Tag Archives: alternative
Column: Housing Rebound Boosts Timber Stocks
By John Wasik CHICAGO | Mon Jun 3, 2013 4:42pm EDT (Reuters) – If a tree falls in the forest, can you make a little money? As the U.S. housing rebound continues, you can watch the value of your real estate rise. In addition you can reap gains from resource companies that own and process timber. Since most U.S. homes are still framed with wood, timber becomes a more valuable commodity as new construction booms. Home prices gained the most in seven years in March, according to a recent S&P Case-Shiller housing index report. Housing starts in April rose 16 percent over the previous month with new building permits up 14 percent, according to the U.S. Census Bureau. North American sawmills are running at the fastest pace in six years, up nearly 7 percent over last year, according to CIBC World Markets , a Canada-based investment bank. Growth in China is also contributing to the rebound. More than 60 percent of log exports from the Pacific Northwest head to the People’s Republic. Timber is also becoming more scarce as forests shrink. As a commodity, it provides an inflation hedge, too; the S&P Global Timber & Forestry index has produced an annualized return of nearly 7 percent over the past three years through April 30. The current Consumer Price Index is running at an average 1 percent. Why invest in timber and related resource companies instead of the obvious play in homebuilder stocks ? Those companies have been rallying for more than a year and are pricey. The SPDR S&P Homebuilders ETF, for example, a fund that holds most of the major home-construction companies, is up more than 50 percent over the past year through Friday, almost double the price of a consumer cyclical index. That portfolio’s price- earnings ratio – what investors are willing to pay for a dollar of expected earnings – is 20, compared to 14.4, for the SP 500. The underlying S&P index for the timber sector has climbed more than 31 percent over the past year through May 31 compared to a nearly 50-percent gain for the S&P Homebuilders Index. The iShares Global Timber and Forestry Index ETF (WOOD), has p/e of 18; that’s not a bargain price either, but timber stocks are a better value now relative to homebuilding stocks and may have more upside. REGIONAL VIEW Most timber companies specialize in specific regions where they own or lease properties. But to obtain global diversification, it’s best to consider one of two exchange-traded funds on the market that hold timber, packaging and real estate investment trusts (REITs) that own lumber resources. The Guggenheim Timber ETF, holds major producers like Weyerhaeuser Co and International Paper Co. It tracks the Beacon Global Timber Index, which holds companies that own or lease forested land or produce wood-based products. More than 40 percent of the companies are based in greater Europe or Asia. It’s up 8 percent year to date through May 31 and gained 25 percent last year. As an alternative, the iShares timber ETF mentioned above has more than 60 percent of its holdings in the Americas, including Plum Creek Timber Company Inc and Potlatch Corp . The iShares fund is a better deal on expenses than the Guggenheim product, charging 0.48 percent annually for management, compared to 0.70 percent for the Guggenheim fund. It’s gained 4 percent year to date and 23 percent last year. Of the two ETFs, the iShares fund offers more total international exposure, including 13 percent stakes in Brazilian companies and 11 percent in Japan , says Eric Dutram, ETF analyst at Zacks Investment Research in Chicago. Either way, the two funds are reasonably priced, he said. Many timber companies give you a bonus if they’re vertically integrated. They could mean they are producing value-added products like rayon, packaging or paper, which also would benefit from a broad economic recovery. These companies may also own or lease land that may result in other mineral plays such as petroleum or natural gas . Keep in mind that timber trends can cut the other way. As funds specializing in a handful of commodities that rise and fall directly with economic demand, these ETFs are not for nervous investors. Guggenenheim Timber lost nearly half its value in 2008 and has a 32-percent five-year standard deviation, a volatility gauge. That compares to 20 percent for a world natural resources stock index. If the housing market goes south again, then these ETFs will suffer. Consider them only as small parts of a larger portfolio and not large holdings. (The author is a Reuters columnist and the opinions expressed are his own. For more from John Wasik see link.reuters.com/syk97s ) (Follow us @ReutersMoney or here Editing by Linda Stern and Andrew Hay) Continue reading
Accelerating The Clean Energy Revolution With CA’s Cap-And-Trade
une 3, 2013 By Emily Reyna Emily Reyna Senior Manager of Partnerships & Alliances for CA’s Climate & Air Team, Environmental Defense Fund Six months ago, California launched the largest economy-wide cap-and-trade program in the world, in what many have deemed a grand experiment . Many people watched nervously as the market unfolded, despite California having applied the lessons learned from the growing pains of the EU ETS and from six years of crafting the market rules in consultation with the state’s – and the world’s – leading experts. Results from the first and second auctions eased those initial fears and today’s results continue to affirm the presence of a strong and viable market. That’s good news for California. Auction Results The third auction held on Thursday, May 16 th offered 14.5 million 2013 allowances for sale and 9.56 million 2016 allowances. So, what happened? Summary Allowance year Allowances offered Allowances sold Settlement price 2013 14,522,048 100% $14.00 2016 9,560,000 78.6% $10.71 Participation: Overall participation was high, with almost 1.8 times more credits bid on than were sold. A diverse array of 81 entities