My friends in the divestment movement often ask me how to find an investment advisor who has a focus on fossil fuel free or otherwise green investing, so I thought I would compile a list for publication on AltEnergyStocks.com.

If your advisory firm would like to be on this list, leave a comment with your Firm Name, location (city, state, country), and website, plus no more than 100 characters of notes where you can say whatever you want about your firm.  I will review each firm’s website to make sure that they are properly registered, and that some flavor of green investing features prominently on the website… this list will not be open to advisory firms that do not see green as a core part of their business and present themselves that way.

I will continue to take submissions to the list after initial publication.

Note that AltEnergyStocks.com also takes paid advertising and sponsored posts from RIAs, mutual funds, and green companies, but the list I am compiling will be open to any qualified firm that wants a listing.

Tom Konrad, Editor

The list can be found here.

The post Compiling a Directory of Investment Advisors Who Specialize in Green Portfolios appeared first on Alternative Energy Stocks.

by Debra Fiakas, CFA

The post “Water:  Invisible Crisis” introduced a new series on water supply in Latin America, describing the lack of access to quality water despite a bountiful supply of rainfall and snow melt.  As the series has unfolded we have learned that water supply in Latin America is largely a local government undertaking.  Investment opportunities are limited to water management companies that sign on to operate government-owned infrastructure or water treatment solution providers.

Water supply to the north has inched further into the commercial realm.  A discussion of water investment would not be completed without a look at private water suppliers in the rest of the Americas.

The only one in the group to lay claim to market share in Latin America is Consolidated Water (CWCO:  Nasdaq), which operates desalination plants in the Cayman Islands and Bahamas.  In 2018, Consolidated began developing a seawater desalination plant in Rosarito, Baja California in Mexico.  The company uses reverse osmosis technology in its plants.  Reverse osmosis is notoriously energy hungry so Consolidated has deployed energy recovery devices from Energy Recovery (ERII:  Nasdaq) to reduce energy costs at several of its plants.

Consolidated is a small company, reaching $69.2 million in total revenue in the most recently reported twelve months.  However, it converted 21% of sales to operating cash flow.  That helps support nearly debt-free balance sheet and an ample dividend.  Consolidated shares trade at the lowest forward multiple in the selected group of water stocks listed in the tables below.  At a forward PE of 24.0 and a forward dividend yield of 2.1% the stock has some appeal, despite the small size of the company.

If you are the sort of investor for whom size matters, American Water Works (AWK:  NYSE) will be the best choice from among stocks in this group.  American reported $3.6 billion in total sales in the  twelve months ending September 2019, on which it collected $1.3 billion in operating cash flow.  The company needs the cash to service its hefty debt load.  Aside from Global Water Resources (GWRS:  Nasdaq) and its unique situation, American Water Works is the most leveraged among the selected water stocks.  The debt load has not dissuaded leadership from generous dividend payouts.  At the current price level, the stock offers shareholders a forward yield of 1.7%.Service Ar

Global Water Resources reported $180.1 million in long-term debt at the end of September 2019, a hefty debt load given its business base.  That said, management is aggressively executing on a growth strategy.  In August 2019, Global Water announced agreements with the City of Coolidge, Arizona and Saint Holdings, LLC to provide water, wastewater and water recycling services.  Coolidge is a bedroom community adjacent to Phoenix.   Saint Holdings is privately owned land development company that recently sold land near Inland Port Arizona to Nikola Motor Company for a proposed mega-manufacturing plant.  When fully approved and operational, the agreements will bring to fourteen the number of water, treatment and recycling utilities under Global Water Resources management.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 12/17/19.  

The post Water Stocks in the Americas appeared first on Alternative Energy Stocks.

by Debra Fiakas, CFA

Depending upon how you string the words together, it is possible to make Latin America sound like the world’s water fountain or the location of a putrid pond out of which hapless citizens ladle their drinking water.

Try these lofty words.

Four the world’s largest rivers and four of the world’s largest freshwater lakes can be found in the Latin America region with a run-off area encompassing 5,470 cubic miles.  The rainwater and snowmelt running into these water bodies represents 20% of the world’s run-off.  By itself Brazil is home to 20% of the water resources of the entire world.

Here is a more realistic string of words on water.

Desertification, pollution and poor infrastructure thwart access to a decent glass of water for most Latinos.  One third of Latin American water is polluted due to lack of sewage treatment.  Fresh, unspoiled water is not evenly available around the region.  The United Nations reports that in 2017, nearly all Argentineans and Chileans were served by clean water systems, but only 43% of Mexicans have access to safe drinking water.  In the Caribbean the numbers are even more stark.  In the Dominican Republic only 24% of the rural population has access to taps with clean water.  In DRC cities piped water access is near 95%, but Dominicans pay dearly for every drop.  Virtually no one in Haiti is connected to a clean water system.  The rest are reliant on rain water.

