Valero Energy Portfolio Analysis

Portfolio Analysis
We currently have 4 holdings in Energy, 4 in Materials and 3 in Utilities. Our Energy holdings consists of Buckeye Partners Limited which is a Oil and Gas Pipeline company, Valero Energy which is an oil refiner and marketer, VanEck Global Alternative Energy ETF which consists of companies that have over 50% of their revenue from renewable sources, and we hold the XLE which is our sector SPDR. In Materials we hold the iShares Global Timber ETF, The Graphic Packaging Holding Company which creates containers and packaging, Minerals Technologies which is an produces industrial speciality materials, and we hold the XLB which is Sector SPDR. Within Utilities we hold American Water Works which is a water utility provider, we hold
We also believe this will generate more alpha as well. The XLE will move from being 50% of energy to 41%, so we still hold a significant portion of our benchmark. We are also selling 30 shares of Valero Energy to hit our target weighting from the Macroeconomic committee. This will realize some gains because we have a 44%HPR in the last 2 years as well as trim one of our holdings that suffers from poor ESG. We believe that this movement away from fossil fuels and into more renewables will be beneficial in the long run.
Investment Thesis
We believe that there will be an increase in investments into the alternative energy space in the next 3-5 years as the costs of production and maintenance decrease and become a complete substitute to fossil fuels. We have already started to see this trend within our GEX fund. We believe investing into alternative energies will be the best way to generate alpha for the EMU sectors.
Industry
The first being the quick change in technology that is represented by a quantity growth sector such as solar energy. We believe that the solar energy is starting to reach its peak in terms of number of companies and will reach a quality growth standpoint soon that will increase the revenue of the existing companies and provide overall growth to the fund, however it will be necessary to continue to evaluate to current technology environment moving forward. The government subsidies and incentives increase the competitiveness of the industry. If these continues it will cause solar to not only increase in terms of business uses, but homeowner cases as well. The tariffs imposed by Trump on the imports of solar panels does dampen the potential growth, but there is very little exposure to this from the companies in the Guggenheim Solar. If the purchase goes through we will hold First Solar in both GEX and TAN, it would only result in approximately 1% of our whole EMU sector, so it should not be an issue.
Valuation
Valuing Guggenheim Solar we conducted a market multiples model. For the model we extracted ETFs that compete with Guggenheim Solar. Those companies were Powershares WilderHill Clean Energy Portfolio (PBW), First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), iShares Global Clean Energy ETF (ICLN), VanEck Vectors Global Alternative Energy ETF (GEX). Arriving at Guggenheim Solar’s Margin of Safety (14%), and Price