Investing in the non-green that produces green

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There are a priori less obvious ways to invest in renewables. Like “betting on activities that are not green but which produce green”, in the words of Renaud Saleur, a hedge fund manager based in Geneva. In his long / short fund on green energy, the boss of Anaconda Invest particularly likes the oil services sector. But not for a short position (which bets on falling prices). Companies providing services to the petroleum sector represent around 40% of the portfolio, as they are in the process of conversion.

“Offshore wind is a very interesting market, because around 19,000 wind turbines will be installed in the world’s seas by 2030, which represents an increase of 30% per year,” describes Renaud Saleur, who uses fundamental analysis and signals generated by algorithms for its management. The installation of wind turbines requires boats and technical means similar to those used to set up oil platforms. However, only 16 boats in the world are capable of installing wind turbines, but ten are obsolete or will be soon. ”

Quasi-monopoly

Two listed companies, the Norwegian OHT and the American Eneti, own the majority of the six ships that can install the current 12 megawatt wind turbines, which weigh in the 600 tons for a wingspan of 120 meters, continues the former manager of Soros and Fidelity. These two shipbuilders, who each account for 4% of the long / short fund, are protected from competition because building one of these boats takes 3 years and costs around $ 400 million.

“However, these two companies and the entire oil services sector are very undervalued on the stock market, at less than 0.5% of the value of net assets most often, because they are associated with oil”, still observes the manager who supervises around 80 million euros in four funds. The shortage of ships is likely to intensify with the new generation of offshore wind turbines, 15 megawatts, taller than the Eiffel Tower.

Decline in renewable energy since January

In 2020, the renewable theme experienced stellar performance on the stock market. The S&P Global Clean Energy index thus gained 138%. Then the sector has suffered since the beginning of the year, the same index losing more than 12%. The rising yield on long-term US bonds and the fact that green stimulus packages are taking time to materialize have prompted investors to take their profits indiscriminately, writes Renaud Saleur in his fund documentation. Anaconda’s long / short fund is down 9% this year, after gaining 60% between its launch in early July 2020 and late December.

Read also: The euphoria for the sustainable bubble

This vision of “the non-green that produces green” is found in another position of Anaconda, Aker Solutions. At the end of August 2020, the Norwegian industrial group introduced two of its subsidiaries on the stock market, which represented around 50% of its activity. Their prices doubled in a few weeks and were four times higher in early January. Why? “Because the spin-off has highlighted the activities of these subsidiaries, in offshore wind and CO2 capture, Renaud Saleur analyzes. These are mid caps, so the effect was very strong on the stock market price. As Aker Solutions provides services to its subsidiaries, investors also understood that renewables were important for the group. ” After falling in anticipation of the spin-off, the Aker Solutions share has returned to its pre-separation level for subsidiaries.

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