Sustainable Investing: Green Energy, Green Economy

by L J Furman, MBA on October 22, 2013

in Connecting the Dots, Energy, Renewable, Sustainable, Sustainable Investing, Value Investing

PLEP_13.10.18

On Dec. 21, 2012, with $16 Imaginary Million, I created an investment simulation. I invested $1.0 Million in imaginary money in each of eight fossil fuel companies and eight sustainable energy companies. As of the close of trading 10 months later, Friday, Oct. 18, 2013, the trend, clearly evident after three months, in March of this year, continues.

  • The Dow Jones Industrial Average is up 17.64% from 12/21/12.
  • The S&P 500 is up 22.03%.
  • The Fossil Fuel Portfolio, dramatically underperforming the reference indices, is up 7.47%.
  • The Popular Logistics Sustainable Energy portfolio is up 156.14%.

As discussed last month, in “Investing for the Future,” the important question is:  Is this a trend or a bubble?  As I wrote, I think it’s a trend.

Jeremy Grantham, the “G” in GMO, invests with the expectation that all things being equal, a company’s valuation tends toward their arithmetic mean values. (Note that Mr. Grantham has not been contacted for this study.) But note that disruptive technologies are, by definition, game changers. Disruptive tech alters the landscape. If you looked at the airline, automobile and railroad industries over the 20th Century, automobiles and airlines waxed while railroads waned.

The future may be similar for Fossil Fuels and Sustainable Energy. The Market Capitalization of the Fossil Fuel portfolio is $1.13 Trillion. The Market Capitalization of the Sustainable Energy Portfolio is $0.06 Trillion ($60 Billion).  The value of the companies of the Sustainable Energy portfolio is roughly 5.3% of the market capitalization of the companies of the Fossil Fuel portfolio. It can almost be described as a rounding error compared to the value of the Fossil Fuel portfolio. But if Mr. Grantham’s analysis is valid, and you aggregate the portfolios into one called “Energy” as opposed to a “Fossil Fuel” portfolio and a “Sustainable Energy” portfolio, then the shareholders of these various companies are in for an interesting few years.

The data are summarized beginning in Table 1, below.

Summary Data
Portfolio 12/21/12 10/18/13 Delta %
Sustainable Energy $8,000,000 $20,490,963 $12,490,963 156.14%
Fossil Fuel $8,000,000 $8,597,972 $597,972 7.47%
DJI 13,091 15,400 2,309 17.64%
S&P 500 1,430 1,745 315 22.03%
Table 1

The stock price data for the Sustainable Energy portfolio are in Table 2, below.

Sustainable Energy Portfolio – Stock Prices
Item Company Symbol 12/21/12 10/18/13 Delta Delta %
1 Cree CREE 34.0 73.9 39.86 117.24%
2 First Solar FSLR 31.0 50.0 18.97 61.19%
3 GT Adv. Tech. GTAT 3.0 8.6 5.63 187.67%
4 Lighting Science LSCG 0.8 0.4 -0.35 -46.67%
5 Next Era Energy NEE 70.0 83.5 13.54 19.34%
6 Sun Power SPWR 5.4 33.6 28.14 518.23%
7 Solazyme SZYM 8.3 11.9 3.57 42.81%
8 Vestas VWS 6.3 28.4 22.04 349.29%
Table 2

The stock price data for the Fossil Fuel Portfolio are in Table 3, below.

Fossil Fuel Portfolio – Stock Prices
Item Company Symbol 12/21/12 10/18/13 Delta Delta %
1 BP BP 42.1 43.3 1.21 2.87%
2 Chevron Texaco CVX 109.7 119.7 9.94 9.06%
3 Conoco Philips COP 58.6 73.4 14.83 25.31%
4 Exxon Mobil XOM 87.2 87.6 0.32 0.37%
5 Royal Dutch Shell RDS.A 69.3 65.9 -3.35 -4.83%
6 Haliburton HAL 34.7 52.5 17.76 51.17%
7 Transocean RIG 45.6 45.9 0.25 0.55%
8 Peabody Coal BTU 26.4 18.5 -7.85 -29.79%
Table 3

The valuation data for the Sustainable Energy Portfolio are in Table 4, below.

