Wednesday, April 16, 2008

Early Commentary on the Claymore Global Solar ETF (TAN)

TAN is trading at $27.07, up $1.10 on the day.
Here's our info post. QUOTE
(it started trading last night and printed a close of $28 up $2.03 on 98,000; I'm not sure if those numbers will be in the official tally, it traded NYSE Arca)

From The

New Solar ETF Helps Spread Sector's Risk
...The fund really is global: China is the largest country represented in the fund, at 29.91%, followed by Germany t 29.01% and the U.S. at 26.33%. Still, ex-U.S., TAN invests in only five countries.

The methodology for index construction is to select from companies that "specialize in providing solar energy products and services," subject them to common liquidity screens and then weight them by market capitalization (actually a modified market-cap weighting so that no one company has too great a weighting).

The fund has a weighted average market cap of $5.8 billion, a P/E of 44, 25 holdings and a cap on the expense ratio of 0.65%.

One little quirk is that there is no published back-test information (verified with a call to the fund)....MORE

From Schaeffers Research:
Time to Get a TAN? A Look at the Claymore/MAC Global Solar Energy Index ETF

...Nearly 43% of TAN's components are considered small-market-capitalization stocks, prompting me to ask Mr. Magoon if this was a reflection on the general "new awareness" of solar energy on the collective investing conscience. However, Mr. Magoon wanted to note that TAN actually is an "all-cap portfolio," with the minimum market capitalization for components set at $250 million. In fact, of the 25 components in TAN, the median capitalization comes in at $1.2 billion, with the average cap totaling $3.8 billion. The combined market capitalization of the 25 components in TAN is $95 billion.

A Comparison-

TAN is not the only ETF that plays on the collective green conscience of investors, as the PowerShares WilderHill Clean Energy Portfolio (PBW) is another that focuses on alternative energy. I asked Mr. Magoon how TAN is different from PBW.>>>MORE

From IndexUniverse:

...Magoon also cited an interesting statistic in "Profiting From Clean Energy," a new book by Melvin & Co. Research Director Richard Asplund, that the energy from the sun that reaches the Earth in one day could meet the energy needs of the world population for 27 years. Solar energy currently provides less than 1% of global electricity.

"You could see massive 50% or 60% annual growth rates for many years before solar energy would even be at a quarter of the world's electricity," Magoon said....

...Magoon said there are only about 200 publicly traded companies that have interests in solar energy worldwide, so the selection pool is somewhat limited. Nonetheless, the index's selection and weighting methodologies show a strong preference for pure-play companies, which MAC defines as companies deriving two-thirds or more of their revenues from solar energy. Companies deriving less than one-third of their revenues from solar energy are excluded from the index entirely. Currently, almost all of the components are classified as pure plays. Pure-play companies receive higher weightings within the index, but weightings are further adjusted to ensure the index complies with 1940 Act diversification regulations.

The current component list has a combined market capitalization of $95 billion, ranging in size from $250 million - which is actually the minimum threshold for inclusion - to $18 billion, Magoon said. Large-cap stocks represent 27% of the index, while mid caps have a 29% weighting and small-caps have a 42% weighting....MORE

From CNBC:

First on Fast Money: New ETF

Posted By:Lee Brodie
Topics:Alternative Energy | Stock Market | Stock Picks
Companies:Suntech Power Holdings Co., LTD. | First Solar, Inc.

“At its inception, TAN gives investors access to a global portfolio of 25 leading solar companies with a combined market capitalization of close to $100 billion,” explains Christian Magoon, President of Claymore Securities, in a first on Fast Money interview.

“The availability of this product acknowledges the maturing of the solar energy industry and investor interest in funding solar power development,” he adds

Top 5 Fund Holdings

First Solar - 8.77 %
Renewable Energy Corp - 7.45 %
Q-Cells - 6.44 %
Suntech Power Holdings - 6.19 %
Ja Solar Holdings - 5.25 %

Traders what do you think?

I’m skeptical of ETF’s in general, says Pete Najarian. The volume can get too shallow and they can get too expensive from time to time.

I’d buy puts on this ETF, says Karen Finerman.