Income Investments

by Tom Konrad, Ph.D. CFA Two more earnings notes I shared with my Patreon followers on February 18th. Covanta Holdings (CVA) Leading waste-to-energy firm Covanta Holdings (CVA) announced 2020 earnings today.  There will be a conference call tomorrow morning, but here is my high-level impression: The company managed well through Covid and ended the year within it's original pre-covid guidance.  Metals and energy prices, as well as increased maintenance capital expenditures were a drag on results, but  prices are improving and capital expenditures will fall in 2021. The company is conducting a strategic review which will likely result in the sale of some underperforming...

DTE Energy Company (DTE:  NYSE) recently priced a ‘green bond’ issuance of $525 million to support renewable energy and energy efficiency.  The thirty-year bonds provide a coupon payment at 4.05%.  DTE is planning to buy solar arrays and wind turbines with its newly flush cash kitty.  The capital raise is of significance less for its size and purpose and more for the fact that a U.S. electric utility company is tapping this unusual financing vehicle. True enough, green bonds are nothing new.  Created to fund projects with environmental or climatic benefits, the first green bonds were issued in May 2007 by the European Investment Bank (EIB).  The...

By Tom Konrad Ph.D., CFA Despite a run-up in the fourth quarter of 2023, it has been a long time since valuations of clean energy stocks have been this cheap.  Perhaps it is worries about hostility towards clean energy under a new Trump administration, or disappointment at the slow implementation of the Inflation Reduction Act.  Whatever the cause, prices are low, and many clean energy stocks are likely to  produce good returns even if the political climate turns further against them. This is especially true for companies that are less dependent on favorable policy or subsidies.  For instance, Yieldcos, high...

by Tom Konrad Ph.D., CFA Sustainable infrastructure financier Hannon Armstrong (NYSE:HASI) is not in my Ten Clean Energy Stocks model portfolio for the first year since its IPO in 2013. I still love the company and its business model, but I have become concerned about its short term prospects. Dividend Disappointment? In my last update on the 2017 portfolio, I wrote, “Sustainable infrastructure and clean energy financier Hannon Armstrong reported earnings on November 1st. The headline numbers were lower than expected, but for a very good reason. The company has spent the last few months locking in low interest rates by refinancing its...

by Prashant Vaze, The Climate bonds Initiative In January, authors from several institutions under the aegis of BiS, published The Green Swan Central banking and financial stability in the age of climate change setting out their take on the epistemological foundations for, and obstacles against, central banks acting to mitigate climate change risk. The book’s early chapters provide a cogent and up-to-date analysis of climate change’s profound and irreversible impacts on ecosystems and society. The authors are critical of overly simplistic solutions such as relying on just carbon taxes. They also recognize the all-too-evident deficits in global policy to respond to the threat. In short, they accept the need for central banks to act. The Two Arguments  The paper makes two powerful arguments setting out the challenges central banks face using their usual mode of working. Firstly, climate change’s impact on financial systems is an unknowable unknown – a...