Much of the water supply in Latin America comes from municipal systems or specialized public utilities.  As a consequence about 90% of urban water supply in Latin America is provided by publicly owned entities.  Nonetheless, some of the largest commercial water companies in the world have taken an interest in Latin America.  A stake in one would be a good hedge against either set of prose on Latin American water supply.

France’s Suez SA (SEV:  PA, SZEVY:  OTC/PK) is a global provider of water and wastewater management.  Its portfolio of water management contracts in Latin America has grown to 7% of the company’s global revenue.  A water distribution contract in Santo Domingo signed in 2018, brought Suez to Ecuador for the first time and extended the company’s Latin footprint to a total of ten countries.  Suez signed on to reduce leaks in the Santo Domingo municipal water system and ensure 24/7 water availability.    Suez is also serves commercial customers with water treatment and desalination systems.  In the year 2018 alone the company signed nine new contracts for water optimization and conservation with commercial customers in the agri-food sector in Brazil, Mexico and Costa Rica.

In 2018, Suez realized Euro 335 million in net income on Euro 17 billion.  For its efforts Suez shares are valued at 17.9 times trailing earnings.  If that seems cheap, think again.  The price-earnings to growth rate ratio is well above one at 1.41, leaving an investor paying dearly for Suez’s growth.

If Suez is not to an investors liking, there is her French sister, Veolia Environment, SA (VIE:  Paris, VEOEF:  OTC/PA).  Veolia acquired Proactiva Medio Ambiente, which operates in eight locations in three Latin American countries.  The water management company serves over 42 million customers with a mix of water distribution and waste management systems it operates for national and municipal agencies.

Veolia shares give an investor a stake in a significantly larger operation with diverse portfolio of water and waste water management contracts around the world.  In the twelve months ending September 2019, Veolia reported Euro 27 billion, on which the company earned Euro 457 million in net income.  Veolia shares trade at 31.8 times these earnings.  The pricey multiple is a little easier to swallow with the company’s 4.0% forward annual dividend yield.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 12/13/19.  

The post Water Supply with a Latin Twist appeared first on Alternative Energy Stocks.

by Debra Fiakas, CFA

The post “Water:  Invisible Crisis” on December 6^th highlighted the building problem of inadequate supplies of quality water in Latin America.  The World Water Council’s Comision Nacional Del Agua reports that As much as one-third of the Latin America population lacks access to safe water.  Unabated pollution and lack of water treatment have been identified as culprits.  In South America, for example, 40% to 60% of water comes from aquifers that are subject to increasing pollution from untreated run-off from mining and agriculture operations.

Our survey of Latin America water sector in South America found an interesting mix of pollution abatement and water treatment suppliers and service providers in the region.  European companies have set up shop in several of Latin America’s major cities and even a few U.S. and Canadian firms maintain at least a relationship with a local distributor.  One might conclude that it is not lack of access to technology or expertise that is holding Latin American communities back from clean, safe water.

For the ambitious entrepreneur the shortfall in clean water is an opportunity for new business in Latin America.  The astute investor could look for a strategy to participate.  We look at several who provide immediate investment alternatives with publicly traded stocks.

Andritz Group SA (ANDR:  VI, ADRZF:  OTC) is primarily known for its equipment for hydropower stations and the pulp and paper industry.  Make no mistake about it, this Austrian company knows water as well.  Andritz has set up shop in Brazil with its Separation Segment that offers mechanical technologies for municipal water treatment, including filters, screens and separators.  The company is well established in Brazil and could be a good partner for municipal operators.  Andritz successfully set up the Santo Antonio hydropower plant in Brazil and regularly supplies Klabin’s pulp mill in Brazil.

In the most recently reported twelve months Andritz earned 3.6% operating profit on Euro 6.6 billion.  The company converted 8.1% of those sales to operating cash flow.  The cash flow is needed if Andritz intends to come down from its current leverage lever where the debt-to-equity ratio is 144.38.  There is some competition for cash use.  Andritz maintains a healthy dividend payout policy and the current forward dividend yield is 4.24%.

Japan’s Kurita Water Technologies Ltd. (6370:  Tokyo, KTWIF:  OTC/PK) provides water treatment solutions to various industries.  Its specialty is treatment chemicals that can be used in boilers and cooling towers as well as industrial processes and wastewater treatment.  Interestingly, the company has chemical products for use in biomass generation.  Kurita can also set up turnkey water treatment facilities, including waste water reclamation systems.

Kurita has had boots on the ground in the state of Sao Paulo in Brazil since 1975.  In 2011, the company opened a water treatment chemicals factory in Sao Paulo near Artur Nogueira.

