Earth Day Tainted By Billions In Alternative Energy Losses (FAN, QLCN, TAN, KWT, PWND, PBW, FSLR, SPWR, WFR, XOM, CVX, BP, CREE, TSLA)

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Earth Day is April 22, 2012, which is this Sunday.  Many Americans and many people elsewhere will be thinking about how they can be more green.  Sadly, there are going to be many investors who are going to be wishing that they had their greenbacks back from investing in green energy.  This not meant as any bashing over the Solyndra SNAFU nor about the value erosion in ethanol and other alternative energy sources, but the public needs to know just how much money has been lost in the exchange-traded funds and stocks that track “going green.”  Then think about the large companies and the open-ended mutual funds which track green investing.

If you combine the losses in the major stocks around solar, wind, and other alternative energies, the losses are billions and billions of dollars in the American companies alone.  We have outlined the profile of each exchange traded fund and we have covered some of the losses elsewhere.  We have tracked 20 stocks in a portfolio over the last year in the alternative energy sector and it is shocking that only 4 of the 20 stocks are not down by more than 50% from their 52-week highs.  It is even worse that 10 of the 20 stocks are down by at least 70% from their 52-week highs if you include the implosions.

We used FinViz performance metrics for the returns, or a lack of returns.  We counted the assets under management directly from each ETF’s website, although we would note that outflows of assets have been seen on top of absolute losses in share price.

First Trust Global Wind Energy (AMEX: FAN) is full of mostly foreign issue holdings and even the king of wind power called Vestas in Europe only has about a 6% weighting with other names coming from Europe and China.  On Friday morning it was trading at $7.17 versus a 52-week range of $7.09 to $12.20.  The loss here over the last year is about 38%.  Assets under management: $24.8 million

First Trust NASDAQ Clean Edge Green Energy Index (NASDAQ: QCLN) is very thinly traded and at $10.10 on Friday it has a 52-week range of $9.00 to $17.02.  It aims to track the NASDAQ Clean Edge Green Energy Index and is supposed to invest at least 90% of assets in common stocks that comprise the index.  Some names are not exactly what investors might consider as green, but Cree, Inc. (NASDAQ: CREE) and Tesla Motors, Inc. (NASDAQ: TSLA) are each weighted more than 7%.  The loss here is 36.6% over the last year.  Assets under management: $18.7 million

Guggenheim Solar (AMEX: TAN) is full of solar stocks which are both domestic and also trade as ADRs from foreign issues which you probably know well if you follow the solar sector.  It invests at least 90% of its assets in common stocks which make up the MAC Global Solar Energy Index.  At $22.77, the 52-week trading range is $22.00 to $88.70 and this has lost 69% over the last year.  Assets under management: $60.7 million

Market Vectors Solar Energy ETF (AMEX: KWT) is also full of solar stocks, but many do not trade in the United States.  The Van Eck Global ETF aims to track the Ardour Solar Energy Index and puts at least 80% of its assets into common stocks in the index.  At $3.39 it has a 52-week range of $3.29 to $13.08 and this one is down 69.9% from a year ago. Assets under management: $12.7 million

PowerShares Global Wind Energy (NASDAQ: PWND) is thinly traded and aims to track the NASDAQ OMX Clean Edge Global Wind Energy Index.  The ETF is full of companies which are not US-based and which are not even traded in the U.S. markets. The top 5 names account for more than 40% weighting and the names are China Longyuan Power Group, EDP Renovaveis, ENEL Green Power, Vestas Wind Systems, and China High Speed Transmission Equipment.  At $6.49, its 52-week range is $6.41 to $11.29, and the shares are down 40.8% from a year ago. Assets under management: $13.4 million

PowerShares WilderHill Clean Energy (AMEX: PBW) invests in all forms of clean energy and invests in companies globally.  Eight of ten of its largest weightings do trade in the U.S. and it invests 80% of its assets into common stocks in the WilderHill Clean Energy Index.  At $5.15 it has a 52-week trading range of $4.80 to $10.38 and it is down over 46% over the last year.  Assets under management: $181.1 million

The only good news about the current value of more than $300 million ETFs above is that they have at least not fallen anywhere near as much as some of the key companies which Americans have tried to invest their retirement and speculative money in.

First Solar, Inc. (NASDAQ: FSLR) is down over 84% over the last year and it still has a market value of $1.8 billion.  The loss here is about $8 billion over the last year in what is supposed to be America’s best solar bet.  First Solar generated $2.76 billion in sales in 2011.  It is currently among the worst stock charts in technology.

SunPower Corporation (NASDAQ: SPWR) received a huge purchase of a majority stake by Total but that has not kept its shares from sliding and sliding.  At $5.62, its 52-week range is $4.94 to $22.36, and shares are down over 63% over the last year and Total is down probably about 70% in value on this one.  Its market value is now barely $650 million but it generated over $2.1 billion in sales in 2011.

MEMC Electronic Materials Inc. (NYSE: WFR) is down 69% over the last year and at $3.50 its 52-week range is $3.31 to $12.00.  Its market value is still more than $800 million and its total revenue in 2011 was $2.71 billion.  The loss is far worse when you consider that this was a $90 stock at the peak of the alternative energy and oil boom in 2008.

The losses here have been in the billions and it only scratches the surface on the alternative energy sector losses.  This takes no consideration of the disappearance of Evergreen Solar, Energy Conversion, Solyndra, and Solar Trust.  This also skips over the ethanol losses as well. We do not want to only seem one-sided here even if billions upon billions of real money has been lost in the alternative energy sector that is reminiscent of the losses after the dot-com bubble burst a decade ago.  Some of the blame may be austerity and Chinese dumping, but investor losses do not come with an asterisk in the monthly statements.

The losses in alternative energy are massive, but oil companies have generated trillions of dollars in sales. Exxon Mobil Corporation (NYSE: XOM) is worth $401 billion in market value and sales for all of 2011 were $486.4 billion.  Chevron Corporation (NYSE: CVX) is worth about $203 billion in market value and it generated $253.7 billion in sales in 2011.  This also marks the two-year anniversary of the BP PLC (NYSE: BP) oil spill in the Gulf of Mexico, and BP generated the equivalent of $375 billion in sales in 2011.

It is sad to make jokes about losses this big, but a couple quickly come to mind:

  • Alternative energy stocks and ETFs have turned 401K plans into 201K or 101K plans.
  • How do make a small fortune? Take a large fortune and buy some alternative energy funds.

JON C. OGG

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