Sustainable Energy Portfolio – Valuation
Item Company Symbol Shares 12/21/12 10/18/13 Delta Delta %
1 Cree CREE 29.41 1,000 2,172 1,172 117.24%
2 First Solar FSLR 32.26 1,000 1,612 612 61.19%
3 GT Adv. Tech. GTAT 333.33 1,000 2,877 1,877 187.67%
4 Lighting Science LSCG 1,333.33 1,000 533 -467 -46.67%
5 Next Era Energy NEE 14.29 1,000 1,193 193 19.34%
6 Sun Power SPWR 184.16 1,000 6,182 5,182 518.23%
7 Solazyme SZYM 119.90 1,000 1,428 428 42.81%
8 Vestas VWS 158.48 1,000 4,493 3,493 349.29%
total 8,000 20,491 12,491 156.14%
Note that the number of shares and portfolio values are in thousands.
Table 4

The valuation data for the Fossil Fuel Portfolio are in Table 5, below.

Fossil Fuel Portfolio – Values
Value Delta
Item Company Symbol Shares 12/21/12 10/18/13 Amount Per Cent
1 BP BP 23.74 1,000 1,029 29 2.87%
2 Chevron Texaco CVX 9.11 1,000 1,091 91 9.06%
3 Conoco Philips COP 17.06 1,000 1,253 253 25.31%
4 Exxon Mobil XOM 11.46 1,000 1,004 4 0.37%
5 Royal Dutch Shell RDS.A 14.43 1,000 952 -48 -4.83%
6 Haliburton HAL 28.81 1,000 1,512 512 51.17%
7 Transocean RIG 21.91 1,000 1,005 5 0.55%
8 Peabody Coal BTU 38.46 1,000 712 -288 -28.85%
total 8,000 8,556 556 6.96%
Note that the number of shares and portfolio values are in thousands.
Table 5

The market capitalization data for the Sustainable Energy Portfolio are in Table 6.

Sustainable Energy Portfolio
Market Capitalization
Item Company Market Cap (Billions)
1 Cree $8.8
2 First Solar $5.2
3 GT Adv. Tech. $1.1
4 Lighting Science $0.1
5 Next Era Energy $35.6
6 Sun Power $3.1
7 Solazyme $0.7
8 Vestas $5.8
total $60.39
Table 6

The market capitalization data for the Fossil Fuel Portfolio are in Table 7.

Fossil Fuel Portfolio
Market Capitalization
Item Company Market Cap (Billions)
1 BP $137.1
2 Chevron Texaco $231.5
3 Conoco Philips $89.3
4 Exxon Mobil $383.4
5 Royal Dutch Shell $211.8
6 Haliburton $50.7
7 Transocean $16.8
8 Peabody Coal $5.1
total $1,125.7
Table 7

Stay tuned.

Posts in this series

  1. L. Furman, 12/21/12, Popular Logistics Sustainable Energy Portfolio,
  2. L. Furman, 2/8/13, Nega-Watts, Nega-Fuel-Watts, Mega-Bucks,
  3. L. Furman, 2/9/13, Gold Bricks and Sink-Holes – The Risk & Reward of Fossil Fuel, Solar & Wind,
  4. L. Furman, 3/2/13, Sustainable Energy Portfolio UP 16% & Fossil Fuel Portfolio Up 1.7% – Since Dec.21, 2012..
  5. L. Furman, 3/23/13, Portfolio Simulation At 3 Months: Sustainable Energy: Up 22%. Fossil Fuels: 3%.
  6. L. Furman, 4/26/13, Earth Day, 2013. Oil Spills, Explosions, Fracking Business As Usual & The Stock Market Response
  7. L. Furman, 5/13/13, Popular Logistics Energy Portfolios: The Trend Continues.
  8. L. Furman, 6/24/13, Popular Logistics Energy Portfolios: At 6 months
  9. L. Furman, 7/22/13, Popular Logistics Energy Portfolios: Sustainable Energy Doubles. Fossil Fuels increase 5.4%
  10. L. Furman, 8/22/13, Popular Logistics Energy Portfolios: An Exercise in Climate Capitalism
  11. L. Furman, 9/20/13, Energy Portfolios – Investing for the Future
  12. L. Furman, 10/21/13, Sustainable Investing – Green Energy, Green Economy

I, Larry Furman, an analyst with Popular Logistics, hold a BS and an MBA, am available for consulting in various domains and can be reached at “lfurman97” at G Mail.  My goal in these posts is to present and discuss phenomena which I find interesting and which appear indicative of systemic shifts in the economy. Investments in equities of various companies are risky.  I do NOT hold a “Series 6” or “Series 7” license from the SEC or any similar licensing body. I am NOT a licensed stock broker, investment adviser or financial adviser and this should n0t be considered “Financial Advice” or “Investment Advice.”

 

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