Clean Energy Fuels (CLNE)
By
Brendan Coffey, Analyst and Editor of
Cabot Green InvestorFrom Cabot Wealth Advisory, 2/19/09
Sign up for free Cabot Wealth Advisory e-newsletterFamed stock investor George Soros published his prescient book, "The New Paradigm for Financial Crisis: The Credit Crisis of 2008 and What it Means," early last year. His prediction was that a huge market bubble had formed thanks to loose government regulation of the financial industry and an ever widening expansion of credit to consumers and to Wall Street, which allowed the explosive growth in risky derivative products. Sounds right on the mark to me.
Soros also has an unmatched track record that doesn't rely on luck, most notably a correct bet against the valuation of the British pound that made him $1 billion in profits in one day in 1992. But perhaps Soros doesn't get as much notice as the doomsayers because he takes a more nuanced view of the position we're in. Beyond Soros' general belief in alternative energy, we don't know exactly what he is buying and selling right now, but regulatory filings do lend some insight.
One of his significant holdings reported in January is 56,306 shares in a company Cabot Green Investor subscribers learned of last summer—
Clean Energy Fuels (CLNE). Clean Energy Fuels distributes compressed natural gas (CNG) and liquefied natural gas (LNG) at 170 gas stations in the U.S. and Canada. Natural gas has two advantages—much of it is domestically produced and it burns much cleaner than diesel or gasoline, emitting just 30% of the carbon dioxide of gasoline.
Right now the biggest customers are fleet operators like UPS, Waste Management and municipalities, as well as airports and seaports that need to reduce their carbon footprint in order to expand. The Port of Los Angeles, for instance, now requires trucks and forklifts to be converted to natural gas. Clean Energy makes money by providing fueling stations at such locations, while also providing funding and expertise in securing government incentives to potential customers.
In total, all of its operations cost Clean Energy about $2.50 a gallon, so the economics don't appear so compelling right now. But consider that national truck emissions standards will tighten in 2010, permitting just one-third of 2007's allowable CO2 levels. That's so strict some conventional engine makers, like Caterpillar, have announced they are exiting the business rather than try and comply. Yet natural gas engines are already inside those 2010 limits.
So even if gasoline prices stay low, there is plenty of demand for compressed and liquefied natural gas (CNG and LNG, respectively). And if gasoline prices surge, as the IEA suggests they should? Then Soros' bet on Clean Energy Fuels will look, well, prescient.
Information on Cabot Green InvestorMore Cabot Wealth Advisory Featured StocksCabot Investing AdviceCabot HomeSign up for free Cabot Wealth Advisory e-newsletter