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Speaker 1: This is a Bloomberg Business flag from Bloomberg World Handquarters.
Speaker 1: I'm Charlie Pellett. Amazon dot com posted first quarter sales
Speaker 1: and earnings the top to annle ass estimates, adding to
Speaker 1: evidence of the company can make money even while investing
Speaker 1: heavily and endeavors like one hour delivery and marketing new
Speaker 1: gadgets like the Echo voice activated home assistant. Stocks move
Speaker 1: lawer today Dow Jones Industrial Average capping the biggest drop
Speaker 1: in three weeks as Apple laded afternoon sell off in
Speaker 1: technology shares, overshadowing corporate deals and strong results from Facebook.
Speaker 1: Facebook today rallying seven point two percent, Apple slumping three
Speaker 1: point one percent. S and P five hundred index down
Speaker 1: nineteen points to two thousand seventy five, a drop of
Speaker 1: point nine percent down, Industrials down two hundred ten points,
Speaker 1: the decline of one point two percent. Nes Stack down
Speaker 1: fifty seven, a drop of one point two percent. Gold
Speaker 1: up nineteen dollars now at twelve sixty nine ten, a
Speaker 1: gain of one and a half percent. Crew at eight
Speaker 1: five barrel crude Oil West Texas Intermediate up one point
Speaker 1: two percent. I'm Charlie Palaton. That's a Bloomberg business flash.
Speaker 1: You're listening to taking Stock with Kathleen Hay and Pimp
Speaker 1: Box on Bloomberg Radio. This is taking Stock on Bloomberg
Speaker 1: just to give you a little bit of a recap.
Speaker 1: Shares of Amazon higher by more than ten percent and
Speaker 1: after hours trading after the company reports first quarter results
Speaker 1: earnings per share of a dollar seven that handily beat
Speaker 1: the average analyst estimate of fifty seven cents. The company
Speaker 1: also posting sales that were better than analysts estimated, and
Speaker 1: also saying that the second quarter net sales will be
Speaker 1: between twenty eight and thirty and a half billion dollars
Speaker 1: as for the second quarter, and that is at the
Speaker 1: high end of analyst estimate. Stock moving high. Are also
Speaker 1: moving higher, and after ours trading, the shares a linked
Speaker 1: In are up by more than fourteen percent or earnings
Speaker 1: per share and revenue beat analysts estimates and also provided
Speaker 1: healthy sales guidance. Shares of LinkedIn higher right now by
Speaker 1: about fourteen percent, but on the other hand, shares of
Speaker 1: Gilead Sciences down by nine percent after reporting that profit
Speaker 1: missed analysts estimates and that sales of its blockbuster hepatitis
Speaker 1: C treatments were less than expected once again, Shares of
Speaker 1: Gilead Sciences down by nine percent. Well, how do you
Speaker 1: put together a portfolio or an investment strategy given the
Speaker 1: volatility in stock market performance? Let's find out from Matthew
Speaker 1: weatherly White. He is the managing director of the cap
Speaker 1: Rock Group to have over a billion dollars in assets
Speaker 1: under management. They are based in Boise, Idaho. He can
Speaker 1: be followed on Twitter at I three impact and he
Speaker 1: joins us in the studio. Matthew, thanks for being here. Yeah,
Speaker 1: thanks for inviting me on again. All right, so let's
Speaker 1: talk about your strategy. How do you approach the selection
Speaker 1: and allocation process for people that would come to you
Speaker 1: for advice? And so we start off with a really
Speaker 1: detailed lifetime discount of cash flow models. We get a
Speaker 1: clear sense of what our clients after tax inflation rate
Speaker 1: of return needs to be, and then we reverse engineer
Speaker 1: the asset allocation from that perspective. But what we're really
Speaker 1: interested right now in terms of portfolio construction and risk
Speaker 1: management it really the energy markets, because we think that
Speaker 1: the destabilization in the price of oil is instructive for
Speaker 1: us when we think about plotting a course to a
Speaker 1: post carbon or a carbon light global economy, and of
Speaker 1: course impact investment investing. It's not just how I can
Speaker 1: make money, but how can I make money and push
Speaker 1: the world, help the world move in the direction I want.
