Cheap gas and an update on Sentry Select

Tony Edwards Everything Else, Perspective

I had a rather heated discussion with my neighbour the other day. He was complaining about the cost of filling up, which he seems to do a lot. I said, “Paul, you’re running an SUV to work and back, a truck to pull your camper, a Harley for you and one for your wife, and I know you’re not looking forward to filling the tanks on your motor boat. You should be thankful your engines don’t run on olive oil, even the cheap stuff will set you back about eight bucks a litre. Besides, that ear-rattling sound coming from the back end of your hog just screams, ‘I love burning gas!’, doesn’t it? Face it , you’re addicted to the stuff.” I think he was starting to get irritated with me, but I couldn’t resist revving him up a little more.

“Paul you’re paying more for a litre of wine, or milk, or bottled water, but I don’t hear anyone talking about running out of any of those things. Yet you and your wife burn 100 litres of gas on your Harleys last weekend, for fun, and it’s a resource that everyone knows won’t last forever! You think a buck a litre is expensive? What are you going to do when it triples in price and you’re fighting someone for the last drops in the pump? Hell, people are already fighting and dying for oil, how do you factor that into dollar-a-litre gas? I think we’re getting it pretty damn cheap myself.” I’m pretty sure by this point he wanted to run me over with his truck, but he chose some well-worn epithets instead.

“Tony, all you tree-hugging, hippie, eco-freaks would have us driving those expensive hybrid things you’ve gotta plug in or, my god, taking the bus to work. A horse and buggy for everyone perhaps? What do you want, to take us all back to the stone age?” Well that wasn’t the first time I’d been confronted with that line of reasoning so I was ready for him. “Paul, whether it’s 40, or 60, or 100 years, sonner or later we’re going to be forced off of the oil habit. And make a big mess in the meantime I might add. Do you know who makes more solar panels than just about anyone else in the world? British Petroleum. They’re hedging their bets, not just on solar but also wind power. Maybe you should too.” He suddenly seemed a little more receptive. “So smart-ass, what should I be invested in if oil hits $100 a barrel?” I said, “Paul, you already own a nice bicycle, other than that, you might consider putting a few bucks into the only mutual fund in Canada that focuses on alternative energy investments.” “Yeah?”, he snorts, “You show me how to run one of these Harleys off a windmill and maybe I’ll have a look.”

SENTRY SELECTED FOCUSED ALTERNATIVE ENERGY FUND

The only fund of it’s kind in Canada, Sentry Select runs a concentrated portfolio of less than 40 companies that operate in the area of research, development, production and distribution of energy not derived from coal, oil or natural gas. These alternate sources include fuel cells, solar and wind power, hydroelectric and co-generation. Since it is quite likely that no single alternative to oil may emerge for some time, this fund is a good way to take a stake in a variety of promising technologies.

In a recent portfolio commentary, manager John Sinkins stated, “…nothing moves the search for alternatives like higher prices, and the recent strength in oil and gas has improved the viability of many of the alternatives. Many of these alternative sources have improved their efficiencies to the point where they are now real businesses earning profit.” To which I might add that, like Ballard Power, many are also real businesses not yet earning a profit.

It may be a bit of a stretch to classify this fund as an ‘ethical’ or ‘socially responsible’ investment. For instance, two of the fund’s largest holdings include Caterpillar, a Fortune 50 industrial company and the world’s leading manufacturer of construction and mining equipment, and United Technologies, whose various divisions produce jet engines and military helicopters. While they are both on the cutting edge of alternate energy production, these activities do not yet constitute any significant share of their business. In many ways this is typical of the grey areas that many so-called ethical investments inhabit, and in my mind a big reason why so many people who would like to put some savings in the stock market choose to buy real estate instead.

This fund is clearly not for the impatient investor. Sentry Select has positions in three fuel cell manufacturers, Ballard Power, Plug Power and FuelCell Energy Inc.. The combined market value of these companies is less than half of what the managers paid for them. In fact, nearly half of the holdings in this fund are down 50% or more, so it’s perhaps not surprising that investors have sunk a paltry $3 million into this offering. But if you look 20 years into the future, can handle the ups and downs in between, and you like to zig while everyone else is zagging, then this fund warrants a closer look for the ‘venture’ portion of your investment portfolio.

The only fund of it’s kind in Canada, Sentry Select runs a concentrated portfolio of less than 40 companies that operate in the area of research, development, production and distribution of energy not derived from coal, oil or natural gas. These alternate sources include fuel cells, solar and wind power, hydroelectric and co-generation. Since it is quite likely that no single alternative to oil may emerge for some time, this fund is a good way to take a stake in a variety of promising technologies In a recent portfolio commentary, manager John Sinkins stated, “…nothing moves the search for alternatives like higher prices, and the recent strength in oil and gas has improved the viability of many of the alternatives. Many of these alternative sources have improved their efficiencies to the point where they are now real businesses earning profit.” To which I might add that, like Ballard Power, many are also real businesses not yet earning a profit. It may be a bit of a stretch to classify this fund as an ‘ethical’ or ‘socially responsible’ investment. For instance, two of the fund’s largest holdings include Caterpillar, a Fortune 50 industrial company and the world’s leading manufacturer of construction and mining equipment, and United Technologies, whose various divisions produce jet engines and military helicopters. While they are both on the cutting edge of alternate energy production, these activities do not yet constitute any significant share of their business. In many ways this is typical of the grey areas that many so-called ethical investments inhabit, and in my mind a big reason why so many people who would like to put some savings in the stock market choose to buy real estate instead. This fund is clearly not for the impatient investor. Sentry Select has positions in three fuel cell manufacturers, Ballard Power, Plug Power and FuelCell Energy Inc.. The combined market value of these companies is less than half of what the managers paid for them. In fact, nearly half of the holdings in this fund are down 50% or more, so it’s perhaps not surprising that investors have sunk a paltry $3 million into this offering. But if you look 20 years into the future, can handle the ups and downs in between, and you like to zig while everyone else is zagging, then this fund warrants a closer look for the ‘venture’ portion of your investment portfolio.