Goldman Sachs said in a research note Thursday the recent energy sector pullback should be viewed as a reason to buy since that strategy has worked well since late 2020. Thinking along those lines, we did add to one of our three oil exploration and production (E & P) stocks twice this month. However, we’re currently debating whether we need that much exposure to an industry so tied to the economy. West Texas Intermediate crude and energy stocks have been under intense pressure in recent weeks on the back of heightened recession fears. While debated for months, worries about the economy and how it might impact oil demand have increased following fallout from the banking crisis and concern about the Federal Reserve hiking interest rates too much. @CL.1 YTD mountain West Texas Intermediate crude YTD performance At a high level, Goldman concedes that recession risks are “more elevated than in the past.” How could they not be following the second and third largest bank blowups in U.S. history and the ripple effect across the financial industry. However, Goldman only puts 35% odds on a recession, leading analysts to reason that an economic hard landing won’t likely break oil’s buy-the-dip streak. The Goldman note pointed out that six major energy pullbacks — three in 2021 and three in 2022 — each translated into “a meaningful buying opportunity.” But, given the elevated uncertainty, the analysts are focused on what they view as quality producers with attractive valuations, meaning those with “strong balance sheets, deeper inventories and lower cost assets.” Based on that criteria, Goldman has Pioneer Natural Resources (PXD) on its “Americas Conviction List” with a buy rating. Similar to Goldman, the analysts at Citi also like Pioneer, saying it’s in a position to realize increased well productivity starting in the second half of 2023 and see increased capital efficiency into 2023. In research note Thursday, Citi upgraded PXD to a buy rating and boosted its price target to $210 per share from $193. The stock closed Thursday just above $189 per share. The Club likes and owns Pioneer, too. It’s the E & P we’ve been buying lately — adding 25 shares on March 13 and 25 more shares Monday . Both were small buys in down markets, bringing our total ownership position to 175 shares for an overall portfolio weighting of 1.3% as of Thursday’s close. The Goldman and Citi updates are certainly welcome as they clearly support our view that Pioneer’s low crude break-even levels and strong cash flow profile are supportive of continued shareholder returns, especially should energy demand rebound from current levels. As for our two other E & P stocks, we’re leaning toward booting Devon Energy (DVN) and keeping Coterra Energy (CTRA), which we bought more of in early February on a collapse in natural gas prices. Both of them carry less than a 1% weighting in our portfolio. Coterra, unlike the others, is about 50/50 oil and nat gas. Influencing our inclination to hold on to Coterra is management’s recent guidance to prioritize buybacks over the company’s base dividend and variable dividend in their mission to return at least 50% of free cash flow to shareholders. The team believes Coterra shares are among the most attractive opportunities in the market. That’s what makes a good buyback. A large variable dividend is nice, but it’s a onetime payout based on recent free cash flow generation with no guarantee that the size will remain the same to the next payout. By repurchasing shares, management is increasing the ownership stake for existing shareholders forever, barring any future equity sales, which we see no need for. If you own more of the company then the next time WTI prices increase, you stand to make much more money should management determine that a larger variable payout is warranted because you have a greater right to the free cash flow than you would have if fewer shares were repurchased. Recognizing the ups-and-downs of owning energy stocks, we still believe they should be part of any diversified portfolio. When we first moved into the energy sector in late 2021, we viewed the holdings as a hedge. The thinking: Should energy prices continue to climb, we would make money while our other holdings — those that have energy as an input cost — took a hit as the higher prices would pressure margins. Recently, we’re starting to see the opposite dynamic. However, the E & Ps we own do throw off lots of cash to shareholders, basically paying us to be patient as we figure things out. (Jim Cramer’s Charitable Trust is long PXD, DVN, CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A work-over rig performs maintenance on an oil well in the Permian Basin oil production area near Wink, Texas August 22, 2018.
Nick Oxford | Reuters
Goldman Sachs said in a research note Thursday the recent energy sector pullback should be viewed as a reason to buy since that strategy has worked well since late 2020. Thinking along those lines, we did add to one of our three oil exploration and production (E&P) stocks twice this month. However, we’re currently debating whether we need that much exposure to an industry so tied to the economy.