Kurita’s shares are quoted on the OTC at a price that represents 20.8 times trailing earnings.  That is not a particularly dear or cheap price, but investors might be swayed by the current dividend yield of 2.0%.  The company earns about 10% return on equity and maintains a fairly modest leverage level with a 20.00 debt-to-equity ratio.  Kurita has achieved top-line growth in each of the last five years and is habitually profitable.  While cash flow from operations have varied year to year, over the last five years Kurita has converted 10% of sales to operating cash.

U.S. companies are not left out of the Latin America water treatment market.  Unfortunately, few are publicly traded.  Fluence Corporation (EMFGF:  OTC, FLC: ASX) is a small company with big aspirations and interesting technology.  Its engineers design and manufacture water and wastewater treatment systems for municipal, commercial and industrial applications.  The company specializes in treatment of brackish water with its proprietary NIROBOX water desalination system.  The EcoBox water reuse system offers strong cost/benefit for decentralized industrial water applications.

Fluence is headquartered in New York State and maintains a presence in Buenos Aires, Argentina. The company has been active in the Carribbean, recently installing a NIROBOX desalination system at a resort in Costa Rica.  Fluence also implemented a wastewater treatment plant for the municipal government in Bordeaux, St. Thomas in the U.S. Virgin Islands.  The treatment plant features Fluence’s proprietary MABR (membrane aerated biofilm reactor) modules that require as much as 90% less energy than the aeration methods used in competing sludge treatment solutions.

Fluence shares are widely listed on exchanges and quotation services around the world.  Frankly speaking it needs all the friends it can find.  The company has grown sales dramatically since inception in 2015, reaching the $100 million mark in just four years.  Unfortunately, profits have not followed…as yet.  The company has reported deep losses in all years.  In the most recently reported quarter ending June 2019, Fluence had to draw $11.3 million out of its bank account to support operations.  At the end of June the company had $16.5 million left on its balance sheet.  The financial picture helps explain why Fluence shares are priced well below a buck and trade infrequently.

Foreign operations and unprofitable businesses mean risk.  However, there is no doubt that each of these three companies provides solid value for their thirsty Latin American customers.  They are worth consideration for the investor who wants to be part of the Latin America water solution.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 12/10/2019.  

The post Water Treatment With a Latin Beat appeared first on Alternative Energy Stocks.

by Debra Fiakas, CFA

Last month Greystone Logistics (GLGI:  OTC/PK) announced a new purchase order valued at $6.8 million to supply recycled plastic pallets to a national food and agribusiness company.  The order requires the fledgling Greystone to manufacture and deliver an unspecified number of the company’s proprietary plastic shipping pallets.  Whatever the number, the contract promises a big shift in Greystone’s prospects given that the contract value represents 9% of total sales in the fiscal year.

It seems Greystone is gaining visibility in the logistics supply chain.  However, trading at less than a buck a share its stock seems to not have yet registered on the radar screen of investors.  This seems a auspicious time to get acquainted with GLGI.

In the twelve months ending May 2019, Greystone reports $71.1 million in total sales of its plastic pallets.  The company has a line of beverage, drum and mixed-use pallets as well as those that can be nested, stacked or racked up.   Additionally, the company sells processed recycled plastic resin.

All of Greystone’s pallets are made from recycled petrochemical resins using the company’s proprietary pallet designs.  Using recycled resins gives customers advantages in both cost and reputation.  The company’s designs make possible greater production efficiency using standard injection molding equipment.  Important to efficiency rates is capacity at Greystone’s manufacturing facility at Bettendorf, Iowa to grind over 200,000 pounds of plastic, making it possible to use low-grade resins.

For investors who might dismiss such a ‘simple’ business model, take note that Freedonia estimates there are at least 2.6 billion pallets in use in the U.S. alone.  Fortune Business reported in June 2019, that the total global pallet market generated $60 billion in total sales in 2019.  Wooden pallets still represent at least 80% of the market in terms of units, but plastic is gaining ground in the food and beverage industry where clean surfaces are especially important.

With those respect-worthy industry facts in mind, let us return to Greystone’s financial performance.  The company managed to draw $2.1 million in net income off sales in fiscal year 2019, representing a 3% net profit margin.  A total of $6.8 million or 10% of revenue was converted to operating cash flow.  This is a lower rate than was reported in the previous fiscal year when the sales-to-cash conversion was 17%.  However, we note that deferred revenue has had a strong influence on operating cash flow.

The availability of cash resources for operations is important to Greystone, which has been making capital investments near $6 million to $7 million per year.  The company also has long-term debt of $22.6 million outstanding, of which $3 million is due within the next twelve months.

