Clean Energy Fuels Corp (CLNE) operates alongside its subsidiaries in order to sell natural gas as the alternative fuel for vehicle fleets in various markets. (Yahoo Finance, 2013) “The Principle of Self-Interested Behavior”. Companies will act in their own self-interest that benefits them. In relation to the company, Clean Energy Fuels Corp (CLNE) they are currently building America’ Natural Gas Highway that operates as a network where vehicles can stop for natural gas fueling along the highways and metropolitan areas. (SEC, 2013) There depend on capital resources and government aid in order to accomplish their goal of major trucking vehicles relying on their own natural gas. CLNE chooses to design, operate, and manager their own systems, gas, gas stations, and renewable systems and generators. “The Principle of Two-Sided Transactions.” Each transaction or perspective has at least two sides, credit and debit. In relation, “We will need to raise debt or equity capital to continue to fund the growth of our business.” (SEC, 2013) CLNE believes in order to manage their risks factors they need to get more credit from acquiring capital in order to fund their future projects, developments, and natural gas initiatives. The methods for acquiring credit are by financing equipment, selling convertible notes, acquiring high yield debt, project finance debt, and asset-based loans. “The Signaling Principle” suggests that actions and words are two different things, it is best to watch what are others are doing not saying. Although they promote natural gas, they realize that natural gas to fuel their vehicles is not realistic if the price of oil were to decline or customers not find their products acceptable. (SEC, 2013) “The Behavioral Principle” This principle suggest that people learn through observation or mirroring others. CLNE looks to the diesel and gasoline industries as mechanisms of what to do in order to drive demand and cater to their corporate customers, by up playing the benefits of natural gas, and downplaying the use of diesel and gasoline consumption throughout the world.
“The Principle of Valuable Ideas” that suggests in order to reap the big returns the company must develop new ideas into products and offerings. CLNE chooses to operate in just about all sectors of the natural gas market, including working with subsidiaries in order to design and develop new ideas to market to a new pool of customers, cost effective ways to fuel vehicles, and technology. “The Principle of Comparative Advantage” is that for a company to be a success they must work in the field that they do best. CLNE works in the natural gas industry and its employees executives that it relies on to run their business. “We depend on key personnel to operate our business, and if we are unable to retain our current personnel or hire additional personnel, our ability to develop and successfully market our business would be harmed.”(SEC, 2013) “The Options Principle” suggests that options are valuable to the success of the company. CLNE utilizes several options that benefit the company including merging with other companies that serve a larger market in the natural gas industry including, NorthStar, BAF Technologies, and IMW Industries. “The Principle of Incremental Benefits” the financial decisions that companies make are based on their incremental benefits that could be positive in the long run. CLNE chooses to make their financial decisions based on demand in the market for either, natural gas, or gasoline and diesel industries. The integration of IMW industries into their business for the new product lines of manufacturing equipment, compressors, and servicing business will help to bring incremental benefits by introducing them into a new local and global markets. (SEC, 2013)
“The Principle of Risk-Return Trade-Off” where companies find a balance between the risks and the tradeoff, where they are more willing to find an alternative for a higher return that offers fewer risks. CLNE is decidedly cautious into the future of natural gas as they have outlined the realities of the changing consumer attitudes and increase or decline of demand in the gas industry. So they operate in several fields including managing their natural gas pipeline and managing the third largest landfill in the US. “The Principle of Diversification” suggest that diversification is beneficial to the success of the company. In CLNE portfolio, they have several firms and business including, IMW Industries, NorthStar, BAF Technologies, CE Renewable Fuels, LNG Plants, and CE Finance. “The Principle of Capital Market Efficiency” the stock market information helps to influence the decisions of traders to either buy or sell shares. This is evident in the present stock market, where the demand is high, and their stock market value is up according to the NYSE. (Yahoo Finance, 2013) The last principle is “The Time-Value-of-Money Principle” that suggest money has a time value or that what money is now being used in what it will be worth in the future. CLNE uses much capital acquired from investors, contracts with government entities. By calculating the risks, the investments, and the interests of all their investments they are able to anticipate for their future gains. (SEC, 2013)
The principle that best explains the book value of an asset is the third principle of The Signaling Principle that pays attention the actions and not what is being said. No, market value of assets falls along the Principle of Capital Market Efficiency, where the market influences the decisions. An example is the equipment that is purchased on the books, and then slowly depreciates in value over time or sold for capital. This is evident on their CLNE income statements and their other financial statements. The distinctive characters that differ in industries compared to the energy industry is that the demand of energy is continual. Everyone, everywhere is dependent on forms of energy in order to operate their businesses, homes, vehicles, and other objects. They are able to provide alternatives that can appeal to a broad array of consumers and entities. That dictates the prices, the demand, and the revenue. Their tight relationships with government entities allow them the leeway to operate globally and with a strong financial backing. The participants are able to maneuver through the market at a fair pace, merging and acquiring acquisitions to their company’s portfolio in order to attract more consumers.
Clean Energy Fuels Corp. SEC Filings. (2013). Edgar Online. Retrieved from http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001104659-13-038853
Clean Energy Fuels Corp. (CLNE). (2013). Yahoo Finance. Retrieved from http://finance.yahoo.com/q?s=CLNE
Clean Energy Fuels Corp. Annual Report. (2012). Clean Energy Fuels Corp. Retrieved from http://www.cleanenergyfuels.com/annualreport/2012/atglance.html
Emery, D.R., Finnerty, J.D., & Stowe, J.D. (2007). Corporate financial management 3rd Edition. Upper Saddle River, NJ: Pearson-Prentice Hall.