were approved to bid in the auction. Current (2013) vs. Future (2016) vintage allowances: All of the 2013 allowances sold, while almost 80% of the 2016 allowances sold, an indicator that there is solid confidence the program will still be around. Entities are keeping their options open in not buying all available allowances for use three years out, which makes sense given the multiple options for achieving compliance. Clearing price: As expected , the clearing price for 2013 allowances was high, settling at approximately 30% above the auction price floor of $10.71. Because 2016 allowances did not sell out, their clearing price remained at the floor of $10.71. Auction proceeds: By selling more than 10 million state-controlled allowances, California’s third auction raised over $117 million – that will be used to advance the goals of AB 32, to reduce climate pollution. The budget is still being finalized for this year, but at least 25% of the auction proceeds (or $64 million to date) must benefit disadvantaged communities. Three Reasons the Momentum Is Here to Stay California’s program is proving to be a strong model for replication elsewhere : Others are watching California’s program closely. In a short period, a price on carbon has been established, all credits at the first three auctions were sold above the floor price, and most importantly, we have begun the process of breaking California’s dependence on fossil fuels and seen a decrease in carbon emissions. Next year, Quebec will link with California’s market – a first step towards a broader carbon market, and potential blueprint for other states and provinces to join the program. Innovation : Smart companies are innovating to reduce their emissions. For example, Kroger Company uses an anaerobic digester in Compton, California to convert spoiled food to energy , generating 13 million kilowatt-hours of electricity a year. Unleashing this type of innovation accelerates the clean energy revolution and puts us further along the path to meeting the state’s aggressive climate goals. Future Leadership : Today, EDF kicked off its sixth year of EDF Climate Corps , an innovative fellowship program that places grad students in companies, cities and universities to identify energy savings within those organizations. This year, 116 graduate students will be working in over 100 organizations this summer — 19 in California — including Apple, Adidas and the Los Angeles Community College System. Many of the alumni continue the work they do in corporate, public and non-profit spaces to address the largest environmental issue of our time. As Van Jones said at the Greenlining Institute Summit recently, “Young people are fighting for us.” We have solid reasons to be optimistic about California’s carbon market, and the continued growth of the clean energy economy. The skeptics aren’t staying silent, but their case is losing steam. After all, facts are facts, and for Emily Reyna is the Senior Manager of Partnerships and Alliances for California’s Climate & Air team in the San Francisco office. In this role, Emily is responsible for engaging and forging common ground with businesses and other key stakeholders to further EDF’s work on implementation of California’s Global Warming Solutions Act (AB 32). Emily previously worked in EDF’s Corporate Partnership’s Program on EDF Climate Corps , an innovative program that places specially-trained MBA and MPA students in companies, cities and universities to build the business case for energy efficiency.California, today’s auction results proved once again the numbers are on our side. Continue reading
Agriculture – Africa’s Orphan Crops
A leading plant scientist is planning to map and then give away the genetic data of 100 traditional crops such as sweet potato, cassava, groundnut, asyam and finger millet. The aforementioned crops are often referred to as “orphan crops” due to the fact that they have been largely disregarded by governments, scientists and seed companies even though approximately 250 million smallholder farmers depend on them for income, food security and nutrition. Howard-Yana Shapiro, a vegan hippy scientist and agriculture director of the $36bn US confectionary corporation Mars spearheaded a partnership in 2010 that sequenced and published the complete genome of the cocoa tree from which chocolate is made and who now plans to sequence and publish the genetic makeup of Africa’s “orphan crops”. Shapiro believes in the enormous potential for developing higher-yielding and more resilient varieties of a large number of the orphan crops by merging traditional plant breeding methods with new biotech tools like “genetic marking” which doesn’t in any way alter or insert new genes in the same way that genetic modification does. Shapiro feels very deeply about the stunting caused by malnutrition which affects around 30% of African children so believes that by improving the crops the African orphan crop consortium, which includes organisations such as the conservation group WWF and Life Technologies, they can eradicate the “plague” that costs Africa $125bn annually. He plans to begin with genomics, then analysis, then to plant breeders, then to the field, then the seed companies and then to the farms. “The genetic information will be put on the web and offered free to plant breeders, seed companies and farmers on condition it is not patented. A new African plant-breeding academy will also be set up in Nairobi, Kenya,” he said. “It’s not charity. It’s a gift. Its an improvement of African agriculture. These crops will never be worked on by the big five [seed] companies. They don’t see them as competition.” Investments in African agriculture is going to be a key topic at the G8 hunger summit, which is taking place in Northern Ireland this coming weekend and will be attended by governments and 45 of the biggest agribusiness corporations who are expected to reveal initiatives to enhance African farming. Continue reading
