Clean or alternate energy sources are becoming a more and more viable option as technology advances, the prices of oil and natural gas continue to rise and the cost of producing clean energy continues to fall. "For example, global solar markets rose 55 percent from 2004 to reach $11.2 billion in 2005, and global wind markets rose 47 percent to reach $11.8 billion in 2005. Going forward, Clean Edge predicts that the solar market will reach $51.1 billion in 2015, with projections for wind only slightly flatter at $48.5 billion." (Cleanedge.com)
Those interested in socially responsible investments should research the possibilities of investing in solar energy, wind energy, compact tidal generators, biofuels (ethanol and biodiesel) and a new technology known as flash carbonization. Also, new technologies are being developed all the time. A report from Cleanedge.com states that the four most prominent energy sources in the next few years will be solar energy, wind energy, ethanol and biodiesel. "In total, we project these four clean-energy technologies, which equaled $40 billion in 2005, to grow fourfold to $167 billion within the coming decade," states the report.
Solar energy, wind energy and compact tidal generators seek to harness natural forces to produce energy. Biofuels are fuels that are manufactured out of natural resources. One biofuel, ethanol, is typically produced from corncobs, sugar cane, sugar beets and grain. A new technology is being developed that can produce ethanol from the waste products that traditional ethanol leaves behind, such as corn husks and straw, making it doubly clean.
Flash carbonization is a process that converts wastes such as tree trimmings, agricultural wastes, biomedical wastes and tires into carbon products. The process results in charcoal which is faster to make and has 200% more energy value than current charcoals on the market.
Business Ethics magazine recently published its list of 2006's "Best Corporate Citizens." If you want to invest in a company that is giving back to the environment and/or community then you should examine their list at www.business-ethics.com. These companies do not necessarily directly produce clean or alternate energy or recycled products or invest in communities but they significantly invest in companies that do. Here are the top 10 firms: Green Mountain Coffee Roasters, Hewlett-Packard, Advanced Micro Devices, Motorola, Agilent Technologies, Timberland, Salesforce.com, Cisco Systems, Dell and Texas Instruments.
If you are nervous about the risk of investment, community development banks and credit unions are federally insured per depositor up to at least $100,000. This is the same rate as traditional banks and credit unions. Communityinvest.org says, "The community development loan funds and venture capital funds are not insured or regulated, but do employ lending and management strategies that ensure their stability, and also have credit enhancements." There is always some risk involved in any investment strategy, be it traditional investment or socially responsible investments.
In the U.S. the focus is primarily on rebuilding communities through personal loans, but the mission with international CIIs is much broader. International CIIs specialize in helping emerging countries from years of conflict and war and in helping recently democratized nations. Developing nations have a different dynamic than the U.S. Self-employed people often comprise 50% pf the labor force. International CIIs provide skills, capital and credit to these self-employed people in order to help them start small businesses. These loans are referred to as micro enterprise loans. These are the most common vehicle for community investing abroad. There are also available small and medium enterprise loans which help create small businesses and jobs and develop the middle class in poor countries. International Community Investment Institutions closely supervise, monitor and train their borrowers.
Sources
www.msnbc.om - "Record oil prices fueling interest in alternative energy investments"
www.socialfunds.com/news www.cleanedge.com
http://www.azstarnet.com/business
http://www.sriadviser.com - "Socially Responsible Exchange Traded Mutual Funds"
www.communityinvest.org
When an IPO is sold, the sale of the shares can take several forms. Some of the most common methods are Dutch auction, Firm commitment, Best efforts, Bought deal, and Self Distribution of Stock.
If the IPO is large, it is typically underwritten by a number of investment banks called a "syndicate" and is led by one or two major investment banks called the lead underwriter. When shares are sold, the underwriters retain a commission determined by a percentage of the value of the shares they sell. The lead underwriters, which sell the greatest proportions of the IPO receive the highest commissions. These commissions can be as high as eight percent.
The IPO process is governed under U.S. law by the Securities Act of 1933 along with the stipulations of the Securities and Exchange Commission. (Individual stock exchanges have specific rules that listing companies must follow.) IPOs smaller in nature have the possibility of being affected by a state's blue sky laws. A state's laws tend to be pre-empted by federal law if the stock is going to be listed on a major exchange or NASDAQ, but will reign over particular medium-scale offerings on the local level.
Prior to the IPO beginning, a prospectus must be drafted by the issuer. This is an exhaustive synopsis of the company's finances, history, operations, products, risk factors, industry environment, and other information. Each IPO prospectus is intensely watched by the Securities and Exchange Commission (SEC). Major law firms are often deep in the drafting process.
Until an IPO is recorded by the SEC, under the Securities Act, no public offerings may be made by issuer or underwriters. (If an offering is made during this time, it is called "gun-jumping.") After the IPO is registered, the issuer and underwriters can advertise the IPO with a simple "tombstone" advertisement that lists the name of the company, the amount of stock being offered, the underwriters' names, and some other basic information. Concealed placement conversations and restricted press releases are allowed. If a written offer is made to sell stock, it must be given with a copy of the prospectus as it was submitted to the SEC. The copy of the official prospectus is stamped with a warning of non-final status in red lettering and is called a "red herring."
When the SEC gives final approval to the prospectus, the price of the shares is settled. The IPO then engages in a "free riding" period where shares are for sale and offered in a number of ways, such as telephone calls, "road shows" and institutional visits. These offers must also be joined with a copy of the prospectus. Any false or misleading statements are forbidden while offerings are shared.
If any statements are misquoted or omitted in the prospectus, the issuer is held liable. If a "reasonable investigation" is not held or if there is reasonable ground to believe the statement was true or the omitted section was irrelevant, the directors, officers, and underwriters may also be held liable. To defend against liability, underwriters complete a due diligence investigation of the issuer which involves lawyers and accountants outside the issuers domain.
Initial founders often discovered themselves to be millionaires before the next day, and because of liberal stock options, employees could also see increases in their income. A majority of IPOs are uncovered on the NASDAQ stock exchange.
Although under-priced IPOs can have a down side, overpriced IPOs seem to carry more risks. If a particular stock is made available to the public at a greater price than the market is willing to pay, underwriters can face difficulty keeping their pledge to sell shares. Even when everything runs smoothly and all the issued shares of an overpriced IPO have been sold, if the stock market decreases in value on the initial day of trading, the IPO's marketability and value may be lost.
The key for investment banks is to settle on an offering price that is low enough to perk curiosity in the stock, but high enough to result in a sufficient gain of capital for the company.
Both the issuer and the underwriter benefit from a bought deal. The plus side of a bought deal for the issuer is the freedom to not worry about financing risk. The underwriters benefit from bought deals typically being lower priced for marketability thus making it easier to sell shares.