Private Equity Faring Poorly in Alter...
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Feb
18
John Murphy
Private Equity Faring Poorly in Alternative Energy
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Preqin, a financial research company, recently reported that those private equity groups that had invested in alternative energy were vastly underperforming the market.  That cannot be said for the private equity groups and others that have been buying up shares of United States Oil (NYSE: USO), the exchange traded fund for oil.  United States Oil is up for the last week, month, quarter, and year of market action (chart below).

It is the same for single company stocks in oil, ranging from mammoth entities like ExxonMobil (NYSE: XOM) and BP PLC (NYSE: PLC) that plumb the world for finds, to Mondial Ventures (OTN: MNVND), a small cap with operations in the bountiful oil country of Texas.

For all of its promise, alternative energy has little to show for the investment of both financial and political capital.  As reported in a recent article in the Financial Times, its investors are faring very poorly.  It is simply nowhere close to being able to meet the needs of the mass market.  By contrast, oil is the most widely used fuel in the world.  Based on a recent report from the International Energy Agency, the use of oil will increase in the future.

That is obviously very bullish for ExxonMobil, Mondial Ventures, BP PLC, and others investing in the industry.

As Preqin is reporting the woes of investing in alternative energy, a recent article on this site detailed how betting by institutional investors that oil would rise is at a five -month high.  That certainly provides a stark contrast between the two fuel sources.  For the last month, United States Oil is up more than 6 percent.  ExxonMobil, BP PLC, and Mondial Ventures are also doing well.  There is little to indicate that oil will not perform well into the future as a rewarding investment.

 

 

 

 



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