Jeffrey McLarty

That the pollution haze, alt. energy phase, banking craze, water ways, derivative maze, urbanization blaze, crop yields on maize and inflation daze…have given me too many ideas to throw money at, I just don’t know which ones are best.

Pollution and energy are two big problems, combine that with urbanization and CVA is likely to prosper. I think FAN, and TAN, are both good bets. Good banks will be fine, and it’s time to start buying value. Mind you, 300 out of the 8000 will fail, or more, but the rest will be ok and prosper on the new standards and previously failed bank clients. PHO has too many starting points to ideas for stocks…I still haven’t found the best ones. Combining the emerging growth with rising middle class, and world water problems HEK is likely to prosper. Urbanization has many vehicles, but right now I like TEX…can’t get enough cranes, etc. Crop yields are amongst the few things in the world that have risen nearly linearly for decades, that’s a good thing for planet earth and investors. Isn’t it ironic how every country in the world seems to have +5, 6, 7%, 2,2000,000% inflation…and the US is only just now starting to count it. Rising middle class in other parts of the world, SDA is likely to prosper. I also see CL doing well for the same reason. I like the new AFK/PMNA/FRN ETFs too, these are where tomorrows money will come from, get long these names and short the S&P, dollar for dollar.

This market has me second guessing myself, and every move I make. I’m not alone, that’s why it’s been volatile, and that’s why it’s will keep being volatile. Learn to Buy-Write. Short-to-Own.

Disclosure: I put my money where my blog is, when the timing is right.

P2P file sharing still dominates bandwidth usage in North America, consuming 75% of the upload stream and 35.6% of the download stream. According to this short study/report on Trends in Broadband Traffic Demographics.

This study is done by a company, I own shares in, Sandvine. They are basically trying to help ISPs, prioritize packets and handle traffic on their networks, in the face of difficult bandwidth trends (Online video/media, P2P file sharing, etc.) The company’s revenue has been explosive quarter over quarter, with a stall in last two quarters. The stock chart is ugly, but I think it will be a great 10 year story. After buying this stock over a year ago, I went to my first annual share holder meeting, in May. I left the meeting more than doubling up my position.

They announce earnings early Tuesday A.M.

Long Sandvine.

As oil rises, and urbanization trends continue, I’m thinking about what might happen.  Shipping rates go up - duh.  So, I think sales and margins will improve for concentrated solutions, where the competition selling finished products will be squeezed.

Eg. Canned frozen juice vs the 2L of ready to drink stuff.  If you have to ship 2L, you’ll pay more to ship a very comparable product.

…just thinking out loud…likely many have thought about this already…it just hit me today.

I’m diving in, actually, I’ve already taken the plunge into the pools of information that’s out there on the topic of the world’s water situation.  It seems with every report I read, I get new ideas, and confirm old ones.  I definitely am more informed, and have changed some opinions on certain names, since my overhaul on PHO.  I’m by no means done learning about this sector, so please leave feedback if appropriate.

The world is about to spend $1 - $1.5 T over the next 20 years, to attempt to offset this sloppy problem:

As of 2006, one in three countries had water shortages.

Developing countries only use 11% of their water for industrial use.  Developed countries us 42% of their supply for industrial use.

The World Bank’s Forecast for the Middle East and North Africa suggests a 50% fall in per-capita supply by 2050.

Dubai obtains 95%, Saudi Arabia 70%, of their water from desalination. Think about that, hard.  Currently with desal, it takes 10MW to produce 100,000 L of water, making it 10x more expensive than harvesting rain water.  Numbers confirming this have varied depending on the report you read.  Apparently desal is 3x to 4x more efficient than it was 30 years ago…but same holds for lots of stuff.

In the UK, the infrastructure leaks 4.5B litres per day.  That’s a bath-tub per person PER DAY.

Average infrastructure in the US is 60 - 80 years old, engineers say, they were built for 50.

Currently, the US subsidizes 50% of the countries drinking water.

In North America, we treat 100% of the water in municipal systems to levels safe for human consumption, but only actually consume 1%.

…ok, I’m tired of re-iterating facts, and yes I have references, good ones too - but I just don’t care if you believe me or not.

The entire global ‘Water’ sector, is valued at $425B, by Goldman Sachs. So quick math, there’s room for at least a doubling, and likely a tripling in market caps inside the next 10 years as the work and contracts fall into place.  Since markets always over react, water will likely be a $2T industry by ~2020.  …But I’m just a young go getter, trying to figure this mess out.  I feel like I might be lagging the crowd in this investment thesis, because I’ve read lots of dated piece.  Who knows(?) While I may have lived through many other macro economic trends, I’m too young to have completely experienced (and understood) them, although I have read of many.

I already own TTEK and I’m getting more and more confident, less and less embarrased in my HEK purchase I made a week ago for different reasons I won’t mention.  VE is looking good to me at these levels, likely will also pull the trigger Monday.  I want MIL, PNR, BMI, ITRI, a little cheaper, then I’ll be a buyer.  ROP too.  Going to keep my eye on INSU, first sign of strength, I’ll be on-top of it. Not sure if I want to bother with HYFLY.SI, valuation is a bit high.

I’ve said that I wasn’t sure infrastructure was the best way to invest, but I’m taking that back and I’m looking for ONE good infrastructure stock.

The following is funny twitter conversation about 3 tickers and only two stocks, along with some insight. 

