Pros Follow Buffett Into Battery Tech
The energy storage sector has gotten a lot of attention recently, and some professional investors have started dipping their toe into the segment’s equities.
In a way, thousands of professional investors have indirect plays on battery technology via investments in diversified giants like Sony (SNE), Panasonic (PC), and General Electric (GE), but those holdings hardly indicate bullish sentiment for the still somewhat speculative sector. Recent 13F filings, however, show that some Pros were starting to dip their toe more directly into the energy storage market.
A look at the Energy Storage and Battery Technology Stocks Index’s performance chart shows that these stocks – many of them small-caps – are subject to fairly substantial volatility. Over the last month, the Index’s performance as a whole has matched that of the S&P 500, however some of its components swung by 20% in either direction for the period.
Johnson Controls (JCI) was the Index’s Pro favorite at the end of 2009, with ten hedge funds, mutual funds, and advisors counting shares among their top-15 U.S.-listed equity positions. According to a 10-K filing on November 25, sales of automotive batteries generated 14% of the company’s fiscal-2009 consolidated net sales, so while it’s not exactly an energy-storage pure-play, the company does have a lot riding on its power solutions business.
Reading, Pennsylvania-based industrial battery company EnerSys (ENS) was the runner-up in Pro popularity at the end of Q4, with eight Pros counting the stock among their top holdings. Next in line were 2009 IPO A123 (AONE) and Exide Technologies (XIDE). Exide credits 38.5% of its company’s fiscal-2009 net sales to its Industrial Energy segment, which makes batteries for everything from forklifts to back-up power supply units.
Berkshire Hathaway’s (NYSE: BRK.A, BRK.B) stake in Chinese electric car and battery play BYD (OTC: BYDDF) isn’t listed among Warren Buffett’s end-of-2009 holdings because his shares are listed in Hong Kong. However, two other Chinese battery plays, China Ritar Power (CRTP) and Hong Kong Highpower (HPJ), each earned a top-15 spot in other Pro portfolios during Q4.
It will be interesting to see how early bets on the battery segment play out for investors throughout 2010 and over the next couple of decades. As we’ve noted before, the push for electric vehicles appears to be picking up steam, and with the proliferation of power-thirsty smartphones and other devices, there is certainly no shortage of demand for innovation within the energy storage sector.
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