China’s Dongfang Electric has installed a 26-megawatt offshore wind turbine, snatching the title of world’s most powerful from Siemens Gamesa’s 21.5 turbine in Denmark.
Photo: Dongfang Electric Corporation
The Chinese state-owned manufacturer announced today that it has installed the world’s most powerful wind turbine prototype at a testing and certification base. This turbine, the world’s largest for capacity and size, boasts a blade wheel diameter of more than 310 meters (1,107 feet) and a hub height of 185 meters (607 feet). Dongfang shipped the turbine’s nacelle earlier this month – the world’s heaviest – along with three blades.
This offshore wind turbine is designed for areas with wind speeds of 8 meters per second and above. With average winds of 10 meters per second, just one of these giants can generate 100 GWh of power annually, which is enough to power 55,000 homes. That’s enough to cut standard coal consumption by 30,000 tons and reduce CO2 emissions by 80,000 tons. Dongfang says it’s wind resistant up to 17 (200 km/h) on the extended Beaufort scale.
In May, Dongfang said it had completed static load testing on the turbine’s blades, and the turbine is now undergoing fatigue testing, which could take up to a year before the turbine is fully certified.
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The autonomous ag equipment experts behind the GUSS robotic sprayers have been developing their AI tech as part of a JV with John Deere for years — and now, that marriage is official. John Deere has acquired 100% of GUSS, and has big plans to pick up that tech and run with it like a … well, you know.
Since then, interest in automated ag equipment has only grown — fueled not just by rising demand for affordable food and produce, but by a national labor shortage made worse by the Trump Administration’s tough anti-immigration policies as well. It’s specifically those challenges around labor availability, input costs, and crop protection that GUSS and John Deere have been spending millions to address.
“Fully integrating GUSS into the John Deere portfolio is a continuation of our dedication to serving high-value crop customers with advanced, scalable technologies to help them do more with less,” explains Julien Le Vely, director, Production Systems, High Value & Small Acre Crops, at John Deere. “GUSS brings a proven solution to a fast-growing segment of agriculture, and its team has a deep understanding of customer needs in orchards and vineyards. We’re excited to have them fully part of the John Deere team.”
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About GUSS
GUSS autonomous farm sprayer; via John Deere.
The GUSS electric sprayer is powered by a Kreisel Battery Pack 63 (KBP63), which has a nominal energy capacity of 63 kWh, enabling the machine to operate for 10-12 continuous hours between overnight (L2) charges.
The GUSS electric sprayers feature the Smart Apply weed detection system that measures chlorophyll in the various plants it encounters, identifying weeds embedded among the crops, and only sprays where weeds are detected. The company claims its weed detecting tech significantly reduces the amount of chemicals being sprayed onto farmers’ crops, resulting in “up to 90% savings” in sprayed material.
John Deere’s deep pockets will support GUSS as it continues to expand its global reach, and help the group to accelerate Smart Apply’s innovation and integration with other John Deere precision agriculture technologies.
“Joining John Deere enables us to tap into their unmatched innovative capabilities in precision agriculture technologies to bring our solutions to more growers around the world,” says Gary Thompson, GUSS’ COO. “Our team is passionate about helping high-value crop growers increase their efficiency and productivity in their operations, and together with John Deere, we will have the ability to have an even greater impact.”
GUSS-brand autonomous sprayers will be sold and serviced exclusivelythrough John Deere dealers, and the GUSS business will retain its name, branding, employees, and independent manufacturing facility in Kingsburg, California.
More than 250 GUSS machines have been deployed globally, having sprayed more than 2.6 million acres over 500,000 autonomous hours of operation.
Electrek’s Take
Population growth, while slowing, is still very much a thing – and fewer and fewer people seem to be willing to do the work of growing the food that more and more people need to eat and live. This autonomous tech multiplies the efforts of the farmers that do show up for work every day, and the fact that it’s more sustainable from both a fuel perspective and a toxic chemical perspective makes GUSS a winner.
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Lawyers for Tesla filed a motion asking a court to throw out a recent $243 million verdict against the company related to a fatal crash in Florida in 2019. The case is the first instance of Tesla being ruled against by a court in an Autopilot liability case – previous cases had ended up settled out of court.
