Fisher Investments on Utilities

by Fisher Investments, Theodore Gilliland, Andrew S. Teufel

Overview

The Fisher Investments On series is designed to provide individual investors, students, and aspiring investment professionals the tools necessary to understand and analyze investment opportunities—primarily for investing in global stocks. Each guide is an easily accessible primer to economic sectors, regions, or other components of the global stock market. While this guide is specifically on Utilities, the basic investment methodology is applicable for analyzing any global sector, regardless of the current macroeconomic environment.

Following a top-down approach to investing, Fisher Investments on Utilities can help you make more informed decisions within the Utilities sector. It skillfully addresses how to determine optimal times to invest in Utilities stocks and which Utilities industries have the potential to perform well in various environments.

Divided into three comprehensive parts—Getting Started, Utilities Details, and Thinking Like a Portfolio Manager—Fisher Investments on Utilities:

• Explains some of the sector’s key macro drivers—like regulation, economic cycles, and investor sentiment
• Shows how to capitalize on a wide array of macro conditions and industry-specific features to help you form an opinion on each of the industries within the sector
• Takes you through the major components of the industries within the global Utilities sector and reveals how they operate
• Offers investment strategies to help you determine when and how to overweight specific industries within the sector
• Outlines a five-step process to help differentiate firms in this field—designed to help you identify ones with the greatest probability of outperforming

Filled with in-depth insights, Fisher Investments on Utilities provides a framework for understanding this sector and its industries to help you make better investment decisions—now and in the future. With this book as your guide, you can gain a global perspective of the Utilities sector and discover strategies to help achieve your investing goals.

Product Details

ISBN-13:	9780470642122
Publisher:	Wiley
Publication date:	03/08/2011
Series:	Fisher Investments Press , #28
Pages:	240
Product dimensions:	6.00(w) x 9.10(h) x 1.00(d)

About the Author

THEODORE GILLILAND is a Research Analyst at Fisher Investments. Theodore graduated from the University of Colorado, Boulder, with a bachelor's degree in international affairs. He currently resides in San Francisco, California.

ANDREW S. TEUFEL has been with Fisher Investments since 1995, where he currently serves as a Vice Chairman. Prior to joining Fisher Investments, he worked at Bear Stearns as a corporate finance analyst in its Global Technology Group. Andrew also instructs at many seminars and educational workshops throughout the United States and United Kingdom, and has lectured at the Haas School of Business at UC Berkeley. He is also the Editor in Chief of MarketMinder.com. Andrew is a graduate of UC Berkeley.

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Table of Contents

Foreword ix

Preface xiii

Acknowledgments xvii

Part I Getting Started in Utilities 1

Chapter 1 Utilities Basics 3

Utilities 101 4

A Defensive Sector 5

What Makes Utilities Defensive? 10

Chapter 2 A Brief History of the Electric Utilities Industry 19

Early Development in the US (1882–1935) 20

A Maturing Industry (1935–1978) 24

Market Liberalization and a New Set of Rules (1978–2009) 30

An Auspicious Start to the Twenty-First Century 36

Part II Next Steps: Utilities Details 39

Chapter 3 Utilities Sector Composition 41

Global Industry Classification Standards (GICS) 41

Global Utilities Benchmarks 42

Why Don’t Utilities Have More Weight? 43

Benchmark Differences 45

Benchmark Changes 47

Sector Benchmarks 47

Industry Breakdown 49

Chapter 4 The Electricity Business in Depth 59

The Consumer: Who Uses Electricity? 60

The Vertically Integrated Electric Utility 68

Power Generation 74

Transmission 93

Distribution 97

Chapter 5 Utilities Sector Drivers 101

Economic Drivers 102

Political Drivers 117

Sentiment Drivers 128

Chapter 6 Utilities Investing in a Resource-Conscious World 133

Energy Challenges 134

Policy Solutions 138

Technological Solutions 144

Part III Thinking Like a Portfolio Manager 155

Chapter 7 The Top-Down Method 157

Investing Is a Science 157

The Top-Down Method 160

Top-Down Deconstructed 166

Managing Against a Utilities Benchmark 173

Chapter 8 Security Analysis Contents 177

Make Your Selection 178

A Five-Step Process 179

Utilities Analysis 188

Chapter 9 Utilities Investing Strategies 195

Adding Value at the Sector Level 196

Adding Value at the Country or Industry Level 197

Adding Value at the Security Level 199

Notes 201

About the Author 207

Index 209