The World Future Energy Summit has recently finished in Abu Dhabi and for me one of the highlights was the Turanor, an impressive solar powered yacht designed and built by Planet Solar. It is the largest boat of its kind to ever sail and the first to ever circumnavigate the globe powered entirely by the sun. It steadily cruises at an average speed of five knots, but is capable of reaching more than double that on clear, calm, sunny days.

The project was conceived by Raphaël Domjan of Switzerland as a method of demonstrating the possibilities that current solar technology holds for clean transportation. The yacht carries a huge rack of Lithium-Ion batteries capable of storing up to three days’ worth of sailing power, easily enough to allow transit to continue throughout the night, or during overcast skies. Never once in thousands of miles has the boat had to turn on its diesel back up, in fact the diesel is only on board is to satisfy the insurance companies.

Whilst the Turanor has sailed around the world it has generated lots of media attention and public interest which has helped to boost recognition of the solar industry and the potential there within. At a price of $20 million the boat will not itself be available to everyone, but the investors are already experiencing ROI from the concepts that it has proven and the other ideas it has tested. One useful technology that could be put into the general market is the software created by Planet Solar which uses weather data to steer the boat into the sunniest areas, a very useful tool for future solar transport. The mammoth trip also demonstrated that neither the solar panels nor batteries suffered significant wear from salt or water, another important discovery for future solar powered boats.

Solar transport still faces many obstacles before it can be mass produced for sale to the general public at reasonable prices, it is more likely that the first solar powered yachts will be available for luxury cruisers. Still, it is obvious that the basic concepts of clean transportation are tenable, now we just need to be patient and wait.

By. James Burgess of Oilprice.com

Source: http://oilprice.com/Latest-Energy-News/World-News/Solar-Yacht-Sails-Around-the-World-Powered-by-Nothing-More-than-the-Sun.html

Jan. 25 (Bloomberg) — Ivan Colhoun, head of Australian economics and property research at Australia & New Zealand Banking Group Ltd. and a former Reserve Bank of Australia official, talks about Australia inflation and central bank monetary policy. Australian consumer prices were unchanged last quarter as banana costs plunged, while a measure of core inflation that accelerated more than economists forecast sent the currency higher. Colhoun speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Johnson & Johnson (NYSE:JNJ) CEO William C. Weldon said in an interview that declines in medical spending could be nearing a bottom.The CEO sees signs that a drop in elective procedures including knee and hip replacements is leveling off, and could help boost sales by as much as 2% this year.

Source: ForexYard

The US dollar had a particularly strong day today following negative news out of both Japan and the euro-zone. News that Japan has logged in a trade deficit for the first time since 1980 caused the USD/JPY pair to jump more than 100 pips throughout the day. Meanwhile, fresh concerns regarding Greece’s sovereign debt drove EUR/USD down, virtually erasing gains made at the beginning of the week.

Meanwhile, investors largely shrugged off news that the US Federal Reserve is unlikely to hike interest rates until the beginning of 2014. The dollar has found significant support as of late, largely because of negative international indicators. Investors continue to view the USD as a safe-haven asset. With the euro-zone still in extremely fragile position, traders can expect the dollar to remain at its current level for the near future.

Turning to tomorrow, a batch of news out of the US may generate significant market volatility. Traders will want to pay attention to this week’s Unemployment Claims figure and the most recent New Home Sales report for clues as to the state of the US economic recovery. With both indicators predicted to come in positive, the greenback may be able to extend its current bullish run as we begin to close out the week.

Forex Market Analysis provided by ForexYard.

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Jan. 25 (Bloomberg) — Gerard Lyons, chief economist at Standard Chartered Plc, talks about the outlook for the euro zone and challenges facing the region’s policy makers. Lyons speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse” from the World Economic Forum’s annual meeting in Davos, Switzerland. (Source: Bloomberg)

Understanding a Company’s Bottom Line

by Jason Jenkins, Investment U Research
Wednesday, January 25, 2012

Before you even think of investing in a company, you must check its make-up. The key three documents are the balance sheet, income statement and statement of cash flows. Any analyst will tell you to do this but no one really tells you what you are actually looking for.

