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SX Greentech Advisor
High Profit ESG Investing

October 12, 2022

The latest week of action suggests the market-wide bearishness is affecting Greentech, with only 6% of the U.S. listed stocks in our universe posting gains since our issue hit your inbox last Wednesday. At that time, we said Greentech is in a zone of support. It still is, but today’s early trading is pushing the sector toward testing a lower trendline we see as a crucial support level. We’re now also about a 6% decline from current levels to a test of the 27-month low set in May. Those two levels provide a band of support at 42-40 for PBW and, as our proxy for the Greentech sector, that’s important support we want to see hold.

To the upside, there is plenty of room to move higher again without actually breaking out of the long-term downtrend – the Wilderhill could advance 30% from current levels without cracking the major bearish resistance line we see. This means, when we see another bounce, we can move to take smaller short-term profits as the sector works through the bear market. And the longer-term picture does show the market is working through the bearishness: one indication is that the rate of the sector’s decline from the February 2021 peak is slowing over time with these intermittent rallies we’re seeing.

Subsector-wise, the market is also telling us to be cautious. Solar, wind, water, nuclear, fuel cells and EVs are all bearish. The main Dow Jones averages – utilities, transports and utilities – are all bearish too, showing widespread market negativity. At the moment, we’re beholden to the market’s tide, not the fundamental outlook of Greentech, which remains excellent.

We have some ratings changes and, while Ormat (ORA) triggered our sell-stop Friday and should have been sold Monday, for clarity we’re formally calling for its sale today.

Real Money Portfolio

Clean Earth Acquisitions Corp. Shares, Warrants and Rights (CLIN, CLINW, CLINR)
The SPAC shares are 22 cents below their trust value of $10.10 – that’s a 2.2% yield assuming the SPAC closes shop in May 2023. If management triggers its option to extend its search period another three months beyond that, in exchange for another $0.10 per share into the trust, shares offer a 3.24% yield come August 2023. Our recommendation is Hold because we bought units at 9.99, which have split into shares, which can claim the trust money, plus warrants and rights to profit on a potential deal. HOLD

Clearway Energy (CWEN/A)
Clearway is working to hold support at 28.50. The company reports earnings on November 2. Our sell-stop is “around 28.” Resistance at 31.50 appears strong. HOLD

Energy Recovery (ERII)
ERII is on top of support at its 200-day line of 20.61. Our sell stop is “near 20.” Essentially, we want to see the 200-day line held and should sell if we have a convincing close under the 200-day. The are some technical conditions that suggest we should move higher from here, but it’s a mixed picture. HOLD

Enovix (ENVX)
ENVX continues to have chart support from the price gap created in August. That gap, which closes at 16.33, is slowly being eaten into, and resistance has formed around 20-21. The company will report earnings on November 8. HOLD

Enphase Energy (ENPH)
ENPH cut through an initial support level this past week. There are zones of support down to the 200-day average at 205, but that likely is too much of a drawdown for us to accept. Our sell-stop is “around 230.” Earnings will be announced after the market’s close on October 25. We’re shifting our recommendation from Buy. HOLD

Growth for Good Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
GFGD is at a 14-cent discount to its trust value of $10. The SPAC’s initial deadline is June 2023, but management holds a three-month extension option by depositing another 10 cents per share into trust. If they can’t find a merger by then, they’re likely to extend, putting shares at a 24-cent discount, or a 2.44% yield to 11 months from now. We bought units at 9.99, which also gave us warrants and rights, so our recommendation remains Hold. No news. HOLD

Li Auto (LI)
LI tested our sell-stop level of “around 19” to start the week. Shares have bounced a little, but China remains a mixed bag: continued COVID lockdowns crimp EV production and the economy there, while the central government incentivizes people to buy EVs. HOLD

Montauk Renewables (MNTK)
We issued a special bulletin Thursday to sell MNTK, given it had broken our sell-stop of “around 16.50” a week ago. The portfolio booked the sale at 14.58, the midpoint of that day’s high and low, a loss of 6%. Shares are slightly weaker today, close to 14. SOLD