Greystone management has its eye on the prize of a large and growing market.  Interest in recycled plastic over plastic products made with virgin polymers is rising.  Judging by the recent purchase order from a large food company, Greystone is well positioned to benefit from this trend.  Investors would be well advised to take a serious look at this simple but fast growing business.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 9/6/19 as “Greystone Logistics: Play on Pallets”.

The post Greystone Logistics: Recycled Plastic Pallets appeared first on Alternative Energy Stocks.

At ComCap19, I drank from a firehose of information about local investing, securities law, crowdfunding, and democratizing capital. And had a great time!

by Evelyn Wright

I just returned from spending four days in Detroit at one of the most inspiring and informative conferences I’ve attended in a long time: Community Capital 2019. This was the fourth gathering of this network of entrepreneurs, lawyers, financial professionals, economic development practitioners, and community organizers dedicated to democratizing and localizing finance and investment. I went because — after several months of researching the opportunities and challenges for cooperatives — I’ve seen that access to capital is one of the most significant and under-addressed hurdles for growing coops. I wanted to learn more about the options available, and boy, did I!

The mission of the “ComCap” network, which has recently formalized into the National Coalition for Community Capital(NC3), is to create a world in which “empowered citizen investors catalyze the growth of locally-rooted ventures creating economic opportunity for all.” As NC3 points out, nearly half of the US economy consists of locally-owned small businesses. But due to the hyper-concentration of the financial system, some perhaps well-meaning post-1929 crash regulations that severely restricted how investments could be offered and to whom, and longstanding structural bias in the economy, in recent decades there have been almost no opportunities to invest directly in the economy that matters the most to us — our local communities.

“The money in your purse and under your mattress are just about the only savings that are remaining in the community.”

Meanwhile, as Amy Pearl, Director of Community Development at the local business-focused financial services firm Seedpay noted, apart from credit unions and a few truly local banks, virtually none of our savings are held and used locally. Deposits in most banks are immediately moved away to be invested elsewhere, and pension funds and retirement savings are almost always invested in big funds on Wall Street, usually in multinational companies, in commodities, or in real estate far away. “The money in your purse and under your mattress are just about the only savings that are remaining in the community,” Pearl said.

It wasn’t always like this. Investment advisor and NC3 Board Chair Angela Barbash said that in her home town of Ypsilanti, MI, construction of the Huron Hotel in the early 1920s was financed by direct sale of stock to local residents. Barbash suggested such examples were common in those days. On a larger scale, to facilitate ongoing regional investment, Detroit had its own stock exchange for most of the twentieth century, and was a hub for financing companies throughout the Midwest. General Motors, Chrysler, and Sears Roebuck were all capitalized on the Detroit exchange, which operated into the 1970s, until deregulation favored the centralization of trading on the New York Stock Exchange.

There used to be dozens of such local and regional stock exchanges across the US, in major cities like Boston, Philadelphia, St. Louis, New Orleans, and San Francisco, but also in smaller ones, includingAlbany, Syracuse, and Buffalo. Many of the regional exchanges closed after the formation of the Securities and Exchange Commission (SEC) in 1934. Other factors in their demise included the rise of state-level regulation to protect investors and advances in communication technology that made it increasingly easy to do business on the New York exchanges from all over the country. By about 1980, almost all of the regional exchanges were gone, and with them any ready structures for facilitating local investment.

This trend has begun to be reversed in the last few years. Direct public offerings like that used to finance the Huron — always legal, but somewhat cumbersome and costly — have become more common and therefore somewhat easier to do. And recent changes in both state and federal laws have enabled the rise of several dozen intrastate and national crowdfunding investment platforms, which allow investors to browse and select projects to invest in.

What Does Community Capital Stand For?

The conference took stock of these developments and asked, what’s next? In the opening session, Brian Beckon, a lawyer at Cutting Edge Capital, which has helped several community capital projects set up their offerings, gave a rousing talk, posing the question, “What does community capital stand for?”

“It’s not just another source of capital for entrepreneurial projects,” Beckon said, “It is that. But we’re also talking about making systemic change. Our economy was designed by and for wealthy investors. It is designed specifically to concentrate wealth. It’s become common to say the economy is ‘broken’. It’s not broken. It’s doing what it was designed to do extremely effectively.”

“The economy is not broken. It’s doing what it was designed to do extremely effectively.”

In order to change that, he said, we need to shift the whole culture that has developed to support that concentration, a culture that relies on stories and assumptions about how things are supposed to be. Stories like: wealth is a reward for virtue, hard work, and ability. We may not consciously believe that, Beckon said, but it’s so deep in our subconscious that it powerfully shapes our political and economic life. Its corollary: since people who are rich must be knowledgeable and virtuous, “when there’s a problem we need to solve, we want those rich people to come and solve it for us.” And of course, “if you don’t have wealth, you lack virtue, you didn’t work hard enough. If you’re poor, it’s your own damn fault!”