To catch up, the case in question is the $243 million Autopilot wrongful death case which concluded early this month. It was the first actual trial verdict against the company in an Autopilot wrongful death case – not counting previous out-of-court settlements.
The case centered around a 2019 crash of a Model S in Florida, where the driver dropped his phone and while he was picking it up, the Model S drove through a stop sign at a T-intersection, crashing into a parked Chevy Tahoe which then struck two pedestrians, killing one and seriously injuring the other.
Tesla was also caught withholding data in the case, which is not a good look.
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In the end, for the purposes of compensatory damages, the driver was found 67% responsible and Tesla was found 33% responsible. But Tesla was also slapped with $200 million in punitive damages. The plaintiffs reached a settlement with the driver separately.
Tesla said at the time that it planned to appeal the case, and its first move in that respect happened today, with lawyers for Tesla filing a 71-page motion laying out the problems they had with the trial.
In it, Tesla requests either that the previous verdict be thrown out, that the amount of damages be reduced or eliminated, or that the case go to a new trial, based on what Tesla contends were numerous errors of law during the trial.
The table of contents of Tesla’s filing lays out the company’s rough arguments for why it’s requesting the verdict to be thrown out, with Tesla seeming to throw several arguments at the wall to see what sticks:
I. Tesla Is Entitled to Judgment as a Matter of Law (or at Least a New Trial) on Liability.
A. The Verdict Is Unsupported by Reliable Expert Evidence.
B. Plaintiffs’ Design-Defect Theories Fail as a Matter of Law.
1. Tesla’s 2019 Model S Was Not Defective.
2. McGee Was the Sole Cause of Plaintiffs’ Injuries.
C. The Failure-to-Warn Claim Fails as a Matter of Law.
1. Tesla Had No Duty to Warn.
2. Tesla Provided Extensive Warnings.
3. The Asserted Failure to Warn Didn’t Cause the Crash.
D. Tesla Is Entitled to a New Trial If the Record Cannot Sustain the Verdict as to Any Theory on Which the Jury Was Instructed.
II. Highly Prejudicial Evidentiary Errors Warrant a New Trial on All Issues.
A. The Improper Admission of Data-Related Evidence Prejudiced Tesla.
B. The Improper Admission of Elon Musk’s Statements Prejudiced Tesla.
C. The Improper Admission of Dissimilar Accidents Prejudiced Tesla.
III. This Court Should Grant Tesla Judgment as a Matter of Law on Punitive Damages or at Least Significantly Reduce Punitive Damages.
A. Florida Law Prohibits the Imposition of Any Punitive Damages in This Case.
B. Florida Law Caps Punitive Damages at Three Times the Compensatory Damages Actually Awarded Against Tesla.
C. The Due Process Clause Limits Punitive Damages Here to No More Than the Net Award of Compensatory Damages.
1. Tesla’s Conduct Was Not Reprehensible.
2. A Substantial Disparity Exists Between the $200 Million Award of Punitive Damages and the $42.3 Million Award of Compensatory Damages.
3. Comparable Civil Penalties Do Not Justify the Punitive-Damages Award.
IV. This Court Should Reduce the Grossly Excessive Award of Compensatory Damages to No More Than $69 Million.
In short, Tesla blames the driver (who was found 67% liable) fully for the crash, says that the Model S and its Autopilot system were state-of-the-art and not defective because “no car in the world at the time” could have avoided the accident, that it provided proper warnings even though it didn’t need to, that evidence was improperly admitted to prejudice the jury against Tesla, and that the punitive damages are excessive.
After looking through the document, Tesla’s main contention seems to be with the admission of various evidence that it says prejudiced the jury against Tesla.
Indeed, the only exhibit attached to the filing is a transcript of a podcast episode where one of plaintiffs’ experts talks about evidence that Tesla withheld data, which Tesla says should have been inadmissible and prejudiced the jury against it.
Tesla says that the only reason these arguments were brought into court was to make the jury feel like there was a coverup, even though Tesla claims that there was no coverup. By repeatedly mentioning this, Tesla says the jury had a more negative view of the company than was fair.
It also says that Tesla CEO Elon Musk’s statements about Autopilot shouldn’t have been admissible, and that they prejudiced the jury against Tesla. Tesla says that the statements by Musk shown at the trial were irrelevant to plaintiffs’ case, exceeded the limits the court had set on which statements would be admissible, and that the admission of these statements “would disincentivize companies from making visionary projections about anticipated technological breakthroughs.”
