Energy Investing After Tesla (NASDAQ: TSLA)

Jeff Siegel

Written By Jeff Siegel

Posted June 19, 2013

It was around 2007 when I first started covering Tesla (NASDAQ: TSLA).

This was actually before the company went public, and before most people even knew that an electric car could be more than a glorified golf cart…

In fact, I haven’t forgotten some of the crazy emails that landed in my inbox after first writing about Tesla. My favorite was the one I received after writing about the company’s IPO back in 2010:


Why are your writing about electric cars? They don’t work and nobody wants them anyway. Go get a Tesla golf cart and try driving it on the highway. You’re a joke! Only a complete idiot would invest in an electric car company. And you are the biggest idiot of them all.

Lewis M.

The last laugh is always the most rewarding…

Of course, Tesla has proven to be the show pony this year on Wall Street. And with good reason. But for now, the big money’s already been made on this one. And the next time I end up riding Tesla, it’ll be in a Model S, not on the NASDAQ.

Truth is, Tesla will most likely be the biggest winner for me in 2013. But that doesn’t mean I’m not taking positions in other stocks that I know will also prove to be solid winners this year…

Here are a couple of my favorites in which I personally have a position.

A Steady Stream of Income

Over the years, I’ve been fortunate enough to be invited to take part in private placements for dozens of modern energy companies. And from solar and wind to natural gas and electric cars, I’ve seen some pretty lucrative opportunities.

But of all the meetings I’ve sat in on, the ones that offered the most bang for my buck were those behind the scenes — that is, the companies not actually making or developing anything, but instead providing the funding for modern energy projects. I’ve often found these to be the best opportunities for those looking for a steady stream of income without taking on a tremendous amount of risk.

Unfortunately, these opportunities never really existed for non-accredited investors.

But back in April, a company called Hannon Armstrong Sustainable Capital (NYSE: HASI) went public. And through this vehicle, even those with less than $50 to invest can get in on the types of deals that were once only exclusive to those on the inside.

Hannon Armstrong is basically a specialty finance outfit that offers debt and equity financing for modern energy and sustainable infrastructure projects. The company has actually been around for more than 30 years, and since 2000 has provided or arranged nearly $4 billion of financing. It also operates as a REIT.

As Forbes analyst Tom Konrad pointed out, by going public and converting to a REIT structure, the company is tapping a pool of relatively low-cost capital from small investors. Konrad believes HASI will deliver a yield of anywhere between 6.6% and 9.8%.

I’m a little more conservative here, anticipating something closer to between 5.6% and 7%. Either way, it’s still a nice dividend on a company that’s essentially the only publicly-traded clean energy REIT — which is also expected to get a nice boost under the new energy secretary’s energy efficiency agenda. HASI generates significant revenue in this area.

The company also operates in the solar, wind, geothermal, biomass, and natural gas space.

I’m looking for an annual gain of about 16% per year for the next two years, plus a dividend of at least 5.6%.

Pick It Up on the Low End

I’ve long been a fan of Linn Energy (NASDAQ: LINE), mostly because of its unique hedging program and its fat dividend.

Hedging its oil and gas output with financial derivatives serves shareholders well with dividends that are hard to beat. It’s the eighth largest MLP in the United States and the biggest that focuses on energy production.

The stock’s been on a bit of a downward trend over the past couple of weeks, as a few analysts have expressed concerns about its hedging practices — the result of worries that the company has not deducted the cost of derivatives from its realized gains on hedging activities. This would be of possible concern for me, too, if the LINE wasn’t still crushing it on production.

I also like the fact that hedge funds and insiders have been loading up recently. CEO Ellis Mark and Executive Vice President Walker Arden, Jr. just picked up about 15,000 shares at $30.70 and $30.42, respectively.

I suspect we could see even more insider buying if the stock remains at current levels. Also worth noting is that over the past 180 days, there have been no insider sales.

I like LINE over the long haul, and continue to enjoy my very generous dividends.

To a new way of life and a new generation of wealth…

Jeff Siegel Signature

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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