Cree: A Bright Idea

Featuring Lutts’ Logic:

The Accountant Who Crossed the Ocean

The Battle of the Billionaires

A Bright Idea

If you’re an average American, you were saturated with media coverage about the Super Bowl, and you’re currently being inundated by coverage of the Olympics, particularly this year’s pre-anointed U.S. stars Lindsey Vonn and Apolo Anton Ohno.

But there are a couple of other current sporting events that most Americans know little or nothing about, and they’re my topic today.

Part one is about the 58 brave people (predominantly British) who are now in the middle of the Atlantic Ocean, ROWING, from the Canary Islands, off Africa, to the island of Antigua, in the Caribbean.  The distance is 2,548 nautical miles.

These rowers left the Canaries on January 4, 41 days ago.

Seven are rowing solo.

40 are in pairs (one is a father-son team).

And 11 are in quads; there used to be 12, but one rower was taken off one of the quads early for “personal reasons,” leaving his teammates with plenty of food but more work to do.

There was also a 12-person boat, the Britannia III, but it’s already finished the crossing.  The crew of nine men and three women (nine British, two Danish and one American) finished last Thursday, after 38 days, 11 hours and 7 minutes.  Britannia III was aiming to beat the record of 33 days, 7 hours, but a five-day storm midway through the voyage put an end to any dreams of that.

Technically, this ocean crossing is a race.  It’s named the Atlantic Rowing Race 2009 (though the start was delayed into 2010 because of weather), and it’s run by Woodvale Challenge, a British maker of ocean rowing boats.

But in reality, it’s a test of the rowers’ physical and psychological fortitude.

The rowers deal with blisters, rashes, open sores, claw-hands, sunburn (on the right side), hallucinations, digestive troubles and more.  They cope with equipment failures, weather, ocean-going tankers … and sometimes their companions, or their lack of companions.

And why do they do it?

Not for money, and not for glory.  They do it for personal accomplishment.  And they do it for charity.  Most rowers solicit donations from supporters and make gifts to charities.  These include ChildLine (help for children and teenagers), WaterAid (providing safe water to the world’s poorest communities), Ataxia (supporting people affected by cerebellar ataxias), British Heart Foundation, Chestnut Tree House (children’s hospice), Jersey Hospice Care, and more.

For some, this ocean-crossing business is almost a profession.  

Ian Couch, skipper of Britannia III, now has three successful ocean-crossing rows under his belt; on the entire planet, there are only six others like him.  In fact, fewer people have rowed across oceans than have stood on top of Mount Everest!

But for some, like the two firemen from Manchester, England-aged 38 and 40-this is a new adventure.

Their profile includes this.  “We are a couple of ordinary firemen who love our food and do a bit in the gym.  None of us have ever rowed before! Mad?  Maybe!  Our view is you live once so live it!”

The firemen, as I write, are in 18th place among the pairs.

Then there are the four women from France, aged 25 to 31.  They’re currently first among the fours, and in third place overall.

The oldest participant is 59-year-old Leo Rosette of Massachusetts, rowing alone.  Leo is currently third-from-last, and if he finishes, he’ll be the oldest person to have rowed across an ocean.  He has 1,693 more miles to row.  C’mon, Leo!

Leading the pairs competition for a long time were two Frenchman, aged 42 and 47, but last week they were slowed by unspecified medical problems and passed by two 26-year old Englishmen from Norwich, one an underwriter for Lloyd’s and one an accountant for PricewaterhouseCoopers.

And then there’s the leader of the whole shebang, 47-year-old Charlie Pitcher, who is currently 304 miles ahead of the underwriter and accountant and 632 miles from the finish.  While the boats in the pairs and quads categories are all of comparable design, the specifications for the boats in the singles category are open, and Charlie’s designer contrived a boat that is lighter than most, and that captures some of the prevailing easterly breeze.  So while all the boats enjoy the help of the westward-flowing ocean current, Charlie’s boat “sails” a little, too!
Which is not to take anything away from Charlie, who completed the Marathon des Sables (Marathon of the Sands) last year.  It’s the equivalent of six marathons in six days … in the Moroccan desert.  

Charlie keeps in close contact, with a near-daily blog.  Last week’s included this:

“Quick image description. There is not even the slightest breath of wind just now, complete silence and the water is silky smooth, not even a ripple, although there is a gentle swell. I am looking out of the hatch, the back of the boat is silhouetted against a purple sea, dead straight horizon, strong orange sky above this line gradually changing in shades of blue high up. There is the odd slap from a teaspoonful of water hitting the side of the boat, my clock is ticking and the keyboard is tapping. NOTHING ELSE. I’m quietly drifting along on 253T at .5 knot (whey hay, free speed again!) One more thing, it is too hot! I’m dripping!”

If you want to keep an eye on them, go to
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The other sporting event is also a boat race, but it’s about as different from these ocean rowers as possible.

It’s the America’s Cup sailing regatta, first won in 1851 when the yacht America bested 15 British yachts in the Royal Yacht Squadron’s annual 53-mile race around the Isle of Wight.  It’s the oldest active trophy in international sport, predating the modern Olympics by 45 years.