This story also underlies our investment institutions, Beckon said. The 1933 Securities Act, which was designed to protect investors from the kind of fraudulent activity that was believed to have caused the 1929 crash, distinguishes between wealthy (“accredited”) and non-wealthy investors. “If you’re wealthy, you’re presumed to have the ability to protect your own interests.” If not, you’re excluded from most kinds of direct investment in businesses. And of course, at the very heart of our system: if you’re providing capital to an endeavor, you have earned the right to control it. “You’re an owner of the business! Of course you have the right to decide and control. But how quickly that spills over into our civic and political life,” Beckon noted.

Community capital, Beckon said, should aim to directly address and shift this old story, embodying principles like inclusivity, equity, and transformative purpose. Everyone should have the right to fully participate in the community’s economy, as an investor, as a business owner, and have a voice in where the community is heading. Investment raises must be done in ways that are fair and reasonable to all and should reject the idea that those who invest more have earned the right to a higher return. And profit must accrue to all stakeholders in a business, not just the investors. Everything about the surrounding environment — the community, the business’s workers, the local government — contributes to the ability for it to succeed, and so all should benefit.

So how is the community capital movement doing in advancing these principles? Arno Hesse and Amy Cortese of Investibulepresented their analysis of some 2000 offerings that have been made over the last few years on several dozen crowdfunding platforms. Of these 2000 offerings, 68 percent were successfully funded, while another 10 percent are still open. The funded raises had a median value of $86,000 from 143 investors. They ranged from $5,000 up to $12 million, and from 1 to 3515 investors.

33 percent of funded businesses were owned by women, and 26 percent by people of color, a stark contrast with the venture capital world, where only 2 percent of funded businesses are women-owned and only 1 percent owned by people of color. Funding rates were actually higher for women and non-white-owned businesses than the average: 82 percent for women and 78 percent for people of color. Hesse and Cortese attributed this success rate to the broader demographics of the investors. “If we want to change who gets funded, we need to change who does the funding,” they concluded.

Moving Towards Funds

Although these crowdfunding platforms have been able to fund a rapidly growing number of projects in the few years they’ve been in operation, they do have a number of limitations, said Janice Shade, co-founder of the Vermont crowdfunding platform Milk Money. They are a lot of work for both the entrepreneurs and the investors involved. Entrepreneurs need to intensively promote their projects in order to achieve funding, so much so that Milk Money is no longer accepting projects from solo entrepreneurs unless they have dedicated — and budgeted for — marketing assistance, said co-founder Louisa Schibli. They simply don’t have enough time to properly promote them while simultaneously doing everything else to grow the business.

As a result, many platforms are running short of active projects. “Crowdfunding can be a great strategy if your market is your community,” said Brian Beckon, but it’s not for everyone. On the investor side, it’s time consuming, too, because of the need to investigate projects one at a time. That might be fine for making a one-off investment in a favorite local brewery or ice cream shop, but it’s probably too cumbersome for most people to develop a sizable diversified portfolio of local investments.

To overcome these limitations, Shade is now working on developing an investment fund for Vermont-based businesses as part of the Initiative for Local Capital. A fund offers some key advantages over the platform-based approach for taking local investing to a larger scale. Fund managers would be responsible for conducting the due diligence on each project, as well as for promoting the fund. Investors would only have to perform their due diligence once, and would automatically get diversification over all the projects in the fund.

Sounds great, but there are some complications. As Brian Beckon explained, investment funds are regulated under the Investment Companies Act of 1940, which defines requirements for businesses whose primary purpose is to invest. Being regulated as a mutual fund under the 1940 Act would impose an insurmountable regulatory burden for any community-scale fund. However, the Act allows for several types of exemptions, so the trick in setting up a community fund is to find an exemption that works for the purposes of the fund.

Charitable loan funds — such as RSF Social Finance, the PVGrows Investment Fund supporting farmers and food entrepreneurs in the Pioneer Valley, and many church extension funds — fall under one such exemption. Other possible fund structures that would qualify for exemptions include real estate-only funds that could, for example, work with community land trusts to acquire properties to be held by the trust, and holding companies that could acquire and manage local businesses whose owners are retiring without a buyer.

Shade is using another exemption structure, a pooled income fund, to construct her fund, because she wants to be able to make a broader spectrum of investments, rather than only loans. She notes that, although loans are the most common community capital investment vehicle, they are not right for all businesses at all times. Early stage businesses may not be able to take on debt before they are earning stable revenue, while later stage businesses run a risk if they take on too much debt relative to their assets. Shade is structuring the Vermont investment fund to be able to offer both debt and equity investments, as well as “in between” options like convertible debt and revenue sharing loans.

