Investing Workshop on Alternative Energy
Community Leaders Hold Investing Workshop on Alternative Energy
By Shane G. Yonston & Judith L. Seid
March 6, 2006
Carlsbad, CA - Blue Summit Wealth Management, a San Diego-based financial services firm specializing in Socially Responsible Investing (SRI), hosted a workshop for their clients and interested community leaders on alternative energy last Monday evening.
"We're really focusing efforts this year on educating our clients and the community on forward looking issues and where potential opportunities in those areas exist today," remarked Judith Seid, CFPï¿½ and founding partner of Blue Summit Wealth Management.
Alternative energy is a sector of the market that has been volatile over the last few decades but that we're seeing gain a lot of traction recently with improved technologies and rising oil prices. "If we can take advantage at the beginning of the growth curve while promoting more environmentally friendly business at the same time, it really becomes a win-win for our clients," noted Shane Yonston, Judith's business partner who heads up the Carlsbad office where the workshop was held.
Guest speakers at the event included Dr. Robert Wilder, CEO and founder of Wildershares LLC, and Mark Snyder, owner of Mark Snyder Electric. WilderShares is an alternative energy index fund that tracks only companies that are "pure plays," or in other words they do not also produce goods or services relating to petroleum-based energy production. Mark Snyder electric is a full service electrical contracting and alternative energy parts distribution business and has been providing such services for almost thirty years to San Diego County.
Shane Yonston made opening remarks in an informal setting with 22 attendees, seated tightly in the seminar room. He spoke more to the theory behind Peak Oil, declaring, "There's never been any question if we're going to run out of oil; the debate is when."
Peak Oil is a theory predicting the inflection point in society when half of the world's source of oil are consumed, and the rising price deters demand, thereby slowing its use in society. This theory was developed by the late geophysisict, Dr. M. King Hubbert, in his famous research paper in 1956. It was notably the most comprehensive study of its kind at the time, incorporating over 100 years of data on oil consumption. The paper likens oil use to a bell curve, where, in the beginning decades, society consumes petroleum-based products in an ever-more rapid trend until, at the pleateau or height of oil production, we reach a "peak." This peak is considered the halfway point for the planet's supply of this non-renewable energy source. "At this point," notes Shane, "the pricing of oil-based products rises to a level where it becomes more financially logical for consumers to demand alternative products." While forecasters' exact date may vary for this point, most analysts give a range of anywhere between 2000-2060. "Either way, the peak oil production point will be reached within the lifetime of those already born."
Dr. Wilder was the first guest speaker, offering an insight to the investment opportunities that this trend is opening up to. With a PhD in environmental science and a background as a professor, Wilder uses his academic research skills to sort through company patent holdings to determine companies' technological foundations in their respective niches. While the fund is an index, and therefore not managed in an attempt to pick the "best" stocks to own based on their likelihood of success; the fund does strive to follow the sector as tightly as possible.
"I always tell people not to invest in my fund," says Wilder, "It's very volatile, investing in all small and mid-sized companies. It can drop like a rock at any moment." Despite Wilder's modest air and denouncement of investor worthiness, the fund has had an impressive first year, attracting more than $400 Million since its inception in April of last year.
"I think the two main reasons that we've been successful are first, there's no real competition. Second, we have a very low correlation with the rest of the market."
WilderHill Clean Energy Index is the only ETF that captures solely pure alternative energy companies without including larger conglomerates that, while they may have huge alternative energy divisions, largely are traditional oil-based producers.
For this reason, along with the funds low correlation factor, it has been an attractive addition to many larger institutional portfolios.
In addition to Wilder's stated causes for success, the general upward trend of the alternative energy sector likely plays a role as well. Clean Edge, a Portland, Oregon-based research firm published their Clean Energy Trends report last Monday, predicting growth of global revenues from $40 billion in 2005 to $167 billion in 2015 going into biofuels, solar energy, wind power, and fuel cells. Ron Pernick, a principal with Clean Edge, quoted current growth rates at 30%.
After Dr. Wilder fielded several questions on his fund and the industry on a whole, Mark Snyder followed with a brief description of how he's seen different technologies come and go over the years. Snyder has been a major player in the practical application of alternative energy products both locally and nationally for almost 30 years.
"Many times it's as simple as having the windows of your home facing the right direction but it's something that many architects and home builders do not consider today," he remarked, "we're starting to see the houses of tomorrow being designed and guess what; they look like the houses of yesterday."
In addition to vying for legislative measures on alternative energy policies and taking an active role with Willie Nelson's BioWillie Diesel Company, Snyder consults individuals and businesses on how they can operate more sustainably and efficiently.
"By offering people a cost benefit analysis of things people can do to use less energy, often times we're able to cut 20-25% on monthly energy costs without any out-of-pocket expense up front," proclaimed Snyder.
The workshop continued with Q&A until after 10:00 PM when the offices finally needed to be closed for the night. Blue Summit's will continue their quarterly educational workshops with the next one scheduled for June to cover sustainable real estate.
To learn more about alternative energy or other socially responsible investments, please contact Blue Summit Wealth Management at firstname.lastname@example.org or 888-698-4330.