Electric Cars Fund
As many investors search for the next big thing in investing, many investors agree that it will somehow be in the arena of energy independence and alternative sources. In such an environment Electric Cars is one of the promising sectors. The sector is still young and largely dominated by a few companies but the products developed such as Tesla Model-S and GM Volt is inspiring. In addition from an investment perspective, the sector should be given the benefit of the doubt as valuations are reasonable and many of the companies have other traditional business lines which decreases the risk.
The Electric Cars Fund aims to benefit from this sectors expected rapid growth as Electric Cars get accepted and the necessary investments are made to install the infrastructure to support these cars. The Fund's main aim will be to accumulate the shares of the main players of the sector at reasonable prices and hold those investments without short term trading. In the case of expected major market reversals the positions may be decreased to adjust risk and reinvest at lower levels.
The Fund will also maintain a sizable position in USO (United States Oil), as the growth and success of the Electric Cars are very much dependent on the price of oil remaining at elevated levels in the United States. The Fund will also try to alleviate volatility with this hedging position in USO.
June 18th’ 12 15:46
TSLA is up close to 10% from its lows in the $29 range due to its approaching Model-S launch. I should have seized this trading opportunity and it goes down as an easy miss. I just put my attention on the AONE position which has done well recently and I missed on this trading opportunity.
June 12th’ 12 15:57
Finally!!! AONE up 52%. This is the reason why I have a long position in this stock. Any positive news and the short squeeze will result in days like this. The AONE position in the Fund is about 15% although the effect on the Fund itself is somehow negated by the loss in the USO position.
May 14th’ 12 11:37
Not much to trade in the Electric Cars stocks. I am happy that AONE has somehow stabilized from its declining trend. However the big increase I expect and hold the stock for has not happened and the fact that I have to wait for it increases the volatility of the Fund. AONE usually moves around 5% a day and the longer have to hold that position to wait for its big short squeeze, the more that daily volatility increases the risk of the Fund. As for TSLA it is hovering around $28 despite the approach of the Model-S launch. TSLA does not seems to have enough hype to overcome the market weakness. At least it is nice to know I haven’t missed out on a big rally in TSLA.
Apr 11th’ 12 15:37
My concentrated position in A123 has proved to be brutal for this Fund. However I will continue to hold this position as the market cap is so low compared to the accumulated technology in this company that worse comes the worse it will be a takeover target and the trade will still make more than a 300% return.
Mar 28th’ 12 12:14
A123 continues to slide and I used it to average down my cost. This might be a harder trade than I initially expected.
Mar 26th’ 12 15:53
I initiated a sizeable position in A123 as the stock has sold of significantly and the upside potential is worth the risk in my opinion. From these levels zero bound limits the downside but upside could be up to a %500 return. I also initiated a long position in oil (USO) to balance the volatility in A123.
Jan 17th’ 12 15: 02
Seems it was a big mistake not use the carnage in TSLA yesterday as a buying opportunity as the stock has recovered almost all of its losses. I should have gone with the valuation call at $21 and bought up some shares. No excuses. One other thing to note is that though, this recent event has shown that there is very little depth in trading for the TSLA stock, as the stock can move down 20% and then up recover all of it in 2 days. So gotta be careful and probably go with the valuation rather than technicals.
Jan 13th’ 12 15:13
TSLA is down about 17% on news that two of its chief engineers have left the company. The stock is down to levels I am comfortable with valuation. However these kinds of news usually take a while more to play out, so I will wait a little more until trading shapes up a little more. Also, I just don’t comfortable with the state of the market with its recent strength, and no matter the valuation the general market movements do matter to these high beta stocks, so just not willing to take the risk.
Jan 11th’ 13:58
The battery maker A123 Systems have had a very good run-up in the last month. I should just go ahead and admit that it probably has a lot to do with the strength in the market as this is a high-beta stock. However these guys are scoring some very good deals such as providing batteries to the some utilities and the recent deal to provide batteries to VIA which converts popular vehicles to all electric versions for fleet use. It makes me quite comfortable investing in this stock once the market pulls back from its lofty levels. Although they are still burning through cash quite fast, they seem to have a solid customer base that continues to evolve.
Dec 8th, 11 15:47
I just don’t feel comfortable accumulating shares in the Electric Cars sector with this European situation hanging over the market so, similar to other Funds I have pumped this Fund with long term Treasuries also. This should provide a little return until market gets more stable. Meanwhile, TSLA is down more than 10% on a Morgan Stanley downgrade, but I am more comfortable starting to buy up shares at low to mid 20s so I will wait a little more
Dec 3rd, 11 13:04
The main stock of the Electric Cars Fund will be TSLA, roughly 30%. The reason is that TSLA seems to be the company that has the revolutionary product that has the edge in design, practicality and performance to make the breakthrough from a niche market to the actual market. The other positions in the Fund will be used to manage the risk exposure of the Fund. One of the other stocks that will be heavily weighted is BMW, at roughly 20% as their iSeries seems to be the one of the only other available R&D product that could breakthrough to the mass market. As BMW also has very strong and growing traditional business it should balance the risk profile of TSLA. To gain exposure to the components makers which are very volatile but also very promising in case of the electric cars taking off, roughly 20%-30% of the Fund will be devoted to the components makers such as A123 and ENER1. There will also be a position held in USO roughly equal to 15% of the Fund, since high oil prices are a necessity for the viability of electric cars. Also the position in USO will decrease the risk profile off the Fund. All of these positions will be accumulated at reasonable levels at market pullbacks to decrease the risk of a major correction as the electric cars is still a rather volatile sector.