Well each document tells a different story:

• The balance sheet is a snapshot of a company’s present condition. A list of assets with liabilities gives you the company’s equity.
• The income statement looks at their income generated minus any expenses to show if they are profitable.
• The statement of cash flow shows you the cash that “flows through the company” during a quarter or year, excluding fixed expenses. This is because cash flow tries to give a picture of the financial aspect of the activities that the company carries out.

All of the above information is helpful in judging the health of a company. However, there are specifics that money managers and analysts look at to drive their decision-making process.

Cash Proves King 

The price-to-earnings ratio is a very popular metric among amateur investors. That’s probably because it’s very easy to digest. But cash flow, and not earnings, drive economic value. Earnings – an accounting measure – represent paper profits that can be manipulated in the company’s benefit.

Here’s a good example of what can happen. Early in a company’s life it will usually lose money. When the company starts to turn a profit, it can often use those losses from previous years to cut its taxes. That can overstate current earnings and understate its forward earnings, masking the company’s real operating situation.

Thus, a savvy analyst would use the growth rate of earnings before interest and taxes (EBIT) instead of net income in order to evaluate the company’s growth. Cash flow is designed to focus on the operating business and not secondary costs or profits…

And take special note: Cash flow represents bankable profits that can be used to shore up balance sheets, repurchase shares, or pay dividends. These are aspects of the business that are very important in the current investing climate.

The Cable Television Example

Cash flow is most commonly used to value companies in industries that use a great deal of up-front capital expenditures and have large amortization burdens. A perfect example is Cable TV companies. They report negative earnings in their initial years of their life cycle as they put out major huge capital expenditures to build their cable networks.

But during this same time, these Cable TV companies see their cash flow grow. Net Income doesn’t paint the entire picture because huge depreciation and amortization charges cover up these companies’ ability to generate cash.

Cash flow analysis would also be used to value telecommunication companies that need to build up a network of telephony supporting infrastructure. They are in the same boat as Cable TV where they incur high fixed costs and amortization.  While building their networks, the telecommunication companies reported high negative earnings, even though, in reality, they had positive cash flows.

P/E ratios usually get all attention, but now you can see why cash flow gives you a better indication of what’s really going on with a company.

Good Investing,

Jason Jenkins

Article by Investment U

Is M&A the New R&D?

by Marc Lichtenfeld, Investment U Senior Analyst
Wednesday, January 25, 2012: Issue #1694

You don’t find too many wealthy do it yourselfers. While some people of means still enjoy putting in the hard work, knowing that a project was done correctly, most prefer to supervise, letting someone else to the heavy lifting.

It’s like that in the pharmaceutical sector, as well. Large drug companies, loaded with cash, are paying exorbitant prices to add drugs to their pipelines. In all fairness, they’re still developing their own therapeutics and are spending more on research and development, but often the quick fix for an ailing pipeline is to pull out the checkbook and purchase mid- or late-stage development drugs.

And the premiums being paid are astronomical lately. Pharmasset was just acquired by Gilead Sciences (Nasdaq: GILD) for $11 billion, an 89% premium to where Pharmasset was trading before the deal was announced.

Bristol-Myers Squibb (NYSE: BMY) will pay a 163% premium for Inhibitex (Nasdaq: INHX) in a deal that involved six bidders.

These kinds of premiums have investment bankers salivating – putting in even longer hours than usual, trying to set up richly valued deals.

For the acquiring pharmaceutical company, a purchase speeds up the process of getting a new drug to market by cutting out the earlier stage development process, where many drugs never prove to be worth anything.

By the time a drug is in Phase II or III, it has at least shown some potential that it could make it to the market. Of course, many drugs still fail in those stages, but at that point, the company is at least halfway to the end zone rather than starting from scratch.

For the biotech company, the acquisition grants them the resources they need to complete their scientific work, as well as the ability to make the drug a commercial success. For shareholders, they get an immediate and often substantial windfall.

So let’s take a look at a few companies I expect to be bought in the next 12 months.

Onyx Pharmaceuticals (Nasdaq: ONXX) – In a recent interview with Bloomberg, CFO Matt Fust said the company is an attractive target for acquirers. If that’s not putting out an “Open for Business” sign, I don’t know what is.

Onyx is the developer of kidney cancer drug Nexavar, which generated $250 million in sales in the third quarter, although Onyx’s take was $75 million because of its partnership with Bayer AG. Nexavar is also being studied in breast cancer, thyroid and lung cancer.

Onyx has another partnership with Bayer on a colon cancer drug that could be approved later this year.

