In 2007, student lending was hot topic. We spoke this week with analyst Sameer Gokhale who said there were essentially two points to the student lending story in 2007:

• 2007 saw some deep cuts from a legislative perspective- so much so that many companies exited the student lending space. College Loan Corportion- the ight largest loan originator in the industry- was one of them.
• There were investigations by the attorney general into the relationships between finacial aid officers and students. While this  sparked a lot of debate, ultimately very few serious violations- much less than subprime space.

For the complete interview with Mr. Gokhale, including overviews of other spaces in specialty finance and stock picks, click here.

One of our special focuses this week is on Semiconductor Equipment. We spoke with Patrick Ho, analyst with Stifel, Nicolaus & Co., who talked a little bit about where Semiconductor Equipment is headed in 2008:

Mr. Ho: If we are going through a slowing economic situation, there’s clearly going to be more caution overall and that’s going to trickle down to the semiconductor capital equipment market. There is no way around it; no one is immune from a slowdown in the economy and particularly in technology spending. If that’s the case, yes they are going to feel weakness. They’re feeling it right now. The question then becomes how long is this weakness going to last for the capital equipment market. That remains to be seen and part of that is reliant on when we may see the end for this recession. If we have a severe recession that goes into 2009, it’s going to linger for the capital equipment companies as well.

For the full interview with Mr. Ho, including a look at a number of economic issues facing the Semiconductor Equipment space and stock picks, click here.

While many of the analysts we speak to at the Wall Street Transcript are talking negatively about the economy and the market at present, alternative energy analysts are humming a different tune. According to analyst Pavel Molchanov, this one of the best times for the alternative energy space- at home and abroad:

TWST: With the politics of the US at this point, what does that mean for this space going forward – in terms of continued subsidies?

Mr. Molchanov: Point number one, when we look at the political framework that is supportive of solar and renewables more generally, the situation has never been more favorable than it is today worldwide. Governments are really getting on this bandwagon, and, again, they are getting onto the bandwagon for a variety of reasons. In Europe, it has historically been because they have a more progressive environmental policy. In the United States, it’s been primarily because of energy independence – promoting domestic energy supply – but increasingly also it has an environmental aspect. And so the big picture here is that the governmental support, again, domestically and internationally for solar has never been better.

The second point specifically from a domestic standpoint is that Washington is not actually the main driver of solar in the United States; it’s really at the state level where many of the leading-edge policies have been enacted. Washington has been extremely positive for ethanol, not surprisingly because of the power of the corn lobby. Farmers have a lot of influence, particularly in an election year, because you have a lot of swing states in the Midwest like Iowa, Minnesota, Illinois, and all of these are key corn-growing states. For solar and wind, the state level is where the action is.

For the complete interview with Mr. Molchanov, including a wide-ranging overview of the space and stock picks, click here.

This week we spoke with a portfolio manager who speaks to us on a regular basis, John Raclin of Barrington Research Associates.  He talked to us briefly about the state of the economy, the government’s reaction to it, and how effective it will be in the long run:

Mr. Raclin: I don’t think that there is any quick fix for this situation. The Federal Reserve is trying to reliquefy the banks, replacing the equity that they, the banks, are writing off with one hand by reducing their cost of funds. Some of the hits to balance sheets have been extremely significant, many billions of dollars. It seems as if almost every morning we are kicking over another rock and finding a bunch of somewhat unappetizing things scurrying around underneath…

The government authorities are basically making a big bet; they can lower interest rates dramatically, flood the system with money, and it will not result in a dramatic upsurge in inflation because of the deflationary impact of both declining residential and perhaps even commercial real estate, along with the continued low-priced imports from foreign countries. Personally, I doubt it will work…

The key thing to remember is that the authorities do what they can do. The hope that governments can either prevent or minimize the impact of foolhardy economic policies should be well recognized by now as a silly expectation. To a certain degree, governmental authorities are like the Wizard of Oz. Lots of huffing and puffing but reality is, compared to markets, they are just another guy behind the curtains. They lower interest rates, because that’s what they can do….

When the economy starts to turn around as a result of all the increased liquidity, they are betting that they will be able to react appropriately and in a timely fashion. That would indicate a level of precision not evident in the past.

For the complete interview with Mr. Raclin, including a complete overview for 2008, a look back at 2007,  and stock picks, click here.

Our other special focus this week is on Canadian technology. We spoke with analyst Mike Abramsky about some of his picks in the space. One that was a little less familiar was the company Hostopia (H: TSX). Mr. Abramsky told us a little about this little company:

Mr. Abramsky: This is an emerging company. The market cap is only about $60 million, a thin float, but we like it because of very aggressive management at the very early edge of a very large global space. There are probably over 1,000 telcos that are starting to try to bundle Web hosting in conjunction with the other telco services that they provide. This is on the business model of a Website Pros (WSPI); these are services that help small businesses get up on the
Internet, but the difference is the Hostopia works through telcos. As a result, their channel leverage is far greater, selling costs are a lot lower, churn is a lot lower because they are working through the telco channels.

For the full interview with Mr. Abramsky, including a complete overview of Canadian Technology in 2007, an outlook for 2008, and more stock picks, click here.

Our special focus this week is on Alternative Energy. The analyst we spoke to talked to us a little bit about what some of the highlights were in 2007 for the space:

• Patrick Forkin, Tejas Securities Group

Mr. Forkin: First of all, on the solar side you saw a real migration of interest from the crystalline manufacturers like SunPower (SPWR), to the thin film manufacturers like First Solar (FSLR). I think we are going to continue to see that in 2008. I think the focus is going to be on the low cost producers in the space. Depending on what you believe with respect to demand attributes in 2008, it should be a pretty good year for most of the established solar guys, both on the crystalline side and the thin film side.

• Daniel Mannes, Avondale Capital Partners

Mr. Mannes: One of the things that was really interesting was not so much the direct plays on alternative energy, but that some of the tangential plays, especially on the agriculture side probably outperformed — outside of solar — most of what is in alternative energy. Especially if you look at areas like fertilizer, those probably ended up being stronger plays as adjuncts to alternative energy rather than playing directly. I think the other thing worth noting, especially as we got later in the year, was a real de-risking of the market.

• John Quealy, Canaccord Adams Inc.

Mr. Quealy: Mr. Quealy: In terms of last year, I would focus first on the smart grid. 2007 brought an acknowledgement by utilities that spending on the grid with some advanced functionalities was really in their best interest. This is an emerging trend that will take years to play out fully, but we did see a jump-start, if you will, in some of the related activities there. They have been going on for a number of years in the background, but 2007 seemed to be the year for utilities to focus on some new energy technologies.

For the full version of this roundtable, including an outlook for 2008 and stock picks in the Alternative Energy space, click here.