Democratizing Capital

Beyond the issues around structuring investment vehicles, there are some tensions within the growing community capital movement. Although crowdfunding platforms and funds often tout that they aim to make investment “open to everyone”, in practice they often have minimum investments of $1000 or even higher, locking out the nearly half of all American households who don’t have nearly that much saved. In sessions on democratic governance of capital, restorative economics, and community capital in communities of color, panelists shared strategies for broadening the reach of investment opportunities, including building investment projects out of existing community networks, where trust and collaborative relationships already exist; focusing on core community needs like food, housing, and energy; and rooting investment projects in intensive community organizing and education efforts.

One of the most interesting and innovative projects in this regard is the Boston Ujima Project, which is aiming to create an entire ecosystem of economic transformation in Boston’s lowest income communities. The heart of the Ujima Project is a democratically-governed investment fund that will finance small businesses, real estate, and infrastructure projects in Boston’s working-class communities of color. Inverting the usual return pyramid, the Ujima fund offers the highest rate of return to those who invest the smallest amounts of money. Their investments are secured by donations from faith-based and philanthropic organizations. Impact investors can who can invest larger amounts receive a moderate rate of return.

All decisions about the use of the funds — including a set of 36 Good Business Standards to guide investments and the election of an Investment Committee to conduct due diligence and make recommendations to members — are made by majority vote of Ujima Voting Members only, Boston residents and displaced residents who identify as working class and/or as a person of color. All other investors are Solidarity Members, who can participate in all community activities, but not vote. Surrounding and supporting the fund and its governance are a wide range of community and economic development activities, including financial education, technical assistance for entrepreneurs, a time bank, local currency, policy advocacy, work to mobilize the support of local anchor institutions, and an active arts and cultural program.

Another issue for mobilizing investment in historically under-financed communities is that the costs of conducting pre-investment due diligence is roughly the same regardless of investment size, which can create a barrier for offering the very small investments appropriate to start-up businesses. Especially in low income communities, where the friends-and-family investment most common in the startup phase may be unavailable, access to such small investments can be a primary barrier to business creation. The Detroit Community Wealth Fund (DCWF) and the Center for Community-Based Enterprise (C2BE) described how they use technical assistance to decrease investment risk, essentially paying down the cost of due diligence while simultaneously building capacity in the community.

DCWF — part of the national cooperative fund network organized by the Working World — offers non-extractive loans to cooperatives that are starting or expanding. Unlike most business loans, no collateral or personal guarantees are required, and loans are paid back as a percentage of profit, rather than at a fixed repayment rate. DCWF provides borrowers with technical support to help ensure their businesses succeed, including business development, financial feasibility, accounting and legal services, and coaching to their borrowers. They also offer a multi-week coop academy that startup coop teams can participate in.

“We are reducing our underwriting costs to nearly zero because these are all coops that we are already working with, so we know them very well.”

Terry Lewis of C2BE shared that they were in the process of starting a small loan fund solely for the purpose of helping worker owners pay for their shares in their cooperatives. “We are reducing our underwriting costs to nearly zero because these are all coops that we are already working with, so we know them very well,” she said. Lewis emphasized that pairing grant-funded education and technical assistance with capital investment was a vital strategy for their work. “We can’t fund the underwriting from loan proceeds,” she said. “We never will, but because we do that technical assistance and we do that relationship building, we can give the loans.“

Lucas Turner-Owens, Fund Manager at Boston Ujima Project, similarly shared that nearly forty percent of their budget goes to community education programs. In order to fund that work out of the small margins on the their loans, Turner-Owens said, their fund would need to be nearly twenty times its current size, jeopardizing the ability of the community to democratically manage it. Funding the education, community building, and advocacy work out of grants and donations ensures the effectiveness of their investment work.

I came away from ComCap super-charged with information and enthusiasm for exploring what we can create here in the Hudson Valley to support truly community-driven economic development, and get beyond the Developer Charming model of hoping those virtuous rich people will solve our problems for us. There are a lot of pieces available that we can work with and a number of really inspiring models to study.

Evelyn Wright is a climate economist, energy analyst, meeting facilitator, and longtime cooperative enthusiast. She lives in Kingston, NY.

This article was first published on Commonwealth Hudson Valley.

The post Building Community Capital appeared first on Alternative Energy Stocks.

by Debra Fiakas, CFA

Grand View Research, another industry research group, estimates that the graphite market could reach $93 billion by 2025, boosted mostly by new demand for electric vehicle batteries as well as batteries for electronic devices and grid-storage systems.  According to Technavio, an industry research firm, the graphite industry is estimated to grow more than 5% annually through 2025, largely on new demand for highly purified graphite material used in lithium ion battery anodes.

