Tom Konrad, CFA
2009 was a banner year for my clean energy stock picks, which are up 57% over 12 months, greatly exceeding their benchmarks.
Over the last 12 months, my ten green energy stocks for 2009 are up 57% vs. 29% for the S&P 500, and 12% for my clean energy benchmark, the iShares S&P Global Clean Energy Index (ICLN), the two indexes I specified for benchmarks when I published the list a year ago.
Below is a detailed rundown of the results.
| Company | Ticker |
Change 12/27/08 to 12/27/09 |
Dividend & Interest |
| The Algonquin Power Income Trust | AGQNF.PK | 113.04% | 13.13% |
| Cree, Inc. | CREE | 265.60% | |
| First Trust Global Wind Energy ETF | FAN | 26.86% | 0.46% |
| General Electric | GE | -3.32% | 5.13% |
| Johnson Controls | JCI | 64.64% | 3.07% |
| New Flyer Industries | NFYIF.PK | 43.72% | 16.21% |
| Ormat | ORA | 27.66% | 0.84% |
| Trinity Industries | TRN | 7.24% | 1.87% |
| Warterfurnace Renewable Energy | WFIFF.PK | 60.22% | 4.37% |
| -2x S&P Depository Receipts + 3x Cash (was SDS until Feb 13) | 3x $ – 2x SPY | -72.44% | -0.18% |
| Total Portfolio | 57.15% | ||
|
Benchmarks |
|||
| Standard & Poors 500 Index (S&P500) | 29.07% | ||
| iShares S&P Global Clean Energy Index (ICLN) | 12.14% | ||
The somewhat cryptic last pick, "3x $ – 2x SPY" is a hedge against a possible market decline. Rather than using a pure short, I wanted to give it approximately equal weight to the other picks. In order to have an initial investment of $1 in each pick, including the short, I sold a hypothetical $2 worth of SPY short, but kept the $2 cash proceeds, along with an extra $1 cash allocated to the pick. Hence that pick is a combination of $2+$1 = $3 cash and -$2 short of SPY. (I left out a few details here for simplicity. All the gory detail is here.)
Outlook for 2010
In the panic of late 2008, picking good companies at reasonable prices was like shooting fish in a barrel. Today, the world is much different, with confidence back and many investors scouring the markets for relative (if not absolute) value stocks. My soon-to-be-published list of ten clean energy stocks for 2010 was much harder to choose, so although I expect to beat the market for a third year running, I don’t expect to do so by as much as I did in 2009. Only two of these stocks, Waterfurnace and New Flyer, made it onto the 2010 list.
I also expect the market as a whole to fall in 2010, although probably not so badly as it did in 2008. I’ll publish my list of ten clean energy stocks for 2010 in the next couple days in order to continue the tradition, despite my opinion that now is the wrong time to buy. A better option might be to buy my list of ten clean energy stocks for 2010, but hedge the resulting market exposure with a selection of the short ideas in my Clean Energy Investing for Experts series. For non-experts, you can simply wait in cash a few months for the market to fall. In the stock market, avoiding the big losses is worth it even if you also miss out on the big gains.
DISCLOSURE: The author and/or his clients own AGQNF, CREE, GE, NFYIF, ORA, TRN, WFIFF.
DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.
