🔴 Betting on Renewable Energy (w/ Rick Bensignor)


Welcome to real visions trade ideas today. We’re sitting down with Rick Benson your CEO of the Benson your group
It is great to have you here Justine. Thanks for having me. All right
So before we get into your specific trade idea today
Could you give us a little bit of an overview of what you see going on in the markets, right?
Oh, it’s been quite a week
So you had Jay pal in the FOMC a week ago when to stay coming out with a quarter point cut?
Which is what the street expected apparently it wasn’t good enough for the president who 24 hours later essentially
changed the entire market environment by imposing the staff threat on the Chinese effective September first and
markets have kind of been in an uproar since the S&P fell as much as about 200 points or so into
Wednesday’s low this week and
We’re calming down. We’re rallying today. It’s good to see I think for now
The spike in volatility is done. What will stay calm for a bit and I suspect through the rest of August
We probably will not take out the the VIX 25 level that we saw as the high of the spike
But no reason to also think that we slide back to 12 or 14 in the VIX
you’re gonna have elevated volatility in
General compared to where we were and also as August goes on Justine
You have to remember that Wall Street takes, you know, it’s a very heavily vacation month, especially the last week of the month
So the last week of August is the second most efficacious week of the year on Wall Street behind Christmas
So you can also get a couple of spikes going on just as less and less people are at their
desks
You can get some slightly
exaggerated moves at this point if the SP got back above 20 950 which a lot of people use is the
Psychological level because that had been the old highs
My guess is you probably got a spike high off of that and you fade that I don’t think there’s any reason for the SP
to turn around make new all-time highs above 30 28 that we saw it’s just over a week ago and at this point I don’t
think we probably take out the
2800 level on the downside so I could see us trading in a hundred point range is hell for the next several weeks
Just as things calm down a bit
But you also never know
A tweet or something out of left field comes that changes the game
Well, so then in this current environment, what sectors are you specifically looking at?
I like the defensive sectors in general put out a pair trade last week two clients to buy staples versus utilities
We just got into that yesterday as the race you’ll pull down into where we were looking to get and I’d say your your classic
Defensives, but I’m still willing to kind of hang with tech and I want to overweight tech necessarily
but I also don’t want to be out of tech and if you look at equal weight Tech versus
weight attack this year
They’re trading fairly close together
Which means it’s not a fag led rally as if only the high cap names in tech have led this whole hire you’ve had breath
That’s been good
and of course breath got hit over the last week because everything came off but when I CQ QEW equal weighted
nasdaq-100
pretty much in line with
QQQ the weighted nastic 100
Which is what most people trade it gives me a pretty good clue that you have broad participation
In tech and it’s the sector that has over time taken over
From what fifty and a hundred years ago was the growth part of the market industrials
transportation used to be part of Dow Theory and you wanted to see those two sectors come together Tech is really the growth part of
The market so as long as you think that there’s still some semblance of long-term growth in the market
You still have to have your exposure in tech and then turning to the worst-performing sector of the market energy
What do you see going on in that space? So energy has been an absolute disaster. I’ve read about it
So many times to clients this year
As of a week ago. Once again, we are on not only
Lows for the year relative to the S&P. So in relative terms XLT the SP energy ETF
Divided by let’s say Spyder SP Y which represents the whole S&P 500 again closed on a new low for the year
But it’s also on
19 year lows versus the SP for ten years energy investing has been an utter disaster
Two years have the last 10 has energy outperform the SP but in the big picture, it’s been a complete dog
So it’s it’s a definitely a problematic sector everybody who’s tried to upgrade or pick a bottom has not effectively done. So
And even though xle has only been trading since 1999 the the SP and energy index existed before them
But there’s only been the etf since 1999
We’re actually in ETF terms getting very close to the all-time low that energy is traded versus the SP
So I’ve got to see
some models that we look at something give me some sense that some turnaround is happening before I’m gonna upgrade this this sector and
You’ve been actually shorting
Xop since about February of this year as part of a parish trade
Yeah
so our homerun trade for
Institutional clients this year has been to be long Solar names through the ETF tan ta n
And short xop oil and gas against it in one of those
Very happy times in life that both sides of a pair trade work for you. Your long goes help and short goes down
This pair trade has made as of last Friday thirty nine point nine percent
So and we’re talking about forty percent gains on a pair trade in the energy space simply being long kind of newfangled
Energy, the the solar side and being short traditional energy oil and gas
Is this a treat that you would consider putting on now?
I know you put it on in February
But is it something that you we’re down to a quarter of the trade left?
We hit our targets about just shy of a month ago
so we’ve taken off three quarters of the trade, but because this continues to make new highs I said
What the heck let’s let’s let 25% go
So would I first get into it now, I would have to evaluate so much
Since we got in and I would have to really look if I’d put it on now
but conceptually I’m going to stick with the idea that and this is something that I said as far back as a
Tober last year when oil had peaked at
$77 and started coming off and I identified same thing
I was on TV at Blue Mary I said that is not just the trading high for that’s the cyclical high for a while
We are not going above that and love people gave me backlash in oils going to 100 noise going to 200
I don’t know if it ever will. I don’t think so. We just yesterday got down under 51 again and crude
It’s bouncing today. But so now over the last month month and a half. I think it is
We’ve got two blows under 51 dollars if we go underneath that again
The oil is probably gone 48 to 47 dollars and and the street is just simply not looking for this
So then how would you go about?
trading this area
I mean
Would you consider going short some oil stocks or would you consider going long some of the other solar energy stocks that you mentioned?