From the third defense in 1876 through the 20th defense in 1967, the format was always one challenger against the current Cup owner.  Early winners included John Malcolm Forbes, Cornelius Vanderbilt and J. Pierpont Morgan.  Tea magnate Sir Thomas Lipton challenged five times, but never succeeded.

Beginning in 1970, interest in challenging was so great that an elimination series was instituted to determine the final challenger.  Since 1983, this has been known as the Louis Vuitton Cup … a symbol of the growing importance of corporate sponsorships.

But this year the America’s Cup has reverted to its roots.  Thanks to aggressive battling over the rules in an effort to achieve an advantage, combined with no-holds-barred use of the legal system, the race was fought by two billionaires with egos to match.

The defender was Swiss pharmaceutical billionaire Ernesto Bertarelli, with a 90-foot catamaran named Alinghi 5.

The challenger was Oracle founder Larry Ellison, with a 90-foot trimaran with a rigid wing sail, originally called BMW Oracle Racing 90, but now called USA 17.

Last Friday, off the Mediterranean coast of Spain, USA 17 won the first race, a 40-mile up-and-back course, by a whopping margin of 15 minutes, 28 seconds.

On Sunday, on a triangular 39-mile course, USA 17 triumphed again, by a margin of 5 minutes, 26 seconds.

Ellison’s key advantage was the big expensive wing.  He reportedly spent some $200 million on the entire campaign.

Going forward, the wish among the sailing fraternity is that Ellison act like a proper steward of the Cup, and organize the next regatta, years hence, so the legal battles are minimal and challenges affordable to sailors from many countries.  Knowing his record, that may be asking a lot.

In the meantime, the benefit to all sailors is that technology trickles down, and the innovative designs used in USA 17 will rapidly find their way into more affordable sailboats.

Me, I’m going to keep an eye on those determined rowers.

Last week, I wrote about the wisdom of buying stocks hitting new highs, recommending both Perrigo (PRGO), the largest U.S. maker of store-brand over-the-counter drugs, and EV3, Inc. (EVVV), which calls itself “Your endovascular company.”  Both had a good week, and I still like them long-term.

But today my thoughts turn to light bulbs.

Of course, they’re not all bulbs anymore, but we’ll probably keep calling them that, just as we still “dial” and “hang up” the telephone.

This weekend I was changing a bulb at home; I replaced a traditional 60-watt incandescent bulb in a ceiling dome with a curly compact fluorescent light (CFL).  But as I was screwing the dome back into place, the CFL, being wider at the end than the previous bulb, was squeezed by the dome and broke.

Remembering the warnings about mercury, I held my breath, opened a window and walked away, heading to Google to learn what to do next.

Among the things I learned are these:

The amount of mercury in a CFL is small (perhaps 4 mg); there’s far more in watch batteries and those shoes that light up as you walk.  In an ideal world, all those items would be treated as hazardous waste.  Normally, however, they end up in the regular trash stream … which is where I put mine after I cleaned up, being careful not to use a vacuum cleaner, which would spread the mercury further.

Then I put in a regular incandescent bulb.

Now, part of me appreciates these CFLs.  After all they save money, by using 75% less energy than incandescents and lasting perhaps 10 times longer.  And they’re less bad for the environment too, regardless of where I dispose of my used CFLs.  The amount of mercury contained in a CFL ends up being less than half the amount that would be released into the atmosphere from a coal-fired power plant to keep an incandescent bulb lit over the life span of a standard CFL.

Nevertheless, I’m reminded of something I read when the government passed laws dictating the phase-out of incandescent lights.  You may remember that there were virtually no complaints from manufacturers.  In fact, their lobbyists helped draft the laws!  And why?  Because the new CFL lights are more profitable.

What I’m really waiting for are light-emitting diodes (LEDs), which use semiconductor technology to create light using substantially less energy … which means less wasted heat.

At the moment, these lights are still not cost-effective for homeowners, although if you really want to avoid the mercury risk you might justify it.  But efficiencies are improving fast.  Just as Moore’s Law illustrated the progress of semiconductor processing chips for decades, today Haitz’s Law (after Dr. Roland Haitz) illustrates the progress of LED technology.  Since the 1960s, efficiency has doubled approximately every 36 months.

One of the leaders in the industry is Cree. Inc. (CREE), a Durham, North Carolina company that’s thriving by serving the industrial market.

Cree earned four appearances in Cabot Top Ten Report last year.  Here’s part of what the last report said, on November 11.

“Cree Inc. is a leader in the production of light emitting diodes (LEDs) … LEDs have been popular for years in laptops and cell phones, but as the demand for electricity rises and the efficiency of LEDs soars, their applications are expanding, especially for outdoor lighting.  For instance, Cree is supplying Anchorage, Alaska, with 16,000 LEDs. With 80% of the firm’s revenues coming from outside the U.S., there’s a good chance countries like China, which already makes up a big chunk of business, could replace millions of bulbs in the years ahead. Revenue growth is accelerating and the recent earnings release just topped estimates. We like it.”

Back then, CREE was trading at 42.  Today it’s 61.  And it still looks good.

Yours in pursuit of wisdom and wealth,

Timothy Lutts
Cabot Wealth Advisory

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