Update: After this story was published, plaintiffs’ attorneys reached out with their own statement
“This motion is the latest example of Tesla and Musk’s complete disregard for the human cost of their defective technology. The jury heard all the facts and came to the right conclusion that this was a case of shared responsibility, but that does not discount the integral role Autopilot and the company’s misrepresentations of its capabilities played in the crash that killed Naibel and permanently injured Dillon. We are confident the court will uphold this verdict, which serves not as an indictment of the autonomous vehicle industry, but of Tesla’s reckless and unsafe development and deployment of its Autopilot system.”
–Brett Schreiber of Singleton Schreiber, lead trial counsel for plaintiffs Dillon Angulo & Naibel Benavides.
Electrek’s Take
Reading through the filing is persuasive at first, but remember that this is only one side of the story – and Tesla is well-known for never budging an inch in legal or reputational matters. (Update: for a quick reaction from “the other side,” see the statement by plaintiffs’ attorneys directly above).
Thinking a little deeper, the filing does rely on a similar “puffery” argument which Tesla has used before. The idea here is that Musk’s statements should be ignored because he, as the CEO of the company, has an incentive (and well-known tendency) to overstate the capabilities of its vehicles.
Lawyers did not use that exact word here, but they do claim that Musk’s statements are “forward-looking” and “visionary.”
But, for a guy who talks so much that he wasted $44 billion on a $12 billion social media site (twice) so that he could force his words in front of every user every day, denying that his words have an effect is a strange legal argument.
Indeed, Tesla has a history of not doing paid advertisements in traditional media, and has relied on Musk, and specifically Musk’s twitter account, to be the company’s impromptu communications platform. Musk even closed the company’s PR department, instead taking on the full burden of that himself.
So to argue that Musk’s statements shouldn’t be admissible, or that they didn’t set the tone for the organization, is more than a little silly.
While Tesla and Musk did state many times that Autopilot was not full self-driving (although, neither was the feature they marketed under the name, ahem, “Full Self-Driving”), the balance of Musk’s statements describing Tesla’s features definitely could have led a driver to think that the vehicles were more capable than any other vehicle on the road.
This is why it’s strange that Tesla also argues that “no other car” could have stopped in the situation of the crash. If your company is constantly claiming that you have the best, safest, most autonomy-enabled vehicle in the world (including in this filing, where it is referred to as “state of the art”), then who cares whether other cars could have done it or not? We’re talking about your car, not anything else.
Further, Tesla said that admitting these statements will put a chilling effect on every corporation’s ability to project anticipated breakthroughs in tech. To this I say, frankly: good. Enough with the nonsense, lets focus on reality, and lets stop excusing lies as corporate puffery, across all industries.
But this is an example of Tesla trying to have it both ways, to pretend that Musk’s statements are just puffery but also that they are important to breakthroughs and that silencing Musk would harm the company. Yes, it probably would harm Tesla’s outreach – because Musk’s statements are roughly the only source of Tesla’s advertising, which is why they ought to be heard to establish what the public thinks about the capabilities of Teslas.
And while Tesla says that cases like these would “chill” development of safety features if manufacturers are punished for bringing them to market, the punishment here isn’t for bringing the feature to market, it’s for overselling the feature in a way that set public expectations too high. Other features have not received this sort of scrutiny because other features don’t get pumped up daily with ridiculous overstatements by the company’s sole source of advertising.
On the other points, I’m not a lawyer. I’m not up to date on the specific limits to punitive damages in Florida. But on the surface, it seems fair to me that if a company was found to withhold data in an important case, after declining a settlement, that some level of significant punishment is fair.
After all, withholding data in a single non-fatal crash that wasn’t even their fault is what led Cruise to shut down operations everywhere. That may have been an overreaction and would certainly be an overreaction in this case with Tesla, given the driver’s responsibility for the crash. But in this case, the damage done to people (a death) was greater, and the damages Tesla is being told to pay ($243 million) will not lead to a shutdown of the entire company. Especially considering this is the same company that just managed to find tens of billions of dollars to give to a bad CEO.
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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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