CNRG: Makes Sense Long Term

seekingalpha2024-06-05

Justin Paget The rapidly shifting path towards renewable power continues to move forward at an increased pace globally, thanks to sustained environmental awareness and encouraging government policies....

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I’ve noted my bullishness on the oil and gas side of the equation, but I don’t think you can ignore alternative energy independent of your views on fossil fuel-related stocks. So how do you get exposure to clean energy?","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{},"translate_title":"CNRG：从长远来看是有意义的","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CNRG":1,"PBW":1,"FDN":0.82},"content_text":"Justin Paget The rapidly shifting path towards renewable power continues to move forward at an increased pace globally, thanks to sustained environmental awareness and encouraging government policies. I’ve noted my bullishness on the oil and gas side of the equation, but I don’t think you can ignore alternative energy independent of your views on fossil fuel-related stocks. So how do you get exposure to clean energy? You may want to consider the SPDR Kensho Clean Power ETF (NYSEARCA:CNRG). CNRG seeks to track the performance of the S&P Kensho Clean Power Index. The benchmark is a proprietary index compiled by S&P Dow Jones Indices and includes U.S.-listed securities of companies that operate in developed and emerging markets. This benchmark index classifies companies as part of the Clean Power sector, which captures a specific set of companies that are engaged in providing products and services essential to renewable energy (solar, wind, geothermal and hydroelectric power) innovation. CNRG’s active investment approach is underpinned by AI and quantitative techniques that identify and score companies at the forefront of the clean energy transition. This allows investors to get exposure to a broadly diversified portfolio of firms that stand to gain from the global move towards cleaner energy generation and lower emissions. ETF Holdings One thing I appreciate about the fund is the weightings here. No position currently makes up more than 4.4% of the portfolio. First Solar is the largest position, followed by Constellation Energy, the latter of which is a major play in alternative energy broadly.   ssga.com These aren’t companies most ETFs have large exposures to, which I like thematically as a diversified option against more traditional market-cap weighted equity holdings. Sector Composition The interesting thing here is the mix of sectors the holdings are classified under. While this is a “clean energy” fund, we can see that the holds are also tied to electrical components and equipment, construction, and semiconductors. This, of course, makes sense given the way alternative energy companies produce their output. Still - it makes this diversified within the theme of clean power overall.   ssga.com The sector allocation speaks to the ETF’s emphasis on companies that are involved in the manufacturing, distribution and generation of clean power, as well as critical supporting industries. Peer Comparison: CNRG vs. PBW It’s worth comparing CNRG to the Invesco WilderHill Clean Energy ETF (PBW), which is essentially playing the same theme using a different methodology and sector mix. When we look at the price ratio of CNRG to PBW, we find that CNRG has significantly outperformed (it’s not even close), suggesting the methodology has overall been far more conducive towards alpha than what PBW does.   stockcharts.com Pros and Cons The move to renewables and other forms of sustainable power generation presents a long-term investment opportunity. More and more, governments and corporations are becoming environmentally responsible in regard to reducing carbon output. This means the demand for clean power solutions is set to increase. Through CNRG, investors can gain exposure to companies at the forefront of this global shift. Rapidly falling prices in emerging clean energy technologies, including solar and wind power, are leading to further adoption and are increasingly competitive with existing fossil fuel-based energy sources. This positive trend bodes well for the portfolio companies of CNRG, all of which are developing or deploying new clean power solutions. On the flip side, investing in this clean power revolution could expose investors to significant risks. In particular, companies in the clean power space would likely have to fight for government subsidies amid political turnarounds and evolving regulatory policies. They also face stiff competition from incumbents, and their success would be contingent upon identifying or developing proprietary technological solutions that are capital-intensive and are prone to technological risk. In addition, the clean power industry is also exposed to multiple sources of risk, including events outside the control of these companies, such as seasonal weather fluctuations, supply and demand shocks for their clean energy products and services, and geopolitical shocks (e.g., war, embargoes, fiscal stress). Conclusion  Strong fund overall. It exploits AI and machine learning models to identify the companies at the forefront of innovation. The performance is there, the mix of holdings is not typical, and it’s a trend that isn’t going away. Worth considering pairing up against energy if, like me, you’re broadly bullish on the space.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.0","shortVersion":"4.30.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2441756042"}