Welcome to WallStreetOasis.com's latest This Week in Finance newsletter, where we profile the hottest investment ideas, substantive market data, incisive financial blogging, and the best under-the-radar research Wall Street has to offer.
Investments: Want to make green? Go green!
With oil trading at over $130 per barrel, gas prices in the United States straddling the $4/gallon line, and inflation worries moving to the forefront of the macroeconomic landscape, it’s little wonder that alternative, sustainable energy is a very hot topic. Couple this with issues such as global warming concerns, the organic food movement, and pressure on governments to take action on the environment, and it becomes clear that the “green” movement is here to stay. This simple understanding, however, does not an easy investment decision make. In the energy sector alone, solar, water, wind, and biofuels, among others, compete for alternative energy market share while many companies around the world compete for slices within each subsector. The question left to be answered, therefore, how do you turn this trend into personal profit?
Any assessment of potential investments should begin with an analysis of risk – how much money could you lose? Given the high level of individual company failure due to significant start-up costs, very competitive markets, cost sensitivity, reliance on innovation, and regulatory issues, investing on an individual company level is extremely risky. However, for those out there who understand the science involved and can stomach the volatility, it could pay off handsomely. SustainableBusiness.com has a nice list of green companies that could provide this risky upside. BloggingStocks.com has an entire category dedicated to environmentally friendly stocks and contains good analysis that could generate some solid investment ideas within the sector.
I personally prefer a more diversified approach, and there are multiple index ETFs that give you exposure to the growth and momentum of these industries without taking too much of the individual company risk. ETFTrends.com has a category dedicated to socially responsible funds that goes through a number of these investments. ETFConnect is a great place to dig deeper on any exchange-traded or closed-end fund you may be interested in, showing top holdings, historical performance, premium/discount, and lots of other information. More and more money is flowing into green stocks from new hedge funds and mutual funds dedicated to these types of investments - and investing with wind at your back is always preferable.
Research of the Week: Focus on the filings
A 13F is a quarterly report filed with the SEC detailing the complete stock holdings of any entity with at least $100 million in equity assets under management. Using these filings, you can find the complete holdings of top money managers and also find who the significant owners of any stock are. "Crowded" trades are a big issue in equity investing, and utilizing this type of analysis is helpful in determining how concentrated the ownership of a stock is, and thus how painful a large sell-off could be.
J3 Services Group offers J3SG.com, a great site to easily navigate through this data. The site allows you to do plain vanilla searches, as well as set up "peer groups" that show common positions among selected institutions, conduct ratio analysis to better understand market sentiment, and view insider trades to see which companies' officers are buying or selling their own stock. There are also more advanced premium services, for those interested.
Blog-Wrap: Stocks haven't bottomed
The Big Picture examines how the recent large drops in the S&P 500 (mid-August 2007, mid-January 2008, mid-March 2008) have been accompanied by large spikes in the VIX Index, which measures the implied volatility on S&P 500 options. The level of the VIX is a good measure of fear in the market, and its sustained low levels during the most recent downdraft in the S&P signify a seemingly slower and more systematic sell-off. Given that a market bottom is rarely reached without a significant uptick in volatility (read: panic), there seems to be more trouble on the horizon.
TWIF Notes: Signs of the Apocalypse
A reality show called Traders (modeled after The Apprentice) is filming, where young go-getters try to make money for a hedge fund manager.
Warren Buffett: 88% cheaper than a year ago.
New WSO Recruiter Database
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Questions? Comments? Send an e-mail to Hedgehog@WallStreetOasis.com or send a private message to him at WallStreetOasis.com. To read previous issues of This Week in Finance please click here: http://www.wallstreetoasis.com/xtracker/type/simplenews
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