1 / 28

Rebalancing the Balance Sheet: Environmental Risks & Opportunities in Global Equities

Rebalancing the Balance Sheet: Environmental Risks & Opportunities in Global Equities. SRI in the Rockies – October 5, 2011 Jan Schalkwijk, CFA Portfolio Manager. What does it feel like to be an Equity Manager?. WE ARE ALL GOING TO DIE!!. Investor Fatigue. Why Invest in Equities?.

gerard
Download Presentation

Rebalancing the Balance Sheet: Environmental Risks & Opportunities in Global Equities

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Rebalancing the Balance Sheet: Environmental Risks & Opportunities in Global Equities SRI in the Rockies – October 5, 2011 Jan Schalkwijk, CFA Portfolio Manager

  2. What does it feel like to be an Equity Manager? WE ARE ALL GOING TO DIE!!

  3. Investor Fatigue

  4. Why Invest in Equities?

  5. Problem: Limits to (traditional) Growth

  6. Rise of a Global Middle Class 2005 - 2010, 500m people escaped extreme hardship, as world's poor fell to 878m. “Never before in history have so many people been lifted out of poverty in such a short period.” India, China, Bangladesh, Tanzania, Ethiopia, Vietnam, Uganda, Mozambique, Uzbekistan – 2/3s of the world's poor in 2005 - experiencing rapid economic growth “By 2030 the global middle class is projected to double in size to 5 billion plus – a surge unseen since the Industrial Revolution.” Christian Science Monitor. Source: Laurence Chandy and Geoffrey Gertz Brookings Institution.

  7. Solutions • Conserve Baby, Conserve! • Invent Baby, Invent! • Drill Baby, Drill!

  8. Considering Environmental RiskThe Business Case

  9. BP 1.5 Years Later Gulf Has reopened for exploration Company is out of daily news Has the stock recovered?

  10. Tokyo Electric Power Co (TEPCO) 2002 TEPCO admits 20-year stretch of falsifying nuclear inspection records 2007 Internal investigations reveals numerous unreported safety incidents. No one held responsible 2008 TEPCO misleads govt over extent of fuel leak at Kashiwazaki-Kariwa plant 2011 – FUKUSHIMA. Co’s response is tragically incompetent

  11. Tokyo Electric Power Co (TEPCO) • 9/30/11 Yomiuri Newspaper: TEPCO damages to exceed $59 billion. Co is effectively a “zombie company” • Stock price down 90% since accident • Trades at 0.24x book value, vs. 1x book for sector

  12. German Nuclear Power Operators Germany to phase out nuclear by 2022 Power companies affected: EON, RWE, EnBW Introduces uncertainty: how to value co’s nuclear assets, revenue impact, future legislation?

  13. Rethinking Energy Sources: New Energy Finance: February 2010, Dr. Jane Woodward Stanford University Credit Suisse (est. of LCOE of Energy Efficiency) • 77% of energy infrastructure needed by 2030 has yet to be built • ≈ 2% of current global electricity comes from renewables • Carbon constrained future seems inevitable • Energy efficiency is cheapest form of Energy (≈ 1.5c/kWh)

  14. An Example: Solar

  15. People’s Republic of Solar Greater than 2/3 of Solar Production is in China U.S. Solar Bankruptcies: Evergreen Solar, Solyndra, SpectraWatt European solar companies eliminating manufacturing jobs (i.e. REC Solar) Chinese solar stocks down 65-75% ytd vs sector down 55%. P/Es in the 1-3x range

  16. Why Invest in Energy Efficiency? 1% Efficiency Source: Dr. Jane Woodward Stanford University

  17. “Risk on” / “Risk OFF”

  18. Political Headwinds

  19. Key Points Environmental Risk is not fully reflected in share prices  Market inefficient at pricing env’tal risk Macro challenge of the 21st Century increase global prosperity while creating an economy within the physical limits of the planet  Green Economy has to happen Green stocks are cheap due to sector pessimism and “risk off” trade  A good time to buy for long-term investors?

  20. Thank You! Phone: (503) 719-6841 Email: info@jpsglobalinvest.com Website: http://www.jpsglobalinvest.com Twitter: http://twitter.com/greenstockguy Contact info

  21. Appendix Wind Energy Green Economy Defined

  22. Wind Turbines: A Matter of Esthetics? Pretty? Ugly? “In China [..] people go to wind farms to have wedding pictures taken.” – Steve Sawyer, Global Wind Energy Council

  23. Winds of Change VESTAS DENMARK SINOVEL CHINA GE UNITED STATES GOLDWIND CHINA ENERCON CHINA SUZLON INDIA DONGFANG ELECTRIC CHINA GAMESA SPAIN SIEMENS GERMANY United Power CHINA Top 10 by 2010 installed capacity Source:BTM Consult

  24. The Green Economy Defined

More Related