter for 2015…with continued farnesene cost reductions, which
is now below $3 per liter in cash production cost.”
Collaboration revenues 20-30%
We’ve watched Amyris through its period as the #1 Hottest Company
in the sector, through a value-crash after delays in getting to
commercial-scale production volumes, it’s “Comeback of the Year”
period in 2013-14 as it put production right, and now into its
first strong commercial flowering. A sense of excitement has
returned to the Amyris story — it’s become more about product
surprises and the upside than operational surprises and the
The cash production cost remains high. $2.50 per liter is going
to drive some exciting returns in niche markets such as fragrances
— and pharma opportunities will abound — but the larger markets in
chemicals and fuels will have limited exposure to Amyris products
Bigger and better?
Back in 2010, Amyris released some interesting figures on its
performance — of course, these were before full-scale production
got underway in Brotas. At the time, the company disclosed that it
had reached 16.8% farnesene yields. Maximum theoretical is 30%. We
haven’t heard much lately about actual production yields, but
usually somewhere around 85% of theoretical is a reasonable limit
in day-to-day operations, and that would put Amyris at around 25%
yields. Product recovery rate in 2010 was already 95%.
So that leaves the company with a pound of product from four
pounds of sugar, which would cost $0.56 (at the current sugar
price of $0.14 per pound) – and with 7 pounds of diesel in a
gallon — the big markets in fuels are going to be a tough
proposition for some time to come. And that’s not taking into
account the operation cost of the facility or the amortized capex.
But there are a number of caveats there. Firstly, Brazilian
projects do not buy sugar, they make cane sugar and the production
price can be somewhat lower, if cane yields are good. More
importantly, Amyris may not be making jet fuel from C15 farnesene
at all — but rather, might make it from C10 isoprenoids, where the
theoretical yields will be much higher.
To that end, it’s worth noting that Amyris still has on the books
agreements with Sao Martinho to build two new production plants
that would each be double the size of its first commercial
faciliity in Brotas — overall, a quadrupling of capacity and
better economies of scale.
In 2012, Amyris CEO John Melo addressed most of these hopes in
his springtime address at ABLC, projecting at the time that the
company would produce finished products in six verticals — fuels,
lubrivcants, polymers & plastic additives, home & personal
care, flavors & fragrances and cosmetics. We’ve seen most of
those product lines come to life, and the pharma route is a
seventh route to revenue for the company.
As Pavel Molchanov notes. “The market wants to see more clarity
on the pace at which Total will be scaling up its fuels joint
venture with Amyris – a prospect we have questions about in the
context of the oil and gas industry’s current period of
In two weeks, Melo will come back to ABLC with another major
address — and we’re looking forward to hearing more about the
Total JV, the potential for added capacity, the efforts to drive
down production costs that open new marlets, and the state of
efforts to unlock the large markets in fuels and chemicals that
will take Amyris along the road toward “billion-dollar company”
Especially, the world of jet fuels.
was originally published.
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