Among the immediate beneficiaries of this growth trend are the established graphite producers and those among the most recent entrants that have begun ringing up sales to customers.

Grand Old Lady

Founded in 1880, France’s Imerys (NK:  Paris) has a lengthy history of mining graphite and producing carbon products.  The company has a history of growth through acquisition.  A couple of its most recent deals is of particular interest to investors in the graphite sector.  In 2016, Imerys strengthened its natural graphite mining resources through a joint venture in Namibia.  The company’s natural graphite resource in Canada is nearly played out.  Then in February 2017, Imerys acquired Japan’s Nippon Power Graphite with its patented chemical vapor deposition coating process.  The moves strengthened Imerys position in supplying high-value anode material to the electric vehicle battery market.

Backward Integration

Upstream graphite producers are not the only players in the sector to grasp the power of integration.  Showa Denko (4004:  Tokyo), a producer of graphite anode material, acquired the synthetic graphite operation of SGL Group (SGL:  DE).  Investors will have to wait for the merits of that deal to unfold, especially given the building interest for the lower-cost, higher-purity natural graphite materials for batteries.

Instead, Entegris (ENTG:  Nasdaq) may have had the better approach, acquiring Texas-based POCO Graphite with its capacity to process high-valued added graphite.  Entegris offers a portfolio of produces for purifying and handling materials critical to the semiconductor and other technology industries.

Repositioning

The Showa Denko-SGL deal is particularly interesting against the backdrop of the flurry of deal making by SGL.  The German ‘carbon’ company has been remaking itself with a series of deals, the most recent of which was of sufficient importance for SGL to trigger a name change from ‘SGL Carbon’ to ‘SGL Group.’  SGL acquired shares from Tokai Carbon in the SGL Tokai process technology joint venture.  SGL management clearly sees process as important as property in the graphite sector.

Two other deals provide further insight into SGL’s strategy.   In November 2017, SGL shed its carbon electrode, cathode and furnace lining business to Triton Funds, an investor in middle industrial businesses in Europe.  With a fist full of cash from that deal, SGL bought BMW Groups 49% interest in the SGL-BMW carbon fibers joint venture.  The two back to back moves make it clear SGL intends to step away from the messier end of the carbon business and double down on the higher-value added products.

Grown-up Table

Syrah Resources (SYR:  ASX) is among the most recent players to take a seat at the grown-up table of producing graphite players.  The Australian company has only recently begun to produce graphite from its Balama natural graphite mine, but the 73 kilotons shipped in 2018, was enough to give distinction to this long aspiring graphite resource developer.

Syrah also has the battery end-market on its mind and has produced low volumes of unpurified spherical graphite from its Balama resource using pilot plants in China and Australia.  The company is targeting the U.S. market and has begun development of battery anode materials processing site in Louisiana in order to assume the profile of a domestic producer. Syrah intends to produce up to 60 kilotons per year of battery anode material in the U.S.   There have been a few stumbles in the Syrah’s initial steps as Louisiana communities fret over water supplies, swamp and river contamination from plant effluent and environmental concerns over harmful chemicals Syrah plans to use for purifying the graphite.  Most likely the company will regain its footing and move forward.

Summary

Among those graphite industry players in the list above, Entegris trades are the best value with a price multiple of 4.4 times forward earnings. However, for investors that want a stake in a company that brings graphite out of the ground and is delivering earnings to the bottom line, the best value is found in France’s Imerys.  Its common stock is currently trading at 6.9 times trailing earnings.  The stock 4.8% forward dividend yield represent icing on the cake.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 4/16/19 as  “Graphite Grown Ups.” 

The post Vertical Integration In Graphite Industry appeared first on Alternative Energy Stocks.

A list of graphite companies covered in this series can be found here.

Like performance test results, customer relationships are critical stepping stones for graphite developers.  In June 2018, Northern Graphite (NGC: TSX-V) announced a memorandum of understanding with a European trading company to sell 100% of the output from Northern’s Bisset Creek resources in Ontario, Canada.  China-based manufacturers are the intended end-users.  Northern management is using the arrangement as leverage with prospective investors to finance mine infrastructure and processing equipment.  Capital costs are expected to exceed CA$145 million.

Northern claims a proprietary purification technology the company intends to use to upgrade its graphite output.    Its Bissett Creek deposit yields primarily large flake graphite that requires considerable shaping to reach the spherical shape that is best suited for lithium ion batteries.  Northern has so far not been clear on whether the European trading company that has pledged to sell the Bisset Creek production is prepared to sell the high-margin purified material or is aiming for lower end graphite concentrate.

