Is Ormat in Play?
Written by: Aaron Katsman | June 13, 2007
By Aaron Katsman
www.IsraelNewsletter.com
Rumors are swirling that a foreign institution is eyeing Ormat (ORA) as a potential takeover target, or at least as a possible recipient of a large investment. Ormat shares surged over 11% in Tel Aviv trading earlier today on volume that was 9 times average. In US trading the stock is currently up about 6% on much heavier than average volume.
Colleague Zack Miller had a great post recently about Ormat’s dual personality. On the one hand the company is experiencing compressing margins and on the other, with the global warming craze, Ormat’s geothermal energy provides a way to increase renewable energy production. Zack also mentions that he foresees consolidation in the geothermal industry, and with Ormat continuing to add geothermal assets to its portfolio, this may make for an interesting target.
I think that Zack is right, and we will see consolidation in the industry. As long as global warming remains a fashionable cause, the investor demand for alternative forms of energy will remain strong. Tom Konrad has an informative post on SeekingAlpha, on investing in renewable energy. While I am no big believer in the global warming hysteria, as long as the fad remains in its infancy, money can be made. If correct, Ormat investors may see large gains ahead.
Disclosure: Author’s fund is long ORA as of 6/13/07. He does not hold positions in the other companies listed.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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