Impax Environmental still steering clear of Tesla

Impax Environmental Markets results for 2014 show that the fund underperformed its benchmark over the period – the net asset value and share price returns were both 1.7% as compared to the FTSE ET100 Index which returned 4.1%. Environmental stocks also lagged wider markets – the MSCI World Index returned 10.6%. The dividend was increased to 1.4p from 1.2p.

The manager says the oil price fall impacted alternative energy related stocks somewhat but is not a problem for the whole portfolio and is beneficial to some companies. There were two acquisitions of portfolio companies during the Period.  Nutreco (Sustainable and Efficient Agriculture, Netherlands) was the subject of an agreed offer by SHV, following a bidding war with Cargill, and Danfoss acquired Vacon (Industrial Energy Efficiency, Finland).

Not owning Tesla had a big effect on their relative performance (this was the same story last year) – the managers do not believe Tesla’s valuation is justified. Solar holdings, such as SMA Solar Technology (solar inverters, Germany), were underperformers.  The managers think this was partly due to market misperceptions about the negative influence of the oil price on the sub-sector: they say in reality, oil prices have a negligible effect on these markets and solar stocks are more closely correlated to government targets, technology costs and power prices.  They believe that this adverse sentiment and the resulting sell-off have been overdone and are currently seeking buying opportunities. They also say Recycling & Value Added Waste Processing companies were weakened by overcapacity in processing and disposal facilities and lower key commodity prices.  This led to weakness in recycling and value added waste processing companies such as Schnitzer Steel Industries (metal recycling, US).  Small and micro-cap holdings also underperformed following good performance in 2013, which impacted Regenersis (mobile phone refurbishment and recycling, UK).

IEM : Impax Environmental still steering clear of Tesla


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