Water Investment Update


This water equity update shows why water shares are looking attractive.

We are getting ready to head back to our farm in North Carolina.  NC has been through a period of heavy rain.

The creeks will be roaring. Here is one of our water falls in normal times and…

ecuador-water

after the rains this time of year, the…

water-investments

water is really up!

water-investments

We love the water.  The large number of year round springs is one reason we chose this farm.  For example water gushes from the rocks at this one spring and…

ecuador-water

fills our deep woods hot tub…

ecuador-water

with continual fresh water, plus…

ecuador-water

provides all of the water supply in our house and helps fill this pond, plus…

ecuador-water

it creates this waterfall that fills a fish pond in our back yard as well as fills a stock tub for our geese and chickens.

ecuador-water

This is just one of dozens of springs on the land.  We feel blessed as water is becoming one of humanity’s most precious commodities!

This economic fact means that there may be growing distortions in water shares.

The message at this site, exactly one year ago, said:

________________________________________________________________________________________________________

From May 20, 2009:

Water equity investments could get warm soon. I am looking for water shares that have extra value now and I began by looking again at our Green Portfolio.

There are six  shares in this portfolio and in 2007 the portfolio rose 266%. In 2008 it fell 208%.  This phenomenal rise and fall was due to leverage in the form of a two times loan in yen.

I am not ready to leverage anything yet but some of these great shares may make sense as a medium or long term investment.

Name                                           Sector                 Currency

Vestas  Wind Turbines     Alternate Energy     Danish Kroner

Q Cells   AG                        Alternate Energy      Euro

Seche                                  Environmental           Euro

Novozymes                       Environmental          Danish Kroner

Hyflux Ltd                        Water                           Singapore Dollar

Kurita Industries             Water                          Japanese yen

Two of the six shares in this portfolio are involved with water purification and China  and Kurota provides diversification into the Japanese  yen which has been strengthening.

Kurita offers an investment in one of the world’s greatest economic concerns.

Water is at the forefront in economic development in the US, especially in the West.

Emerging nations have a water crisis as well.  Hundred of  Chinese cities are facing water shortages; farmers in the most-populous nation are forgoing millions of tons of grain production every year. Per-capita availability of water is expected to shrink to alarming levels by 2030.

India has a similar concern. According to the World Bank by 2050 demand for water in India will exceed all available supplies.

Therefore the green portfolio did exceedingly well before the crunch.

Now many in the market is worried that environmental shares will suffer, because the economy cannot afford to invest in the environment.

Water concerns cannot wait long especially with two of the world’s fastest growing economies facing serious water concerns, there is plenty of fundamental room for growth.

______________________________________________________________________________________________________

So today (May 20) let’s look at how these water shares have performed in the last year.

kurita-share-chart

According to charts from www.finance.yahoo.com the Kurita shares trade under the symbol KURITA WATER INDS LT (KTWIF.PK). They sold at $26.50 when I wrote about them on May 20 2009.  They almost immediately rose to $37.25, by September 25 2009… a 46% rise in four months.

Our September 26, 2009 message warned about this super heated rise and said:  We must take care because before we really see the international economic light, I expect one more downturn this autumn… one that will break the economic backs of many who have been just barely hanging on. Markets and economies rise and fall in spurts and provide large influxes of  profit that create really bad fiscal and lifestyle habits that are destructive when dangerous economic ex-spurts (recessions) come long.

Sure enough Kurita shares tanked the next day and fell over 20% in a week. They have continued downwards since and are now back at $27 a share… about where they started a year after our last message about these shares. 

However I do not use charts to try and time the purchase and sale of shares. What I do look for are share prices that drop without reason.

We can see that Kurita’s price has oscillated a lot since they were listed in 2007.

kurita-share-chart

I love investing in water and have been recommending water shares for about a decade now… so I ask, “when the Kurita share price collapsed… was this because the world suddenly found a huge new supply of good fresh water?  Did Kurita shares drop because a new competitor came to town? Did the analysts find something wrong at Kurita or did the company file a dismal earnings report?”

No.  The need for clean water remains. Kurita continues to be a strong force in the clean water industry.

I watch charts like these so I can better spot good value.  Here is what to do.

#1: Look for big problems… like the world’s water shortage.

#2: Look for well managed companies who are successful in the process of helping solve the problem.

#3: Watch the share price of the company.  If it falls, especially in a general market collapse, and you cannot see the problem (water shortage in this case) resolved nor the company in trouble… then there is an imbalance. The shares may offer special value.

In this case… review the share with your financial adviser.  Review the risk and the potential timing for a recovery to see if the investment fits your unique financial situation.

You can read more about Kurita here.

Last May we also looked at shares of the Singapore water company Hyflux which trade OTC as HYFLUX WATER TRUST (HXWTF.PK)

Our timing could not have been better. The shares rose from 28 cents a share to 50 cents a share in four months. The price has not trimmed back and have remained in the 50 cent range.

hyflux-chart

These shares, especially in light of euro concerns as well as market will offer good value buying opportunities as global markets fall.

If investing in just the share of one or two companies like Kurita and Hyful does not suit you, another way to get  good value water equities  is to invest into a water share ETF.

One of the ETFs we reviewed in last year’s water message is the PowerShares Water Resources Fund.

This ETF invests in the shares that compose the Palisades Water Index which is an equal-dollar weighted stock market index that tracks the performance of companies engaged in the global water industry.  The PowerShares Water Resources Fund aims to match the performance of this index.

Shares in this index include pump and filter manufacturers, water utilities, and irrigation equipment manufacturers.

Here for example are the seven large holdings in the index:

* Tetra Tech (NASDAQ: TTEK) 4.58%
* Itron Inc (NASDAQ: ITRI) 4.12%
* Urs Corp (NYSE: URS) 4.07%
* AECOM (NYSE: ACM) 4.00%
* Danaher Corp (NYSE: DHR) 3.98%
* Badger Meter (AMEX: BMI) 3.95% (flowmeters)
* Veolia Environnement (NYSE: VE) 3.92%

The chart we view in 2009 from Finance.yahoo.com  showed how this ETF  was clobbered in 2008.

water-investments

Yet the need for water has not diminished.  This made the fund especially worthy of research… for value.

water-share-chart

Performance since that time has been steady and the ETF has risen from $14 to the $18 per share range showing that water shares overall have been rising through thick and through thin.

Investments go up and down. Markets get hot and rise.  Markets crash.  Fashion distorts markets but in the long term, fundamentals rule. There few fundamentals to investing as important as this.   There few fundamentals to investing as important life itself as important as water.

See Ecuador water problems here.

See an Ecuador water problem update here.

Get your next water investing update at our June 23-27 Quantum Wealth – International Investing and Business course.

Gary

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How to Have Real Safety in 2020

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motif

 

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Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Michael is a brilliant mathematician.  We have tracked his analysis for over 20 years.   He continually researches international major stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  He compares each stock market’s history.  From this, he develops his Good Value Stock Market Strategy and rates each market as a Buy, Neutral or Sell market.  His analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each BUY market.

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A BUY rating for an index does NOT imply that any stock in that country is an attractive investment, so you do not have to spend hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pifolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

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70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, Austria, France, Canada, Germany, Hong Kong, Italy, Japan, Norway, Spain, Singapore and the United Kingdom.

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The fact that the Pifilios are invested in all the shares of the MSCI Index in each good value market reduces long term risk.

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When the bear arrives, what will happen to global and especially good value markets?

No  one knows the answer to this question.

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In the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

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