International Investments Green Envy

by | Mar 29, 2007 | Archives

International investments can make many investment managers green with envy. With the help of Jyske Bank we track five multi currency portfolios each year. Currently, especially as equity markets have collapsed around the world, our green international investment portfolio is doing extremely well. Here is the growth each month since last November

Portfolio 2007
Dec 29
Jan 30
Feb 6
Feb 26
March 8
Green Portfolio

This should not be surprising. International investments in green are hot!

Green should be important. The world needs to solve its environmental problems and the push is on to do so.

For example a recent Orbus article about international investments entitled “God Save the Green” says

International Investments Quote:

“The United Kingdom has given itself the goal of deriving 20% of its electricity needs from renewable energy by 2020. This intended change in the way the British Isles are powered could affect the emission of greenhouse gases in a positive way – reducing them – while adding to the UK component countries’ efficiency, productivity, employment, and overall quality of life.”

The article told about the Solar Cities Congress, a gathering held at Oxford University with diverse attendees including builders, bankers, and government officials from around the world including China, South Korea, Brazil, Germany, and Italy.

The article outlined that this is not a fad. International investments in renewable energy is as real as the fossil fuels have been over past decades.

Hydrocarbon emission restrictions will increasingly reach every family and business in the world. Plus rising energy costs will make everyone think twice about wasting any fuel. This is why international investments in this sector are doing so well.

There are growing numbers of communities that are investing heavily in clean energy and lifestyles. One community in South London for example is a zero fossil fuel development. Some of the changes it has made include ventilation based on wind alone. Small turbines on each house refresh naturally and eliminate air conditioning. Grass roofs are added to absorb rainfall and reduce the risk of floods. They provide “sky gardens” for flowerbeds and a nice place to sit. Double-pane glass captures heat during the day and releases it at night. This reduces dependence on household fuel for comfort. Car pools allow residents to check out an automobile by the day. Public transportation is enhanced.

In Scotland ocean power includes tidal power, harvested primarily from sluices in estuaries, and wave power devices like OPD’s Pelamis Wave Energy Converter. The Pelamis generates 750 kilowatts of electricity, and its first commercial application (following successful testing) will be installed in Portugal, another country with enormous offshore wave energy potential. Once installed this summer, the Portuguese facility will provide enough power for 15,000 Portuguese households, displacing 60,000 tons of CO2 emissions per year.

A recent New York Times article entitled “NEW CONQUESTS; For Internet Barons, Uncharted Investment Territory” by Matt Richtel says: “Robert M. Metcalfe, Silicon Valley legend, creator of the Ethernet standard, founder of 3Com and now a venture capitalist, makes a bold prediction about technology investors’ next conquest. ‘We’re going to solve the energy problem in 30 years, just like we solved the Internet problem in 30 years.”

Silicon Valley has now shifted its focus from dotcom to alternate energy problems and investments.

Denmark now produces 20% of its electricity through wind turbines.

So international investing in green investments catches a huge trend. This is why the Green International Investments Portfolio we created and track has alternate energy companies from around the world.

Green International Investments Portfolio

Nov. 2006 Invested Amt
March 8, 2007 Value
FranceSeche Environnement
DenmarkNovozymes B
DenmarkVestas Wind Systems
JapanKurita Water Industry
GermanyQ-Cells Ag
SingaporeHyflux Ltd

Every international investment in this portfolio has performed well.

The three keys however to good international investments are:

#1: Catching the big trend (as green is).
#2: Finding good value.
#3: Good financial management or discipline.

This means that we should watch the price progression of all the international investments in our portfolios. Jyske Bank helps us a lot in this with their VAMOS system. Vamos stands for Value, Momentum and Strength. The bank monitors thousands of shares and provides investment suggestions about shares based on its weekly reviews.

This makes it worth noting that the bank recently sent a message that says: “NOVOZYMES – REDUCE.”

The bank believes that Novozymes shares are now overvalued. Their analysis says that the company’s 2007 outlook was in line with Jyske’s estimates but disappointed the market. The share originally increased due to focus on ethanol. Since President Bush’s ”State of the Union” address in late January 2006, the Novozymes share increased markedly due to the speech’s focus on the use of alternative fuels – including fuel ethanol – and a rising oil price.

Novozymes benefited from the heavy demand for fuel ethanol primarily in the US. In Jyske’s view, the high sales growth of enzymes for fuel ethanol is more than reflected in the current share price.

The bank says: “There are undoubtedly great perspectives in staking on extracting fuel ethanol from biomass, but as Novozymes and its rival Danisco/Genencor, among others, have indicated there is still a long way to go, before we will see the first viable commercial product in the market.

Jyske maintains a REDUCE recommendation due to a strained fundamental valuation and expects the share price to decline in the near future, but notes that Novozymes has a share buyback program of 2% of its share capital and this is expected to support the share.

Jyske’s Overview of Novozymes says:

* Novozymes A/S is the world’s leading supplier of industrial enzymes. Also in the area of micro-organisms, which has been established through acquisitions of companies, Novozymes has a leading position. Furthermore the company has defined biopolymers and pharmaceutical proteins as strategic focus areas within which research and acquisitions will take place.

* Industrial enzymes are today used in a wide range of industries and since industrial enzymes in many cases facilitate the work process, make it more profitable or are much more environmentally friendly than their alternatives (chemicals), the potential of enzymes in Jyske’s opinion are far from exhausted.

* The company has established strong strategic partnerships with leading companies within various business segments and it holds more than 4,000 active and issued patents and patent applications and a number of license rights.

* Novozymes operates in attractive markets where the company will be able to maintain high organic growth of 8-9% over a number of years.

* The company is able to go on improving productivity, which will ensure a continuing high profit ratio.

* Ongoing productivity improvements result in a low investment level, which in combination with a stable cash flow from operations will generate a positive cash flow.

Despite the above factors, the valuation of the share is assessed to be strained because:

* Weakening of the main currencies USD and JPY.

* Heavy focus on a few customers within enzymes for the detergent industry (Procter & Gamble, Unilever). The proportion of sales generated from these is, however, declining steadily.

* Lack of success within product development.

* The debate regarding gene-manipulated organisms spreading to the enzyme area.

* The sales and earnings growth are not stabilized.

* Keener competition due to new global players in the market.

You can learn why green performance is so vital now in a sixteen page email report about how 13 economic forces now clash to shape investments markets. The report also outlines the five new Multi-Currency Portfolios we are tracking in our Borrow Low-Deposit High Multi-Currency Sandwich Educational Service. To learn more about International Investments

Join us for our updated May 25 – 27, 2007 International Investments Course in North Carolina. Thomas Fischer joins me to update global economics there. We will update our International investment portfolio there.