The Street, 4 October 2012
When Al Gore talks, people listen. Just ask the folks who hand out Academy Awards and Nobel Peace Prizes.
Al Gore also talks to investors. Since 2007, the former Vice President in Bill Clinton’s administration has been preaching the benefits of putting your money where his mouth is: Alternative energy.
But if Al Gore has any message for investors today, it might very well be this: “Stay the hell away from alternative energy!” Not that he would say so. At least out loud.
Reading through the promotional materials he puts out through his company, Generation Investment, it is hard to tell whether his “Client Update” is selling investments in his Climate Solutions Fund or memberships in the Sierra Club.
“Scientific fundamentals continue to point to a need for urgent action on climate,” Gore says. Just like his Oscar-winning movie, “An Inconvenient Truth,” it has lots of cool charts and graphics.
Climate policy is still firmly on the political agenda and corporate climate-related activity is increasingly strategic. Innovation is driving costs down and improving the business case for low carbon and high efficiency solutions.
This goes on for 20 pages. But even Gore does not seem to be listening any more.
Gore’s company files a quarterly report with the SEC that tells a different story about the 30 stocks in its portfolio. His company’s public investments in wind, solar, biomass and other alternative energy to combat climate change are practically non-existent.
But his portfolio is top-heavy in high-tech, medical instruments, and even more pedestrian investments in companies such as Amazon (AMZN), eBay (EBAY), Colgate Palmolive (CL), Nielsen (NLSN), Strayer University (STRA), and Qualcomm (QCOM).
He is also big in China, with stakes in a big Chinese travel agency, CTrip, and China’s largest medical equipment manufacturer, Mindray Medical.
And if you want a piece of the natural gas pipeline game — heavily dependent on the environmentally suspect fracking — you can find that in Gore’s portfolio as well with Quanta Services (PWR).
Generation Investment even had a piece of Staples (SPLS) at one point — but that was before anyone realized that was Mitt Romney’s love child.
Not an Apple (AAPL) to be found, despite the fact that Gore sits on its board of directors. But Generation Investment at one time did have a piece of General Electric (GE) and Procter & Gamble (PG) and that global warming game-changer, PayChex (PAYX).
This is “urgent action on climate”? If you say so, Mr. Gore.
If Generation Investment is a bit gun-shy on alternative energy, perhaps it is because of its catastrophic brush with First Solar.
Three years ago, First Solar seemed on its way: Interest in solar was at an all-time-high — as were subsidies for making, installing and using it. So America’s largest manufacturer of solar equipment seemed ready to cash in.
So did Generation Investment. According to SEC filings, Gore’s company bought 440,000 shares in late 2010 at about $130. By the first quarter of 2012, the value of First Solar — and just about every other solar manufacturer in America — had plummeted.
Generation Investment rode it all the way down, buying more and more shares as the price went lower and lower until finally it reached $25 in the first quarter of 2012. Generation Investment was holding 1.1 million shares worth about $28 million.
All this despite $3 billion in loan guarantees that kept many analysts talking about its great future. But the stock was always more popular with true believers in solar energy than with people who want to make money.
In the second quarter of this year, Gore et al. finally figured out what I have been saying to my clients, my listeners and my readers for two years: Alternative energy is a terrible investment and “sell everything under the sun.” That’s why I started shorting First Solar at $121 and kept shorting it all the way down to $33.
You can read about it in my SeekingAlpha article “How Does First Solar Survive?”