Last year, you didn’t need to sweat to find a winning solar stock. Everything went up, but that’s over now. The sector was taken down mercilessly in the first quarter, then lifted in recent weeks by bargain hunters.
"It’s become so volatile that you can hardly leave your screen for a minute,” said a hedge fund manager who prospects in alternative energy. Tired of the ups and downs, he’s putting more cash into wind shares.
This investor, whose firm looks after about $25 billion -- and who, like many hedgies, is not keen on seeing his name in the media –- laments that the wind industry has built five times the capacity of solar around the globe but sports a punier market cap. Soon the wind will blow the other way, he figures. He’s especially high on the largest players, the turbine makers and utilities, whose growth tends to be strong and steady, and the stocks less like thrill rides.
It doesn’t require vast sums or sprawling production lines to market solar cells. But it can take years, a mint’s worth of cash and a colossal manufacturing operation to set a wind farm in motion, ensuring that the business remains more an oligopoly than a free-for-all.
Owning entrenched turbine makers such as Denmark’s Vestas and Spain’s Gamesa helps this hedgie rest easy. Order books at these two companies are filled well into the future. Likewise, U.S. stalwart General Electric. Turbine sales were a standout in the conglomerate’s generally dismal first-quarter results, bolstering this investor’s view of the trend.
Forecasts for the windmill makers are still too low, he said. This year, “their margins will be better than expected because they’re running at full capacity.”>>>MORE