Kibaran Resources (KNL:  ASX) is focused on the Epanko deposit in Tanzania in East Africa.  The company recently raised AU$2.2 million through a AU$1.0 share purchase plan for existing shareholders and a AU$1.2 million private placement.  The capital serves as a strong vote of confidence in the company’s plan to convert the Epanko resource into battery-grade graphite.  Shareholders may have been inspired by recently announced test results from European customers.

Kibaran calls its purification process EcoGraf and claims it can produce a range of high-purity graphite material.  The recent customer tests were completed using spherical graphite produced form Kibaran’s Epanko flake graphite.  Kibaran recently commissioned a new batch plant in Germany to facilitate further customer testing.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Crystal Equity Research has a Speculative Buy rating on the shares of Westwater Resources, Inc. (WWR:  Nasdaq) through its CER Reports series.

This article was first published on the Small Cap Strategist weblog on 4/12/19 as part of the post “Graphite Developers Eye Large Growing Market.” 

The post Canadian and Tanzanian Graphite Connections appeared first on Alternative Energy Stocks.

The post “Integrated Graphene Producers” featured several graphene producers with novel business models that marry captive graphite sources to the technology and knowhow to produce graphene.  These are not the only graphite producers.  Although not as elegant as graphene with its svelte single-atom profile, the market for graphite has its appeal as well. Graphite has been a staple in steel industry crucibles, foundry molds and automobile brake linings.  These days graphite has moved into another even more important place in cars  –  lithium ion batteries that make electric vehicles viable as replacements for gas guzzling cars and trucks.

Spherical graphite is especially desirable because the graphite anodes hold up well against the lithium electrolyte in repeated charge and discharge cycles.  Both coated and coated spherical graphite has experienced a surge in demand.

In 2017, the lithium ion battery market consumed 105,000 metric tons of graphite  –  60,000 natural coated spherical purified graphite and 45,000 synthetic graphite.  Investors can expect these numbers to climb dramatically to keep up with the battery market.  MarketResearch, an industry research firm, estimates the lithium ion battery market will grow by 16.5% annually through 2024.  Those big numbers have quite a few miners reaching for picks and axes.  How many will gain a foothold in this big, fast growing graphite market?

The fifteen natural graphite resource developers listed below all have one thing in common  –  no revenue.  Even with the best of graphite resources under their control, management has considerable work ahead to bring the resource to market.  The reality of mineral resource exploitation is marked by high capital costs and pinched operating margins.  Several of the graphite developers have made plans to integrate forward into the hottest segment of the market  –  battery-grade graphite.  According to Industrial Minerals, spherical graphite suitable for lithium ion battery anodes is priced in a range of $2,700 to $2,800 per metric ton in China where many battery manufacturers are located.  This compares quite well to the range of about $655 to $790 per metric ton for flake graphite concentrate.

The next three posts will look at individual stocks from this list.

For those investors who have more of an appetite for revenue and profits, there are a number of graphite producers that have already reached the market.  The next post features these successes and explores valuation for graphite production.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Crystal Equity Research has a Speculative Buy rating on the shares of Westwater Resources, Inc. (WWR:  Nasdaq) through its CER Reports series.

This article was first published on the Small Cap Strategist weblog on 4/12/19 as part of the post “Graphite Developers Eye Large Growing Market.” 

The post Graphite Developers Eye Large Growing Market appeared first on Alternative Energy Stocks.

ZEN Graphene Solutions (ZEN:  TSX-V) recently teamed up with the University of Manchester, seat of the two Nobel Prize-winning scientists who are credited with isolating graphene.  ZEN management hopes to work with Manchester on commercialization of graphene for a variety of applications, including concrete, composites, membranes, and sensors.

ZEN’s Albany graphite project is located in southeastern Ontario.  In March 2019, the company completed tests on a production process to purify graphite concentrate from its mine.  The purified graphite was near 99.8% carbon per gram and will be used as a precursor material for ZEN’s graphene.   The company plans to use a chemical exfoliation process to convert its highly crystalline graphite into graphene material. ZEN’s goal is to have a graphen pilot-scale production facility up and running before the end of 2019 and be able to offer graphene samples to customers in 2020.

ZEN’s ambitious goals will be at least partially supported by a cash kitty that was CA$2.8 million at the end of December 2018.  The company has been using about CA$85,000 in cash per month to support operations. Investors can likely expect this figure to increase over the next year as management moves on plans for a pilot plant and accelerates business development activities.

A list of integrated graphene producers can be found here.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

This article was first published on the Small Cap Strategist weblog on 4/9/19 as part of the post “Integrated Graphene Producers.” 

The post Crystalline Graphite appeared first on Alternative Energy Stocks.