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Hedge funds cool on alternative energy co.'s

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By Riva Froymovich

February 26, 2007 2:11 pm ET

Alternative-energy companies may be more popular than ever, but a number of hedge funds reduced their stakes in solar power and ethanol producers in the fourth quarter, according to filings with the U.S. Securities and Exchange Commission, Bloomberg News reported.

Those include D.E. Shaw & Co. of New York, Tudor Investment Corp. of Greenwich, Conn., Citadel Investment Group LLC of Chicago, Caxton Associates LLC of New York, SAC Capital Advisors LLC of Stamford, Conn. and Pequot Capital Management Inc. of Westport, Conn., which manage a combined $86

The reason is that some consider global warming investing is a short-term fad, Bloomberg reported, pointing to the short selling of U.S. alternative-energy stocks last month, which climbed 45 times faster than the average for Standard & Poor's 500 Index members.

Stock statistics for this quarter indicate that hedge funds have increased their bets against U.S. alternative-energy stocks, Bloomberg reported.

Alternative-energy stocks have slumped before—sometimes just due to the inability of companies to turn a profit despite the increase in demand increases, said the report.

The popularity of alternative energy “does not mean that as an investor you'll be able to make money,” Stuart Schweitzer, New York-based global strategist at JPMorgan Asset Management, told Bloomberg.

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