How do investors factor climate change into their stock-picking equation?
Corporations are catching on to the risks and opportunities of global warming.
from the March 12, 2007 edition
Page 3 of 3
Isn't that risky? For every company that grows like that there must be several that fail.
Patsky: We certainly advise any investor in our fund or in that space to be long-term oriented, because there's going to be volatility. For every two companies that end up being real successes and going up threefold, fourfold, there's going to be two or three that go bankrupt. We're hopefully out of them before that happens, but it is going to happen. An example of one that went terribly wrong was AstroPower, the No. 1 maker of photovoltaic cells. The biggest player in solar in the US went bankrupt just a few years ago with its assets acquired by GE. We were luckily not investors at the time. But it's a sign. Just because you have the industry growing rapidly doesn't mean everything's going to go up and everything's going to do well.
What specific companies do you like?
Patsy: We're currently holding REC, which is Renewable Energy Corp., out of Norway. They're producing silicon all the way to producing the solar cells. Because there's been a tight supply of silicon and the fact that they've had their own supply has been critical to their rapid growth. SunPower is a manufacturer of the solar cells and modules here in the US. That's another name that I think is a quality company and a solid player in solar. In wind, Gamesa has been a solid player in the business and wind turbines out of Spain. That's been a name that we've held.
Should investors look at innovative conventional energy companies, too?
Patsky: Coal will clean up its act. You'll see it become cleaner and cleaner because technologies are progressing. So it will remain a part of the energy equation. While the waste-disposal issue remains a problem, nuclear in terms of its carbon footprint looks attractive. So indeed, we may see commissioning of new nuclear power plants in the United States after many years of not seeing any.
If corporate America is becoming more green-conscious, will the mutual-fund industry follow?
Patsky: Yes. We are going to see many of the conventional mutual-fund houses starting to look at some of these external factors. It's becoming so obvious, they can't ignore it.
• Watch the entire conversation at: www.csmonitor.com/ethicalinvesting.
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