Cleantech Vet Candid On Green Investing

Apr 11 2008 | 2:00am ET

Public investing on Wall Street is a funny thing, and knowing or understanding reality has very little to do with making money, according to one former Wall Street analyst and clean technology expert. In fact, David Kurzman, senior vice president of the Clean Technology Research Group at Panel Intelligence, believes that reality can actually be a detriment to making money in the short term.
“It doesn’t matter whether a technology works, if a company has the best or worst strategic partner in the world, or if there’s a commercial viability in the near future,” Kurzman told attendees at the Wall Street Green Trading Summit in New York last week. “So what’s left? Well, it’s really down to what the next investor is willing to pay you for that security.”
So where are the opportunities for investors in this space?
Kurzman thinks controlling and reducing carbon dioxide emissions is going to be a “huge opportunity,” specifically via sequestration, which is the long-term storage of carbon so that the buildup of CO2 in the atmosphere will be slowed or reduced. Another promising way to reduce CO2 emissions is gasification, which is a process that converts materials such as coal, petroleum, or biomass into carbon monoxide and hydrogen.
He also says solar-related stocks have started to rebound and investors should look at “the biggest and cheapest” of those stocks as well as those with subsidiaries that have hidden assets or will go public.

Another sector he likes is power storage. “Hybrid electric vehicle batteries will be a huge winner,” he said, adding that investors should watch for when the private investors make their exits though IPOs or company sales.

In general, Kurzman looks for multi-billion or trillion dollar opportunities, while dismissing the $100 million or $200 million industries.
And what sectors should investors avoid in the short term?
Kurzman explained that the silicon shortage was now officially over, and those who bet otherwise were going to be very disappointed.
“Companies are starting to cancel orders for polysilicon, and a bust cycle tends to follow a boom cycle, and this is a meaningful risk,” he said. “However, some investors have exposure to the polysilicon spot market, and those who do could see their margins benefit as polysilicon prices decline.”

Finally, Kurzman brought up two barriers to the commercial adoption of hydrogen fuel as a replacement to fossil fuels. First, hydrogen generated from renewable power sources is “largely a niche opportunity” and is not a solution to fuel dependency or global warming. Second, there is a perception that it is dangerous.

“The magic in this area is how hydrogen is going to be perceived by investors, and unfortunately, investors still feel that hydrogen is more dangerous than gasoline or natural gas,” he said, adding that the physics behind it tells us that it is less dangerous.

 “A lot of people don’t want to hear that, but sometimes the truth can give opportunities to long-term investors,” he said.

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