Seidman Investment Portfolio Organization

 

Company: PowerShares WilderHill Clean Energy ETF 
 
Sector: Energy (Public, AMEX: PBW)

Winter 2010 Sell Summary By: Matt Weller
 
We chose to sell the PowerShares WilderHill Clean Energy ETF (PBW) primarily because of uncertainty regarding its prospects and a desire to diversify out of the clean energy sector.  The entire energy sector is currently mired in uncertainty, with investors hesitant to invest until the outcome of climate change legislation (“cap and trade”) is clear.  The prospect for near-term clarity in Washington is bleak, with a polarizing health care bill currently stalled in Congress and elections upcoming at the end of the year.  In addition, with recent scandals surrounding the efficacy of climate change studies and uncertainty regarding peak oil, we determined that minimizing exposure to the clean energy sector is the prudent course of action.  Finally, our allocation to “green” and energy stocks (including PBW, ITRI, PTR, and CPL) stood at an unprecedented high of 28% of our portfolio before the sale.  This statistic is especially alarming, given the fact that the majority of these holdings’ movement in the coming years is likely to be linked to the highly volatile price of oil (and to each other).
 


Holding Summary:

PBW is an ETF that attempts to mirror the WilderHill New Energy Global Innovation Index, a collection of companies focused on renewable energy and curbing the effects of climate change. Holdings come from a variety of green sectors, including wind and smart grid technologies. However, PBW's largest holdings are in the field of solar technology.


      With the passage of cap and trade laws, alternative energy companies should see increased interest in the coming years. The 2010 federal budget calls for a $15 billion annual investment in clean energy funded through the sale of emissions credits. This is expected to continue for 10 years.  While it is difficult to predict which specific companies will succeed, the green sector as a whole looks promising.


 

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