By Freedom Day Solutions
This will be the least popular idea I have shared in almost three decades of stock research. As always, I have no idea what will happen next. That’s why I love this endless work. The only thing I know for certain is that curiosity beats conviction. I have never witnessed a more agreed upon conclusion – that the energy sector is unsustainable at best, and almost completely un-investable. As a portfolio manager I am delighted to be in lonely positions on the other side of that crowded trade. What’s even better for more people, I am curious if improved solutions for better climate aren’t hiding where the convinced crowds would never consider.
Capital will always flow to where it is treated best around the world. Energy companies underperformed the rest of the stock market for over a decade. They made their own terrible investments, over-produced supply and drowned themselves in debt. Then the ESG movement created public pressure to eliminate even one good word said about traditional energy sources, and are forcing institutional funds to sell all energy shares or be fired.
Energy supplies growth. These three words do not make up that popular acronym, but instead provide a bunch of facts instead. But even the crowds of ESG protestors need to take a hot shower at some point. To be clear, I am a dad of five young kids (with zero time for politics) who wants the cleanest and brightest future for all of our families. We have big problems to solve. Better than any new regulation or tax, capitalism will always reward the best problem solvers. That’s why I know there will be wonderful new innovations and technologies developed.
I am wondering if the most unimaginable possibility offers the greatest upside to the environment and investors – improving the use of traditional energy. After all, who better to know where the biggest challenges to solve are, than the industry with the blueprints to the problems?!
We will take a tour of one of those remarkable solutions right around the corner from the loudest critics who are not being taught how capitalism works (which may be no accident, so the value of their tuition isn’t examined more closely). I’m not an engineer or environmental scientist. I will let the example of what is possible speak for itself, when we look at the potential of energy supplying growth to better power plants in just a moment.
What I do know is when a group of stocks is unusually appealing. Never in my career have I studied a better setup than certain energy stocks, made possible by the most crowded conviction that they are doomed. We will look at those facts underneath uninformed opinions….. read more