"The Energy Trade of 2008"

Certainly you don’t need me to tell you that energy stocks of all kinds are hot investments, and have been for a couple years. After all, a couple excitable traders even pushed oil up to $100 a barrel for a few minutes today, so I’m sure we can write tomorrow’s headlines right now.

You’ll even hear Jim Cramer tell you that he thinks oil and gas companies are still the best bets for investment now — he likes the drillers and service companies, especially, like RIG, but to some extent these companies all move in unison.

And we’ve got a nice, brief teaser for you today: It comes in from the folks at Energy and Capital, hawking their new “$20 Trillion Report” newsletter (we looked at this about a month ago for their oil sands play, too).

I got a little sleepy reading all the way through the teaser, but I gather that in exchange for signing up for the service, you get a whole passel of special reports — including this one, the “Energy Trade of 2008.”

So what clues are we given?

“It’s a stock that an American billionaire recently bought 395,000 shares of.”

He paid $13.95 a share, and it’s now at about $15.

It’s an alternative energy company.

This billionaire’s last pick, over the summer, rallied 100%.

And of course … the part that makes you get all excited: “we think it’ll reach $30 in the next couple of months.”

100% in a couple of months? That sounds A-OK to me. Interested?

OK, based on those paltry clues I’d say that this company has to be ….

Clean Energy Fuels (CLNE)

The billionaire in question here is T. Boone Pickens, who you’ve probably heard from quite a bit in the last few months as oil has teased (and finally touched) the $100 mark. He’s the first “go to” quote for any financial journalist on oil issues, and one of the more colorful investors and oilmen around … so it’s always fun to see what he’s buying.

And he is indeed buying up shares of CLNE. He did buy a whole mess of shares in relatively short order (the company only went public over the summer, so they haven’t been on the market all that long). If you add up the holdings of the various Pickens’, you get close to 20 million shares.

At $15 a pop, that adds up to … I don’t know, gajillions, I think.

OK, fine, $300 million bucks. That’s a pretty big holding, even for Mr. Pickens. Or maybe he’ll let me call him “T.”

Pickens did recently buy 395,000 shares, at the beginning of December at $13.85 a share (close enough to the teased $13,95, no?) But frankly, that is just a tiny fraction of his holdings in this one so I wouldn’t read that much into it. He has held most of his 20 million+ shares since the IPO, and I don’t know how he got them — there’s a project for one of you sleuths out there. It could be that he owned much of the company before it went public, I haven’t yet checked.

He also sold about 600,000 shares of the same stock back in June, after the IPO, at $11.30 a share. That’s just about .50 cents above the all time low price for this stock, so while he may be a great oilman and he certainly understands the energy business, there’s no guarantee that he always knows the best time to buy and sell his stocks.

What is CLNE? It’s a play on the future of natural gas as a transportation fuel — they are the biggest provider of natural gas for this market in North America. Currently they’re not profitable, but analysts see them eking out a small profit of a couple cents this year so the shares trade at a forward PE of 300.

Whew.

Well, this one might be worth taking a look at if you’re interested, and if you believe that natural gas is the logical next fuel for transportation in this country — they do have business in a few other countries, but this is really a US gas play, and for the foreseeable future it’s going to be all about large truck, bus, and municipal and corporate car fleets — think mail trucks and city buses, not neighborhood fueling stations for individuals. If that’s the future, this is certainly a logical play on that future.

Is it the best “Energy Play of 2008?” Well, it’s not the play I’m making in my portfolio, but perhaps it will be for you — that, of course, is your call, but thanks to your friendly neighborhood Gumshoe you’ve at least got a little start on your research … best of luck.
             ——————–
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The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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1. I think a PE of 300 is a little high, even for BIDU or GOOG but especially not for a speculative play on city busses converting to alt fuels… better to invest in the people who make the conversion kits… for nat gas I like GW.
   thanks for all your gumshoe work !

   [Reply]

   Posted by NOZpickr | January 3, 2008, 8:09 pm

2. Gumshoe,

   What is your energy play?

   [Reply]

   Posted by Curious... | January 4, 2008, 12:06 am

3. Gumshoe, what do you think of the ‘vacuum etraction’ technology that is supposed to open up shale oil deposits in Montana et al or in the Bakken oil field in Saskatchewan?

   [Reply]

   Posted by Ian King | April 18, 2008, 11:40 am

4. Hi Ian — I wrote about that “oil vacuum” here: http://www.stockgumshoe.com/2008/04/oil-vacuum-key-to-unlocking-800-billion-barrels.html

   [Reply]

   Posted by StockGumshoe | April 18, 2008, 1:18 pm