For a week now, I’ve been chasing CCC with limit orders, I might just pull the trigger Monday AM.  You may or may not know this man and this man already did. Of course I asked what’s the better play? He answered.  I looked at CLE, both of them, and was confused. But didn’t question him, and shrugged it off.  “Probably a typo” I thought.  I figured, he’ll probably blog it later.  A day or two later, I learned about CLC in a report by Goldman Sachs. It took me reading one annual report to convince me to buy some CLC…the lights went on inside my head - turns out, my name wasn’t the only thing he made a typo on.  I laughed.   I think this is a sign…I’m buying some CLC tomorrow, and save a little cash for a pullback.

In my opinion, and I would like yours on this, the trend in water, along with solar, wind, global banks, green stuff, and nuclear is what my generation of investors should be riding. no? are there others?  I’m talking 20 year trends here.

PS. I’m also finally buying CVA first thing in the AM too…but that’s another post.

Colgate baby. Growing world-wide middle class will likely enjoy tooth-paste, just as much as the rest of the world. I’m leveraged with a SWEET 2010 call spread. ~0.9% in time premium on an effective $65 call with capped gains at $80. 74% returns expected within 20 months. Check out my write-up, over at Blue Moat.

So, ‘Blank Check’ Company, Heckmann Corp. (HEK) recently announced they bought a Water Bottling company in China. I’m like - wow - what a great business to be in right now. Probably a scam. The chart exploded this morning. Some heavy money traded the shares north of $8.50, then it pulled back to ‘pre-publicized’ levels of $8.25. I figure 1. What a scam, these guys are investing in a likely trend/shell company, which their brother in law probably owned. If it is legit, it’s likely a great investment - anybody in charge of a ‘blank check’ likely knows what they are doing. If their crooks - no way did they go to all that trouble for the shares to peak at $8. If they aren’t crooks, same holds. So since it went back to pre-publicized levels, I bought a few shares at $8.2799. I especially liked the fact that I could consume everything in current circulation, in english, in less than an hour. It has just become my smallest holding, my biggest gamble, and most un-researched purchase. According to Lindzon, due diligence if for underperformers, lets see if he’s right. I’m literally gambling with ~1.5% of my portfolio…so blow on the dice for me…I know it’s wrong…and I’d never do this with other peoples money.

Plus, the downside shouldn’t be worse than the lows during the chart where the company was just a blank check. That’s $7.22. Soooo…yaaah. D

I specifically watch the advertisements on TED, because the companies sponsoring this stuff, deserve my eyeballs for a few extra seconds. Watch this video.

I can’t for the life of me own a stock where the PEs are higher than the temperature of the energy source they are trying to harvest from. Solar stocks are in the stratosphere, I thought about buying FSLR and writing the calls, but I don’t quite want $27.5K dedicated to one position….nor the downside.

That leads me to thinking about the companies who will benefit from Solar.

During the tech boom, we all poured money into innovation, and it’s why the internet runs so smoothly today. Without the fiber optic cable all the big boys paid to lay with share holder money, well, I might not be blogging right now. Most of the guys that did the leg work to set up the networks had major problems reaping the revenue when they commoditized their product. Turns out, some of them went bankrupt, and since you can’t pull up already laid cable the bankrupt companies were sold off by banks for pennies on the dollar.

Same thing is likely starting now, we’re pouring money into solar stocks, and the innovation from the money will eventually lead to grid parity solar energy prices.

So when this grid parity happens - who wins? That’s a million dollar question we got a little time to think about.

Anybody want to discuss? Any ideas? I’m looking for names who are going to install these products and improve margins as they sell un-used energy back to the grid.

In a global economy, if you’re not adding value, you’re going to be left behind.  If you don’t carve out a niche for your own importance, well…there’s a bunch of Indians and Chinese who are going to out-run you.  Totally serious, trends are scary, education is being commoditized.  Make no mistake, if you are not a leader, you will be forced into the opposite.  For the followers, or the ones not adding value, the world will make sure to it that your life will suck…I’m talking to the growd under 30 and not a millionair or happily married.

I’m 23, ready to start making impact.  I’ve got a modest advantage compared to my peers financially, so I’ve got to put it towards good use. Nothing was ever handed to me, I worked hard…so don’t hate.

The question is, what niche do I carve myself? 

Right now, I’m thinking Solar, Wind, or Water.  These are areas that are going to be important for the next 100 years, at least…(right?)

Thanks to my diverse degree in engineering, I’d understand the technology deep at the roots of every one of these topics, but now which one should I run with?

Yah the capitalist in me knows that if you become an expert in any of these fields, it should lead to amazing returns in the ‘folio…BUT it will also lead to opportunities to contribute to society some way some how - obviously, as an engineer, I’m speaking in context of innovation but, but I mean I don’t want to waste my brain, time or money on designing the next UI for RIM, or checking sodium meta bi-sulphate levels at Ontario Power…been there done that.  That work is for [educated] zombies.  Like, actually do some good for the world….somehow…down the road.  And maybe, i’ll never get my shot at it, but experts are tomorrows’ change agents…so I’d rather open the door, leave the option, to potentially become a change agent reather than definately stay a zombie.

I’m talking about marrying a trend here, for life, and serious about it…like…live, eat, and breath a trend…so I can have a chance to make impact.  I’m talking present value.