To OTC Journal Members: 
 

It All Changed in February of 2005

What changed in February of 2005? It was a new law in China requiring 10% of energy generated to come from renewable energy resources. It was still three years out to the Olympics- but the Chinese were quite anxious about the levels of pollution around Beijing and the other major cities in the country. They wanted to start solving the problem.

10% is a massive number in China. Currently, China's power production stands at 800 gigawatts, and is expected to rise by 80 gw this year alone. Here's their problem- China doesn't have much oil or natural gas- China has an abundance of coal, and coal is a dirty fuel for power plants- much worse than the US's preferred fuel- natural gas, which we have in abundance.

Before moving on to some information related to my new China idea, which I believe will be a big money maker for all who choose act quickly, it's worth reviewing where I am on International investment ideas. Here's my track record in chronological order:

• China Energy Recovery (CGYV): September of 2008- $3.50 to $1.20- down 67%
• Brazil ETF (EWZ): December '08- $35 to $69.12- up 97.5%
• China ETF (FXI):  December '08- $25 to $42- up 68%
• Universal Travel (UTA):  June '09- $8 to $13.45- up 68%
• NF Energy (NFEC):  June of '09- $2.07 to $4.25- up 110%
• Legend Media (LEGE):  June of '09 at $.40 to $.35- down 12.5%
• Xinhua Sports and Media (XSEL):  August '09- $1.71 to $1.78 - up 4%
• Tianyan Pharma (TPI):  Friday of last week- $3.60 to $3.75- up 4.1%

A couple of the ideas are quite recent and will need some time to develop and mature. Nevertheless, that's the track record. Post Q4 of last year we have been making a lot of money, and I hope you've participated and notched some gains.

Now, back to China and my new idea, which I believe might just be the best of the bunch. As I stated above, it all changed in 2005 when China passed a law requiring 10% of energy to come from renewable sources by 2010. The "renewable energy gold rush" started, and it's gaining momentum.

China has an abundance of coal and very limited natural gas resources, so thousands of cheap, dirty power plants were built in the '70's and 80's to provide power for the meteoric growth. Many of those inefficient dinosaurs are now either standing idle or being retrofitted with the latest energy regenerating technologies, creating significant profits for investors.

Here's an early look at one component of my new idea. This upcoming recommendation boasts one of the biggest and most successful global investors amongst its shareholders and on its Board of Directors. Read on:
 

Carlyle Group- The Biggest Private Equity Firm In the World

Raise your hand if you know who the Carlyle Group is. In case your hand's not up, here some 411 on this powerhouse investment group. Based on capital under management, Carlyle Group has been ranked the largest private equity fund in the world.

Here's a few factoids:

• Carlyle has 890 employees
• there are 495 money managers working there in 20 different countries
• 415,000 people are employed by Carlyle financed companies
• There are over 1300 investors in their funds from 71 different countries
• It is estimated Carlyle has $84.5 billion under management divided amongst 64 different funds
• 25% of Carlyle capital is deployed in Asian investments (that's low if you ask me)
• 22% of their capital is invested in energy and power

Carlyle has not been without its detractors as well. Filmmaker Michael Moore takes a shot at them in Fahrenheit 911. Carlyle is a big investor in defense contractors, and has capital under management from Middle Eastern investors. To raise $90 billion, you have to get some oil money. Moore tries to tie Bid Laden's extended family as investors, and makes (in my view) the unfounded leap that terrorists are taking over our defense companies through Carlyle. A big stretch.

Regardless of your particular feeling about this issue, Carlyle is in fact the largest private equity firm in the world, and a highly successful investor in numerous transactions.

Of late, Carlyle has been very active in China investments. In September, Carlyle bought a minority interest in Yashili Group- China's leading developer of infant formula.

In August, Carlyle helped facilitate a contract between China based pipe maker Yangzhou Chengde, and India based Bharat Heavy Electricals Ltd. Carlyle is a big, and clearly value added shareholder in Yangzhou Chengde.

In fact, in its 2008 Annual Report, Carlyle boasts it was one of the early investors in China, having put its first capital to work 10 years ago. Today, Carlyle describes itself as "One of the Largest and Most Committed Private Equity Firms in the country (China)". There is a whole section of their Annual Report devoted to China.

Where's all this leading? Suppose I was to identify a very profitable energy company in China that has received a significant investment from Carlyle Group. In fact, suppose Carlyle Group was a big enough shareholder to be consider a "control" entity by SEC definition, and had seats on the Board of Directors.

Then- take it one more step- suppose this stock was extremely undervalued and no one knew about it. I mean nobody knows about or follows this stock, and the company is gushing profits implementing one of the most powerful business models I've reviewed. You'll be one of the first to have a really good look at this idea.

It's coming soon. Stand by for more information. You'll have all the 411 within a week.

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