A Play on Geothermal and the Green Energy Movement

15-Nov-2010

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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By Liu-Yue (Louie) Lam, Co-Founder, Oxstone Capital Management,

CPN, Calpine – USA, $12.02, 11/1/10

Calpine is an independent power producer that operates one of the newest fleet of natural-gas plants. As the largest geothermal operator in the US, it is also a perfect play on the alternative energy / green technology movement. Calpine will also directly benefit from the US economic recovery as demand for energy picks up.

Calpine is currently trading near a 52 week low and at multi year lows. This is also a great post bankruptcy play. Calpine emerged with a stronger and cleaner balance sheet and in better competitive shape. This becomes a competitive advantage in an industry full of highly leveraged utility rivals. It owns one of the best portfolios of efficient power plants focused on clean energy– geothermal plants and natural gas plants. One of its competitors attempted to buy Calpine to access its state of the art power plants a few years back. Calpine has a product advantage from its portfolio focused on alternative energy sources which will reduce its risks to any adverse actions from new eco-friendly EPA regulations or the pending energy policies such as cap and trade etc..

Lastly, Warren Buffett believes there’s a bright future for the utility business and his own company holdings includes a utility business. Blackstone is also recently making a bid for Dynergy. Clear signals that the utility business may be attractive at current prices. I believe the utility business has a terrific future with growing population trends, and the longer term trends in electric car usage will further spur higher demand for electricity. This is also a safe way to buy into the USA economic recovery story.

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