Spring Clean Your Clean Energy Portfolio

Spring Clean Your Clean Energy Portfolio

May 12 2022

Markets can often feel like roller coasters, grinding up slowly and falling precipitously. As veterans of the securities, legal and investment management industries, team members at The Climate Capitalist have witnessed debacles like Long-Term Capital Management, the dot.com boom and bust, Enron’s implosion, the 2007-9 financial crisis and countless micro-implosions at the sector and company level.

With fear of runaway inflation, persistent supply chain woes and a costly war in Ukraine, the markets are knocking on bear territory. TCC is taking advantage of this correction to rebalance and upgrade our personal Clean Energy Investment portfolios.

Harvesting tax losses and repositioning for gains can lessen the sting of corrections. We’re harvesting tax losses in positions that do not hold as much forward potential to get more after-tax gain on a new position with superior future return potential. In 2008, upgrading from “C” level companies to industry dominant players like Microsoft (MSFT) and Applied Materials (AMAT) and emerging gazelles like Nvidia (NVDA) paid off handsomely. Of course, you must be committed to the long-haul as an equity investor as volatility or general multiple contractions in the face of rising rates can “rip your face off” as one of our favorite investors reminds us, frequently.

Following Warren Buffett’s advice to “be fearful when others are greedy, and greedy when others are fearful” we attempt to use corrections to build positions that we like for the long-term. We are focused on buying superior businesses at attractive valuations in relation to earnings and assets.

As storage and battery technology continue to evolve, we see the integration of car batteries and home electrification/grid reliance reduction as a major theme providing support for Tesla (TSLA). In September 2021, TCC summarized investor Gary Black’s thesis and $1,100 price target. Since then, the company has done a far better job managing supply chain crises than its automotive industry peers. In a recent article, Black updated his price target for Tesla to $1,600.

We are also interested in Glencore (GLCNF) as a play on mining and minerals as noted in an earlier TCC issue. Dan Loeb’s Third Point recently initiated a position sharing our investment thesis. Qualcomm (QCOM) is another company we are interested in as a play on data infrastructure and informatics that enable better resource utilization systemically.

As markets plunge, it is helpful to have a shopping list, fair value estimates and purchase points. Since you might be proved wrong in the short-term, buying great companies (or well-structured ETFs and mutual funds) and investing for the long-term is the best strategy.

December 28 2020

This week we look into why China is driving to become the global leader in fully electric and hybrid vehicles and which brands are winning.

April 6 2022

Last week, we attended MIT’s annual student-led Energy Conference. This week we recap the presentations from a veritable who’s-who of global leaders from industry, government and academia.

October 28 2020

Companies all around the world are making big investments in manufacturing, transportation, storage and utilization of hydrogen to replace the fossil fuels we use to run our economy. Today we examine a few of the high flyers.