- Utilities investor Electron Capital credits its big 2020 and 2021 start to renewable energy stocks.
- Solar battery-maker Sunnova and NextEra are among the $2.3 billion firm’s top holdings.
- A recent presentation from the firm highlights the increasing efficiency of renewable energy sources.
- See more stories on Insider’s business page.
Count Electron Capital is one of the many firms leaning into ESG as President Joe Biden’s administration takes hold.
The $2.3 billion hedge fund has long been an infrastructure and utilities investor, run by former SAC Capital portfolio manager Jos Shaver, and many of its top holdings still include legacy energy players like PG&E. But the firm’s banner year last year, sources say, was driven by renewable energy companies, and the manager is expecting interest to only increase in the space as the Biden administration sets its policies.
The fund returned 37.7% last year, and has made 6.3% through April this year, a recent factsheet states. The average hedge fund was up 11.8% and 8.7%, respectively, according to Hedge Fund Research. Last year was the best on record for Electron, according to the factsheet.
The firm’s renewable bets are no small wagers either. Among the firm’s top positions are investments into solar battery-maker Sunnova Energy International and NextEra Energy, which generates the most wind and solar energy of any company in the world. Those two positions were worth more than $180 million, regulatory filings show.
The manager believes utilities like NextEra will be the drivers of the energy transition, not legacy energy companies. A presentation from earlier this year seen by Insider outlined how “utilities are best positioned to capture cost reductions at scale” of renewable energy sources like wind and solar.
“In the United States, clean energy technologies grew strongly during a Trump administration and should grow even faster under a Biden administration where federal policy drivers that were absent for the past 4 years are taking shape that could potentially accelerate growth to record levels,” according to the presentation.
A chart on another page of the presentation shows off-shore wind energy generation capacity projected to grow by 21% annually over the next decade.
“Renewable generation costs have plummeted making these technologies profitable without a subsidy and causing rapid displacement of fossil fuels,” the presentation read.
Biden’s constant calls for a massive infrastructure package could provide another boost to Electron. The presentation cites the Federal Highway Administration projected concrete needs for the country’s bridges and roads to sit at nearly $1.2 billion, while asphalt needs are more than $1.6 billion. Electron has significant stakes in concrete-makers Cemex and Forterra.
“There has never been a more supportive backdrop” for infrastructure spending from the government, the presentation said.
The firm declined to comment.
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