Where the opportunities exist for investors, as companies provide solutions to the ever growing water crisis
Point Roberts WA, DELTA, BC –November 10, 2009 www.Water-Stocks.com, an investor and industry portal for the water sector within Investorideas.com, presents an interview with Bill Brennan, President & CIO
of Brennan Investment Partners LLC, an investment advisor that specializes in the analysis of and investment in domestic and foreign securities of the global water business
Q- Dawn Van Zant at Water-stocks.com
Bill can you give our readers some background on your history in the water sector and some insight into your firm’s focus and direction.
A- Bill Brennan
Brennan Investment Partners LLC
I started out as an engineer in the environmental area dealing with ground water quality issues and the actual construction of drinking water and waste water plants globally 20 years ago. I then went to Coopers & Lybrand where I headed up the environmental consulting arm in the Eastern US. After business school I went over to the public company side as an equity analyst with Pacific Growth Equities in San Francisco where I focused on industrial and environmental companies. My specific water focus regarding equities is directly attributed to John Dickerson at Summit Global in San Diego and the direction he has provided me since 1994. John liked the fact that I had actual experience as an engineer/consultant and public equity experience in the water space. He taught me a great deal about becoming a true value investor in the water space and has heavily influenced my value approach to investing. Over the last ten years I have managed various water products here in the States and in Europe. I presently manage the Kinetics Water Infrastructure Fund-KWINX as the portfolio manager and the sub advisor.
Q- Dawn Van Zant at Water-stocks.com
Bill, your firm issued a report, Investing in Global Water Equities 2009 & Beyond that examines the substantial opportunity in the sector. Can you give our readers a summary of the scope and size of the market potential?
A- Bill Brennan
Brennan Investment Partners LLC
The size of the market and the global opportunity is staggering. We estimate that approximately 550+ companies around the world provide numerous services and products into the water sector which is the third largest industry from an embedded capital standpoint at almost $700 Billion in spending. Besides the core water providers such as utilities and industrials, companies involved in agriculture, hydroelectric, waste management also have significant exposure to the water space since it is the backbone of their respective industries. The paper, which can be found on your site, also addresses where the opportunities exist for investors as companies in our universe provide solutions to the ever growing water crisis.
Q- Dawn Van Zant at Water-stocks.com
Can you break down the water investment sector into sub sectors for us and what sub sector presents the most opportunity in the short term and long term and what factors are driving it?
A- Bill Brennan
Brennan Investment Partners LLC
We like the water utilities since they have a monopoly as far as controlling the commodity to a large degree. With a guaranteed growth due to the public utility commission aspect of the business that reimburse for capital expenditures as we rebuild our water network in the US and build out water infrastructure in emerging countries. We also invest in various industrial aspects of the business such as pipes, membranes, water meters and desalination that have the potential for above average returns over the long run. The spending on water is especially strong in emerging markets. The growth experienced in the US in the 20th century will be mirrored in emerging markets but at a very compressed timeline-we estimate within the next ten years. Government will always have a hand in the oversight of water management and rates which in our opinion is a positive. Global governments realize GDP is completely dependent on water availability and use/reuse in order to sustain growth rates over extended periods of time. Therefore we tend to have a longer time horizon regarding our approach. We emphasize risk management with an eye on minimizing volatility in our products.
Q- Dawn Van Zant at Water-stocks.com
Its been noted that water is still a relatively small part of the overall investment in the cleantech space to date, with some of the well known names like Khosla recently making investments . Why do you think that is and what is it going to take to make water a more significant play in cleantech?
A- Bill Brennan
Brennan Investment Partners LLC
I can’t tell you how many times I have been asked this question over the last year. When we look at the Private Equity-Cleantech situation, there are several entry points starting with true venture investing and ending with the classic buyout investment. The Growth capital aspect of PE is tough in this sector because a lot of good properties have been bought by the larger water platforms-GE, Siemens, etc. The companies that are still private are private for a reason-either they cannot be effectively scaled or the owners don’t need or want a strategic investor. One of our Advisors, Dr. Rengarajan Ramesh, the former CTO of GE Water has broken the main issues into four areas that I think private equity should focus on before any investment is undertaken. The issues are as follows: 1. Existing laws not enforced. - Leading to significant increase in healthcare costs. Johns Hopkins estimates that costs of water related illness is about 12 -14% of the total US healthcare costs. This can be verified and validated by Bloomberg school of Public Health at Johns Hopkins University. 2. Water problems are all local - Lack of availability, with no progress towards conservation like rainwater harvesting, storage, and water reuse. So, each community should take the responsibility both for conservation and reuse. Similarly each community should have a strategy to protect, preserve and prolong their underground assets to ensure safe, clean drinking water to their homes. If they fail to do so, they will be faced with very high costs and a failed infrastructure. Problem needs to be treated locally and on a state by state basis. 3. Price - Historically prices have been low. Now it is clear that the prices are moving up where we will move towards full cost pricing that encompasses the cost associated with treatment, conveyance and the energy to do both. The cost to treat and move water has gone up and the current price increases for water still does not reflect the true costs and only addresses the higher energy costs associated with moving the water. One way to keep prices under check is to leverage harvesting of rainwater and reuse with distributed systems. 4. Agriculture - Lack of water efficiency in agriculture and current use it or lose it water rights do not help in promoting conservation in agriculture. Subsidies / incentives need to be given to promote water efficiency along with penalties for polluters (groundwater contamination due to agricultural drainage). So the opportunity exists for investments in a combination of pre-existing technologies into a comprehensive solution set that can be provided in a turnkey fashion and for water conservation technologies at the residential, commercial, and agriculture levels.
More info:
Brennan Investment Partners LLC www.brennaninvestment.com
Read: Brennan Investment Partners LLC: Investing in Global Water Equities 2009 & Beyond
A Dynamic and Profitable Theme in Any Economy – William S. Brennan, President & CIO
Water: A Global Growth Sector
Research more global water stocks at the water Stocks Directory
Water Stocks Showcase Company: Wescorp Energy Inc. (OTCBB: WSCE )
Wescorp Energy Inc. is an Oil and Gas solutions provider focused on deploying its water remediation and environmental technologies that overcome tough operational challenges facing oil and gas operators today on a global basis. Wescorp's patented, highly scalable H2Omaxx microscopic aeration technology increase the recovery of oil and reduce the amount of hydrocarbons in the contaminated water to less than 0.001% or 10 ppm. Wescorp's H2Omaxx is economical and environmentally friendly eliminating the use of chemicals, filtration systems, high temperature systems and high pressure vessels.
Wescorp Energy Inc Showcase Profile Page: http://www.water-stocks.com/CO/WSCE/Default.asp
Wescorp Energy Inc Company Website: http://www.wescorpenergy.com/
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Water-stocks.com
Dawn Van Zant 800-665-0411
Email: dvanzant@investorideas.com
Web Site: www.InvestorIdeas.com www.water-stocks.com
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