AMAG Pharmaceuticals (Nasdaq: AMAG) – Another company whose executives, for all intents and purposes, acknowledged the company is for sale.

In his presentation at the J.P. Morgan Healthcare Conference earlier this month, new CEO Frank Thomas said, “…should we remain an independent company” several times.

It would not be a surprise to see the company taken over, as some activist investors have been pushing the company hard for a sale, forcing out former CEO Dr. Brian Pereira. The former chief was seen as an impediment to the company being acquired, and AMAG’s shares jumped 18% the day it was announced he was being replaced.

AMAG has one approved drug, Feraheme, for chronic kidney disease, and should have Phase III data for the drug in the broader indication of iron deficiency anemia. The company has $229 million and no debt.

Incyte Corporation (Nasdaq: INCY) – Incyte Corporation won FDA approval in November for its myelofibrosis drug Jakafi. It’s the first drug approved for the rare disease. Myelofibrosis is a disorder that causes bone marrow to be replaced by scar tissue and leads to, among other things, an enlarged spleen.

The company has a partnership with Eli Lilly (NYSE: LLY) on its Phase II candidate for rheumatoid arthritis. It has a deep pipeline with one Phase III drug and six Phase II drugs.

The stock has had a big run since Jakafi was approved, climbing from around $12 to $18. But it’s still trading below its 52-week high of $21.15, reached before Jakafi was approved.

Lastly, one of the company’s directors purchased 50,000 shares in the open market last week, putting nearly $900,000 of his own money to work.

I suspect a big pharma company is going to see a lot of value in Incyte’s pipeline and approved product.

Good Investing,

Marc Lichtenfeld

Article by Investment U

Ocean Thermal Energy Conversion (OTEC) is an idea for creating renewable energy by exploiting the difference in ocean temperatures between the surface and the seabed. The OTEC permit office first opened in 1981 as part of NOAA, America’s National Oceanic and Atmospheric Administration, the marine counterpart to NASA. It was created after the oil price spike of the 1970’s when interest in alternative power sources rose. Oil prices eventually settled and as a result interest in the alternative power sources dwindled, so in 1994, just 13 years later the OTEC office was closed without ever having issued a permit. Good old American bureaucracy.

Now, again during times of high oil prices, alternative energy sources are back with vengeance. All options are being considered and one of them is OTEC. Luckily the concept is reasonably simple. A fluid with a low boiling point, such as ammonium, is vaporised in a heat exchanger using surface water from the sea with an average temperature of about 25°C. The resulting gas has a sufficient pressure to drive a turbine and create electricity. The gas is then cooled using seawater pumped up from a depth of about one kilometre and with an average temperature of about 5°C. The liquid ammonia can then be reheated and the whole process started again. Theoretically this means that OTEC plants can be built anywhere with a surface water temperature of 25°C and a depth of at least one kilometre.

One company pursuing OTEC technology is Lockhead Martin, which is collaborating with a smaller firm called Makai Ocean Engineering to build a 10 megawatt plant in Hawaii that is projected to open in 2015. Then if this plant is successful the idea is to construct a 100 megawatt plant by 2020.

Most of the technology necessary can be taken from existing areas of engineering, such as deepwater oil drilling, where the heat exchangers and pipework required to make a 10MW plant already exist. The 100MW facility however will need a pipe that is not only 1km long but also ten metres in diameter, in order to supply the necessary amount of water. It must also be strong enough to resist waves and ocean climates for decades. Kerry Kehoe, the current head of OTEC activities at NOAA, estimates such a facility could cost $1 billion.

By. James Burgess of Oilprice.com

Source: http://oilprice.com/Alternative-Energy/Renewable-Energy/Using-Ocean-Temperature-Differences-to-Create-Renewable-Energy.html

Jan. 25 (Bloomberg) — Fatih Birol, chief economist at the International Energy Agency, talks about the price of oil. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse” on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland. (Source: Bloomberg)

Jan. 25 (Bloomberg) — Andrew Stotz, a Bangkok-based strategist at Kim Eng Securities (Thailand) Pcl, talks about Thailand’s economy and central bank monetary policy. Thailand may cut interest rates for the second consecutive meeting to help spur a recovery from the worst floods in almost 70 years and as a deteriorating global economy threatens growth. Stotz speaks with Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)