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11A Sustainable Energy Technology Equity Hedge Fund - July 2008
NEW ENERGY FUND LP
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NEW ENERGY FUND LPA Sustainable-Energy Technology Hedge Fund
MISSION
To provide exposure to the growth of the global renewable energy sector by creating portfolios with superior risk-adjusted returns.
GOAL
To achieve a 15% - 20% return with a standard deviation of 6% - 10%.
METHOD
We identify the most promising sub-sectors in the universe of renewable energy companies and select best-of-breed stocks within these groups. We use bottom-up stock selection to create a portfolio of 25 – 40 stocks.
STRUCTURE
An onshore and offshore feeder fund for a master feeder fund with a general partner and investment advisor. 5 employees, 3 professional.
FEES
NEF LP has a 1.5% management fee and 20% incentive fee with high water-mark.
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FOSSIL FUEL EXTERNALITIES – Energy is Mispriced
FOSSIL FUELSand
NUCLEAR
CLIMATENuclear Revival
HEALTHCancer, Respiratory, Immune
POLLUTIONMost common issue
GEOPOLITICSIran/Iraq/Saudi Arabia/China
SUBSIDIESFossils and Nuclear receive them too
RELIABILITYBlackouts and centralized paradigm
DEPLETIONCoal and Uranium too and now… resource nationalism
WASTECAFÉ Standards
CLEAN ENERGY
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GROWTH TO 2010…and beyond
Source: Piper Jaffray and Photonics
WIND
SOLAR
BIODIESEL
ETHANOL
Now expected to be 200 X
Now expected to be >9 bn Gallons
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More Foreign Stocks
Good US Volumes
Even more foreign Market Cap
Foreign companies are larger and more numerous Wall St still still has no wind and little solar. It’s still a very new industry here.
UNIVERSE ANALYSIS - May 2008Quadrupled from 216 in Oct 2004
16 X 2004 Market Cap,
10 X 2004 Daily Volume
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COMPARISON OF RENEWABLE & S&P 500 INDEXES
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STOCK SELECTION820 stocks
$824 billion mkt cap
$9.7 billion volume
Portfolio
25-40 Stocks
Valuation
Technical
Timeliness
Watch List
Growth
Management
Macro Picture
Technology >150 StocksScalability
Economics
Government Incentives
We divide the universe into three parts:
1 – (25%, 30.6%) Pre-commercial, disruptive technologies, cash burn, time to first revenues, viability of the technology
2 – (50%, 49.0%) Revenue producing companies –Time to profitability, cash burn and market dynamics
3 – (25%, 15.3%) Profitable companies – Standard fundamental growth screening within the context of the technology potential.
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First Solar (FSLR - Nasdaq)
• Thesis: Excellent fundamentals offer pure growth• Cadmium Telluride thin-film solar panels• Vertically integrated• Economically competitive at $1.25 per watt (Silicon $3.5)• Consistent upside earnings ‘surprise’ numbers• Has no “Silicon shortage”• Market Capitalization: $23 billion
B
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Akeena Solar (AKNS - Nasdaq)
• Thesis: Subsidies underpin strong sales growth• Aggressive acquisitions led to critical size• Barry Cinnamon, CEO, wrote white paper for
Schwarzenegger's, “million solar roofs” project• Addressable market still huge• Bought for $1.00 in a Pre-Reverse Merger, PIPE• Market Capitalization: $135 million
B
S
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Zenn Motor Co. (ZNN CN)
• The only way to play the EEStor barium titanate ultracapacitor battery
• The battery is lighter, barium is plentiful, its small volume and is cheap
• Zenn have exclusivity for all vehicles less than 1400 lbs. curbside weight• Kleiner Perkins and Lockheed Martin backing
• 4 passenger electric car (EV) will go 250 miles on one 5 minute charge
• Market Capital is $150 million
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• 360,000 kilowatt hours in a year or 360 megawatts
• 5 X 15 meter parabolic dishes
• 16% efficiency Photovoltaic
• Saves 100,000 gallons of diesel fuel yearly, US $400,000
• It’s a “Car Stopper”
•Locals were consulted and were “pleased and excited” about the project
Windorah
Queensland
Australia
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MARK TOWNSEND COX – PORTFOLIO MANAGER
• 24 years experience in international equity markets
• Parabolic solar ovens in Africa in 1979
• Founder (in 2003) and Chief Investment Officer of New Energy Fund, LP
• 11 years as portfolio manager, 5 with Pinnacle International Management, LLC
• Hedge fund initiation while at Pinnacle
• 14 years European equity sales, analyst, and head of sales desk
• EMBA, Columbia University, Executive MBA class
• Series 7, 24, 65, 63 NASD licenses
• Royal Military Academy Sandhurst
• British Army paratrooper lieutenant. Falklands campaign. Awarded MID.
• MA, Dundee University, Scotland. French & English Literature.
• Fluent spoken French
MANAGEMENT TEAM
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MANAGEMENT TEAMABIGAIL LAUFER, Chief Operating Officer
• 27 years of investment industry experience
• First director of mutual fund research for Merrill Lynch in 1983
• First high net worth consultant at Frank Russell Company in 1987
• Founded Laufer Consulting in 1990.
• Partner of the Maud Group in 1994. (Hedge Fund of Funds)
• Founded Hanover Square Associates in 1997, a third party marketing firm.
• Joined New Energy Fund as COO in 2006
• M.B.A. from the University of Michigan (1981)
• A.B. from Princeton University (1978)
• Member of the Financial Women’s Association and the National Association of Women Business Owners.
• NASD series 7 and 63 registration.
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PERFORMANCE – NEW ENERGY FUND (NEF)
All returns are net of all fee’s and expenses. 2006 and 2007 subject to audit expected to be complete by July 2008. Three complete years’ track record. Inception was Dec 29th, 2004.
*
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PORTFOLIO STRUCTURE AND RISK
• Initial positions 1% - 5% at cost, according to liquidity, growth outlook, and valuation.
• Cash normally held below 5.0%
• 25 - 40 names
• Pipes and Private investments behave like hedges
• Currency exposure is obtained through direct stock selection in foreign markets
• Not more than 50% in any one currency
• Not more than 12% in any one stock at market price
• Not more than 35% in any one sub-sector at market price
• Short positions are held as individual stocks or index ETFs to mitigate volatility of overall sector
• Stop-loss limits offset downside risk
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EXPOSURES (end June 2008)
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SUMMARY
• Longest Renewable Energy hedge fund track record at 3.5 years
• 15% CAGR since inception
• Registered with the SEC
• $30 million under management (Aug 08)
• Mix of Family Office, High Net Worth and Institutional investors
• Offshore fund represents 25% of NAV
• Goldman Sachs prime broker platform
• Concept Capital (SMH) doing on-shore administration
• 4 person team expanding to 5 by year-end including a senior analyst
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NEW ENERGY FUND LP527 Madison Avenue7th Floor
New YorkNY 10022
212 419 3918 office
917 419 3918 cell
212 689 1455 office
917 297 4383 cell
646 840-5477 office
303 818-9009 cell
