Sell! Sell! Sell!
Don't buy! Don't buy! Don't buy!
These are the sounds you'll probably hear if you happen to tune in to a CNBC program called Mad Money when the program host Jim Cramer talks about the stock of any renewable energy company. Cramer, a former hedge fund manager, aims the show at what he calls “home gamers,” ordinary people who want to pick their own stocks for investment. For the past few years, Cramer hasn't had much good to say about stocks of companies in the wind or solar energy space. In fact, he is down on most companies engaged in anything resembling “green” technology - He once called LED manufacturer Cree Inc. a “serial disappointer.”
He recently opined on his show that “Green works as a philosophy….but not an investment philosophy, and we are about making money, not making cleaner skies, as much as we, too, have a predilection for clean air.”
Cramer thinks the solar energy business is in decline. It has long relied on government subsidies, he says, which has become an increasingly tenuous proposition as policymakers reduce spending and cut funding to solar energy projects. When people calling in to the show ask his opinion on stocks such as the solar power company First Solar Inc. or renewable energy equipment maker Suntech Holdings, he races for his sound effects console and starts hammering on the Don't buy! Don't buy! button.
Cramer is only slightly less negative on ethanol and wind power. The closest I've seen him come to recommending a wind power stock was on the initial public offering of a Chinese wind company. He told his listeners to forget it unless they could get in on the IPO itself, that is, buy the stock before it began publically trading. Once it traded in the open market, he told viewers, dump the stock.
Cramer has also called electric vehicles “unsafe at any speed” if government efforts at controlling the budget deficit reduce or eliminate subsidies in that area. He told viewers to avoid EV battery maker A123 unless they could get shares in its IPO, and then to flip out of the stock.
But there is one segment of energy Cramer is high on: He claims natural gas is the bridge fuel to wean the U.S. off its oil addiction. Cramer regularly brings CEOs from nat-gas-related companies onto his show and lobs softball questions at them.
Cramer's fawning over nat-gas company management seems to sometimes go to silly extremes. Watching a recent interview with Clean Energy Fuels CEO Andrew Littlefair, for example, I was left wondering whether Cramer would end the segment by kissing Littlefair's ring.
One point to note regardless of how you might feel about Cramer's on-screen antics and positions on energy: His market prognostications don't seem to be anything special. A financial analysis firm called CXO Advisory Group looked at market predictions Cramer had made in his column for New York magazine and found he got things right only about 50% of the time. And two Northeastern University researchers who looked at Cramer's on-screen recommendations concluded “while Cramer may be entertaining and mesmerizing to many of his viewers, his aggregate or average stock recommendations are neither extraordinarily good nor unusually bad.”