Speaker 1: When you say this disruption oil, just push the price
Speaker 1: so low creating the postcarbon area. Might say gas is
Speaker 1: so cheap, we'll never stop using oil. Yeah, it's counterintuitive,
Speaker 1: and I think that for the first time, certain me
Speaker 1: in my professional investing career, that relationship between the price
Speaker 1: of oil and the adoption of alternative energy strategies is
Speaker 1: starting to break down a little bit. And I think
Speaker 1: we might actually be seeing the emerging outline of the
Speaker 1: inverse of that, where the lower price of alternative renewable
Speaker 1: energy actually drives the price of conventional fuels. But this
Speaker 1: is not because of government subsidies. And I'm not the
Speaker 1: fossil fuel industry did not enjoy subsidies or does not currently.
Speaker 1: But I'm wondering, is that something that can stand on
Speaker 1: its own In places? Yes, in places no, I mean
Speaker 1: there are some states Arizona, for example, um X, the
Speaker 1: succession of the of the feeding tariff down there. Um
Speaker 1: solar power is almost at grid parity without any subsidies,
Speaker 1: but the five year extension of the investment tax credit
Speaker 1: sort of takes that conversation off the table. You might
Speaker 1: not like the subsidies, but they're going to be there
Speaker 1: for five mirrors, and that's a great tail wind to
Speaker 1: the continuing continued development of solar energy. So when you
Speaker 1: look at companies, who is on your radar screen because
Speaker 1: you're talking about alternative energy, you're talking about a postcarbon era.
Speaker 1: You're talking about the role of technology, which what does
Speaker 1: incrude oil too? But it plays such a big role
Speaker 1: in all these alternative sources. It's such a big part
Speaker 1: of it. I think a lot of times when people
Speaker 1: look at alternative and renewable energies, they think about it
Speaker 1: as an energy play. We think about it as a
Speaker 1: technology play. The reason being that traditional energy is a
Speaker 1: commodity based business and increased utilization broadly speaking, leads to
Speaker 1: higher prices. With alternative and renewable energy, it's exact opposite.
Speaker 1: Increased utilization leads to lower consumer prices per unit of
Speaker 1: energy created. And if I'm a consumer, and I get
Speaker 1: to choose. I'm going for more use equals lower prices.
Speaker 1: Pals us about emerging markets if you can, because they
Speaker 1: sometimes have the ability to leap frog developed countries in
Speaker 1: their technological application and also in the environmental industry. That's
Speaker 1: exactly right. We've made some really interesting investments in distributed
Speaker 1: power in subs in Africa for precisely that reason. If
Speaker 1: you use the analog of the mobile phone and you
Speaker 1: look at Sub Saharan Africa in particular, they were able
Speaker 1: to effectively create a communications network without any hard lines installed.
Speaker 1: We think it's the same thing with solar power. If
Speaker 1: you skip the whole grid installation process and the hundreds
Speaker 1: of billions of dollars necessary to build power lines across
Speaker 1: the desert, then all of a sudden you have the
Speaker 1: capacity to bring power, electricity light to communities that heretofore
Speaker 1: have simply been off the grid. So can you give
Speaker 1: us a couple of names of attractive renewable energy companies? Uh? Yeah,
Speaker 1: I mean you might know that I'm not permitted to
Speaker 1: recommend specific stocks are but you're not recommending them, But
Speaker 1: you who are who are leaders in this field? Yeah,
Speaker 1: so I'm even looking at ones like Solar City or
Speaker 1: sun Edison which are cracking sun EDISD in particular, cracking
Speaker 1: under the weight of debt. We think that the business
Speaker 1: model still makes sense. It was just the business management
Speaker 1: got a little bit out of control. Too much debt
Speaker 1: growing too fast. Pretty traditional story in the markets, and
Speaker 1: what kind of returns can I get if I hop
Speaker 1: into this area? What are you what are you thinking? Yeah, so,
Speaker 1: if you're doing an alternative renewable project energy finance typically
Speaker 1: through debt, you can look at an eight handle on
Speaker 1: a lot of that debt um If you're doing equity,
Speaker 1: you're really taking a ride on what's going to come
Speaker 1: from the Paris Accord and Top twenty one. If a
Speaker 1: carbon pricing mechanism emerges, we expect very attractive returns. If
Speaker 1: it doesn't in the near term, then there's gonna be
Speaker 1: a lot of alatility. Is a transition from a carbon
Speaker 1: intensive economy to something different. This is great news for
Speaker 1: people who want to help push the renewal, editwable and
Speaker 1: renewable energy front forward and makes the money. Matthew weatherly White,
Speaker 1: thank you for joining us. Managing Director the cap Rock Group,
Speaker 1: thank you for joining us. Day on taking Stock. I'm
Speaker 1: Kathleen he has along with Pim Fox, and this is
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