Hedge Funds Increasingly Short on Green Tech Stocks

A recent Bloomberg analysis of 500 hedge funds, tracked by Hazeltree, a data compiler in the alternative investment industry, reveals a growing trend among Wall Street hedge funds. On average, these funds are net short on batteries, solar, electric vehicles, and hydrogen companies compared to those long on green companies.

More Funds Net Long on Fossil Fuels

The data also indicates that more funds are net long on fossil fuels than shorting oil, natural gas, and coal. This trend persists despite the Western world and China investing hundreds of billions of dollars in green stimuli packages to support these industries. However, considering that some green industries are not sustainable in the short run, some speculative green tech firms have already imploded.

Wall Street's Realization

In 2023, Wall Street quickly realized that investments in clean energy and green tech would not yield the quick returns they had anticipated. Many were swayed by government and mainstream media's climate crisis propaganda, funneling money into green companies that were not viable in a high-interest-rate environment. The Bloomberg analysis provides insight into Wall Street's misguided investments. Currently, funds are primarily net short on green tech while long on fossil fuels.

Continued Green Energy Bubble Meltdown

Numerous reports on the worsening green energy bubble meltdown were provided to readers last year, and the trend has continued into 2024: - Green Energy Meltdown To Continue Next Year, Bloomberg Survey Finds - There Is A Financial Crisis Brewing In Offshore Wind Energy - US Clean Energy Stocks Have Lost $30 Billion In Value In The Last 6 Months - ESG Bubble Further Deflates As CEOs Ditch Green Lingo On Earnings Calls - Another Green Energy Company Declares Bankruptcy, Thank Biden's Tariffs - Solar Firm Lumio Files For Bankruptcy After 'Sharp Decline In Demand' Since peaking in 2021, the S&P Global Clean Energy Index has dropped 60%, while the S&P Global Oil Index has risen 70%. Impax Asset Management, a clean-energy transition fund once valued at $50 billion, has seen its value collapse by over half since 2021.

Political and Geopolitical Risks

Beyond the challenging macro-economic backdrop that green investors have had to deal with over the past few years, there continues to be a hostile political backdrop. Investment managers who continue to champion green, sustainable or ESG (environmental, social and governance) strategies regularly have to defend themselves against US Republicans who perceive these strategies as a "woke," anti-capitalist conspiracy. Most of the hedge fund managers Bloomberg interviewed pointed to an increasingly hostile geopolitical environment, with obstacles such as tariff wars making them hesitant to invest in classic green bets such as EVs or solar power. With much of the supply chain for green technology now depending on China, the risk of a full-blown trade war targeting its products has become a direct threat to the financial appeal of clean energy. "The energy transition is failing, and will fail," Barry Norris, the founder and chief investment officer of UK hedge fund Argonaut Capital Partners LLP, told Bloomberg, adding that fossil fuel will remain the top energy source for years to come.

Hope for Nuclear Energy

Despite the challenging landscape, all hope isn't lost. From the beginning, it has been suggested that the real green trade lies in nuclear energy: "Buy Uranium: Is This The Beginning Of The Next ESG Craze."

Bottom Line

The energy transition is proving to be a challenging endeavor, with many investors realizing that the quick returns they hoped for in green tech are not materializing. Political and geopolitical risks further complicate the situation. Yet, there is still hope in other areas, such as nuclear energy. What are your thoughts on this matter? Do you agree with the sentiment that the energy transition is failing, or do you believe there is still potential for success in green tech? Share this article with your friends and let us know your thoughts. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.