Onsemi (ON)
ON is nearing our sell-stop of “around 59,” trading under 60 today. The temptation is to loosen the stop a bit, but since ON is falling with semiconductors as a whole, we are concerned buyers may not come in at a lower price if we close below 59, given the sector’s bearishness. Little news. HOLD

Ormat Technologies (ORA)
On Friday ORA settled below our sell-stop of 85.30. We didn’t issue a special bulletin for the sale, but a close below our sell-stop should trigger a sale the next day. If you haven’t sold, we recommend selling ORA. SELL

Shoals Technologies (SHLS)
SHLS is between resistance at 22-24 and support at 18-19.50. We continue to be wary of committing new capital in current conditions. WATCH

Sunrun (RUN)
RUN has broken beneath support this past week, with today’s trading eliminating gap support from an earlier bullish move. We’re dropping RUN from our watch list as a result, because for us to buy now, shares either need to turn technically bullish, which is unlikely in the near term, or fall to a more value-level price. DROP

Excelsior Portfolio

ADS-Tec Energy (ADSEW)
The company said supply chain problems will keep it from hitting its 2022 sales projections, shifting “significant revenue” into 2023. This is the first misstep from the well-run business. That said, more sales next year probably come when the market has worked through this bearish period and will be more receptive to good news. Our warrants are recently at 91 cents. HOLD

Constellation Energy (CEG)
For the first time in a while, we’re seeing some cracks in the bullish posture of CEG, with shares slipping below initial support in the 84-86 zone. Our sell stop is “around 77.” While we’d prefer to remain in this trade, we’ll gladly book the profit if shares erode to that point. Earnings will come November 8. HOLD

ESS Technology (GWH.WS)
The warrants have slipped below 60 cents today, as the shares have lost about a third of their value in the past week on market bearishness. HOLD

FuelCell Energy (FCEL)
Shares are near a two-year low today. The handful of fuel cell stocks trade in line with Greentech as a whole but with more upside and downside volatility. We have no sell-stop, having entered the trade with the goal of remaining in the trade for at least one year. This is a half-sized position. HOLD

LiveWire Group (LVWR.WS)
Our featured trade in last week’s issue, we added a position in the EV motorcycle maker’s warrants at 39 cents, where they trade today. Most likely, this trade will need some time for the underlying shares to get their feet and for the market to turn its attention back to growth stocks. If you have patience, you can still buy here or lower. BUY

Origin Materials (ORGNW)
No news and modest weakness on light volume for our warrants. This was part of a June 2021 basket trade and is a one-sixth-sized position, as are the three other remaining holdings from that trade, below. HOLD

Ree Automotive (REE)
Ree is now below a buck, which starts to bring concerns about Nasdaq listing requirements. The business appears to be making progress, so the goal is to make it through the bear market until 2023 starts producing sales. HOLD

ReNew Energy Global (RNWWW)
Warrants are basically level on the week at 1.03 today. ReNew is India’s largest renewable energy owner/operator. HOLD

Volta Inc (VLTA.WS)
Volta warrants are around 39 cents, little changed from last week. The company’s cost-cutting moves have shares now trading close to a dollar. Like Ree, the goal is for the company to weather the storm until positive news brings buyers back. HOLD

Our next SX Greentech Advisor issue is published Wednesday, October 19. Weekly updates are published every non-issue Wednesday, and any timely notices get distributed as needed. Get in touch with comments, suggestions and questions any time. Reach me at brendan@cabotwealth.com. Thank you for subscribing.

Brendan Coffey, Chief Analyst of Cabot SX Greentech Advisor, has been immersed in investing for more than 25 years, including as an investment advisory editor, investor, markets reporter and writer about and for a wealth of Wall Street’s most influential minds. He’s discussed investing strategy with the likes of Carl Icahn, Mark Cuban and Leon Cooperman and collaborated with hedge fund managers and entrepreneurs on books and essays. He’s written about investments and markets for Forbes, Bloomberg, Fortune, The Wall Street Journal and numerous other outlets.