Jim Chanos is the founder and Managing Partner of Kynikos Associates, the largest exclusive short selling investment firm. Chanos opened Kynikos Associates in 1985 to implement investment strategies he had uncovered while beginning his Wall Street career as a financial analyst with Paine Webber, Gilford Securities and Deutsche Bank. Throughout his investment career, Chanos has identified and sold short the shares of numerous well-known corporate financial disasters; among them, Baldwin-United, Commodore International, Coleco, Integrated Resources, Boston Chicken, Sunbeam, Conseco, and Tyco International. His celebrated shortsale of Enron shares was dubbed by Barron’s as “the market call of the decade, if not the past fifty years.” More recently, he has expressed concerns about the credit-driven property development in China to drive economic growth and its economic consequences. Chanos received his BA in economics and political science in 1980 from Yale University.
Topic is Alternate Energy. Does Solar+Wind=Hot Air?
I was not going to talk about a country in Asia with a culture of looking inward, and mistrust of the West. It is a country that was first our ally in the early 1900s, and then our enemy. I am not going to talk about it because it embarked on a new economic model recently. It is a country where high savings rates helped boomed fixed income boom. And it is a country that people look at as a harbinger, as a new way forward. I was talking about Japan.
Chanos said he did not want to piss off a country with a billion people this year, so he will not talk about India.
People are very excited about green power. With the energy problem we have there is a need for new technology. Wind and solar cannot be big players at this point. New transmission capacity will be needed, and new technologies to make it cost effective. Wind is 50% and solar is four times more expensive than natural gas.
Coal is even cheaper. This is a basic problem alternate energy problems will have to overcome unless technology changes.
We keep hearing that green energy will create jobs. Laid off construction workers who are now building the green infrastructure is the main source of job creation in the green industry.
Environmental benefits are questionable. Solar uses hazardous materials and has waste disposal problems. Wind has “not in my backyard” problems.
Wind installations are up 40% in past year, much dependent on stimulus and subsidies. This is also the case in Europe.
Vestas (VWDRY, Financial) has a $6 billion market cap. It is a leader in the alternate industry. Business has become to turn down. The company is deferring costs and changing revenue recognition to book more revenue up-front. the company recently changed auditors. Cash flow is now negative. The company also has competition from China and the U.S.
This company will be increasingly under strain.
However, solar is really the darling I am the most bearish about. Costs are not changing dramatically any time soon. Capacity is increasing more than depend. Spain in '08 represented over 40% of demand, Italy 25% in '09. Western Europe is increasingly questioning subsidies to solar companies.
First Solar (FSLR, Financial) has questionable technology. The company is guiding for negative FCF for 2011. Companies are having to put more and more in capex because the business is not being successful.
The company is trying to move into other markets where they have been less successful. This is all despite the fact that they are headquartered in Malaysia where they pay almost no taxes.
We love where management sells, and even more where they leave. This has happened a lot in the past few years.
Disclosure: None
http://www.valuewalk.com/
Topic is Alternate Energy. Does Solar+Wind=Hot Air?
I was not going to talk about a country in Asia with a culture of looking inward, and mistrust of the West. It is a country that was first our ally in the early 1900s, and then our enemy. I am not going to talk about it because it embarked on a new economic model recently. It is a country where high savings rates helped boomed fixed income boom. And it is a country that people look at as a harbinger, as a new way forward. I was talking about Japan.
Chanos said he did not want to piss off a country with a billion people this year, so he will not talk about India.
People are very excited about green power. With the energy problem we have there is a need for new technology. Wind and solar cannot be big players at this point. New transmission capacity will be needed, and new technologies to make it cost effective. Wind is 50% and solar is four times more expensive than natural gas.
Coal is even cheaper. This is a basic problem alternate energy problems will have to overcome unless technology changes.
We keep hearing that green energy will create jobs. Laid off construction workers who are now building the green infrastructure is the main source of job creation in the green industry.
Environmental benefits are questionable. Solar uses hazardous materials and has waste disposal problems. Wind has “not in my backyard” problems.
Wind installations are up 40% in past year, much dependent on stimulus and subsidies. This is also the case in Europe.
Vestas (VWDRY, Financial) has a $6 billion market cap. It is a leader in the alternate industry. Business has become to turn down. The company is deferring costs and changing revenue recognition to book more revenue up-front. the company recently changed auditors. Cash flow is now negative. The company also has competition from China and the U.S.
This company will be increasingly under strain.
However, solar is really the darling I am the most bearish about. Costs are not changing dramatically any time soon. Capacity is increasing more than depend. Spain in '08 represented over 40% of demand, Italy 25% in '09. Western Europe is increasingly questioning subsidies to solar companies.
First Solar (FSLR, Financial) has questionable technology. The company is guiding for negative FCF for 2011. Companies are having to put more and more in capex because the business is not being successful.
The company is trying to move into other markets where they have been less successful. This is all despite the fact that they are headquartered in Malaysia where they pay almost no taxes.
We love where management sells, and even more where they leave. This has happened a lot in the past few years.
Disclosure: None
http://www.valuewalk.com/