Conceptually. Yes, I still like the idea of being long solar short
Traditional oil stocks at this point again
You have to pick your time
but the trade that I kind of want to talk about today and still think work is another chain that I got our
Individual investors, so I have two different newsletters and consulting arms one handles institutional one handles individual investors
the institutional trade with solar versus xop but for months all so we’ve been long on the on the
Individual investor side the ticker PBW. It’s a clean energy ETF and
it’s trading right now around $30 a share and
We got in a 2016 change. So in percentage terms we’ve done nicely. We’ve kind of found the pocket
that was the right place to be in we’ve traded in and out a couple times because we keep hitting our
Targets and we lighten up but what I’ve told clients is this is one of those rare times that on the individual investor side
Which is typically tactical from trading. In fact, our report is called tactical trader report
So it’s meant for short term weeks two months not long term
This is one of those rare ideas that I actually think over years can work
The all-time high in PBW is a hundred and forty-four dollars a share. It’s trading at thirty
I see no reason why this can’t double in the next few years
So I think that shorter term we could probably get as high as maybe thirty four and a half thirty four three quarters
Probably between now and years ends
So that from $30.00 that’s still a very decent increase
but I could see the stock being is sixty or seventy dollar stock in a couple years – I think there’s just
Build-up and it’s gonna keep coming and coming for the clean side
is there a specific catalyst that you see bringing it up to 70 the catalyst is just the continuance of
Move towards clean energy
More more companies are investing on that side and reducing their infrastructure
Capital expenditure on the traditional side now some people have argued
That’s why oil will eventually go to one hundred two hundred dollars because they’ll be less capital put in yet demand
globally
it will still always exist for oil and I’m not saying it won’t but as we go to cleaner sources of fuel and
electric cars and and
America keeps now being the number one producer of oil and then we’re exporting we always used to be an employer
We’re now exporting all over the place. I don’t see oil getting
$200 and you know kind of the crazy triple digit numbers that people are talking about
So the catalyst to me is just the ongoing movement
Towards clean energy as as the place to invest it’s where companies are investing
So I think it’s where the public wants to invest
Is there a point that you would back out of PBW that it started trending downwards or is something else happen?
Well two-way stands for that every trade has to have a stop
So yes from from a risk management point of view as a trader. Yes. There’s a place
I’ll tell you that in a second
But in the bigger picture if we went from thirty back down to let’s say twenty six where we first got in earlier this year
for longer-term investors
I’d be all over this because I don’t think there’s a lot of downside to the sector any longer if you look at the long-term
chart it’s been plenty of time getting beaten down from all-time highs falling into the 20s and kind of just hanging there for years and
Then we started turning and going higher and that’s when I got on board. I guess tactically as a trader. You’re probably somewhere around the
Twenty seven seventy level couple of daily closes under that from a trading perspective might have me get out
but for an investor
I would use I would welcome a move down and and just put more money to it. And you mentioned the
$34 target by the end of the year
what do you see is the biggest potential risk between now and
December for this the catalyst for this not to work between now and December would be more of a recessionary environment
Truly hitting and rates coming much lower
companies halting their expenditures all around both in
technology
infrastructure and part of PBW is actually
Qualified as tech now. It’s all energy related
But Solar names some people look at solar names is really more technology than a pure energy type of expenditure
So I think if companies reduce their infrastructure and capital spending
Then you have a slowdown in growth and that could be what doesn’t allow this to keep going higher, right?
so if the the risk of a risk off environment
So a lot of people like using ETFs because it gives them access to volume and a lot of different companies
This ETF has relatively low AUM
Why would you like using this ETF versus going after individual names in this case? You could go after the individual names
I’m not saying you couldn’t
Generally for individual investors. I
Leaned them towards the ETFs because single stock risk is always big you miss on somebody misses a quarter
the stocks gone
I’m not willing to let a 30% drop occur overnight and it can happen in any name these days if they missed
So to me ETFs give you much broader
Diversification it’s the clean energy space
I’m also not a fundamental analyst. So I’m not digging deep into these names to tell which one’s good
Which one’s bad which has the cleanest books etc. I like the space
and this was one of the names that showed up on a screen months ago as
A potential bottom in that space and that’s what made me come up with it 200 million other assets
No, it’s not huge. If an institution wanted to come in with big size, that could be a problem, but for
Individual investors who are buying 100 shares 500 shares. It’s no problem. It’s not a penny bid-offer spread
there is a little bit offer spread to this name, but
It’s liquid enough to do anything you want to do. Alright, can you summarize this trade in 30 seconds? Sure
So we like clean energy conceptually over years to come
This trade is to get long PBW near current price. It’s 30s or so
We think it could probably get to 34 and 3/4 by yours ends
Stop yourself out on it from a trading basis under twenty seven seventy a couple closes under there I can walk away but longer-term
This is a stock that easily could be a sixty or seventy dollar stock. Great Rick
Thank you so much for joining us today Justine
Thanks for having so Rick is bullish on clean energies specifically
He likes the invest go clean energy ETF ticker symbol PBW
He recommends buying at current levels with the short-term
Target of thirty four seventy-five by the end of the year and a stop loss of twenty seven seventy
Additionally, he likes the ETF as an investment with a target of sixty to seventy dollars over the next two years
Just remember this is a trade idea and not investment advice
Make sure to do your own research consider your risk tolerance and invested cording. Ly for real vision. I’m Justine under health

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