Just a few weeks after telling investors it’s time to cut bets on crude oil, Kingdon Capital Management looks like a seer, thanks to President Barack Obama’s plan to cut carbon emissions.
Kingdon, the hedge fund firm that generated a 13.4 percent gain in the year’s first half, boosted investments in solar companies, it wrote in a July 20 letter. David Einhorn, the president of Greenlight Capital Inc., also may see benefits: In October, he recommended buying renewable power company SunEdison Inc. as his firm built a stake that ranked as its third-largest U.S. public equity holding by the end of March.
Obama is set to detail on Monday the most sweeping new rules in the history of the Environmental Protection Agency. The White House said the measures will be tougher than the regulator’s previous proposals to combat climate change, potentially producing winners and losers among big investors speculating on how quickly the U.S. will shift to solar, wind and other renewable sources.
It “ratifies the existing direction of the industry’s evolution,” said James Lucier, analyst at Capital Alpha Partners in Washington. The plan “certainly confirms a circumstance where we’ve been headed for quite some time.”
For Lucier, the die in energy has been cast for several years. Technological improvements in solar and wind production have kept those sources competitive in the face of falling fossil-fuel prices, even as hydrofracking drove natural gas to new lows. The Obama administration is seeking to accelerate the transition, the analyst said.
Last month, Mark Kingdon’s $2.6 billion firm said it had sold oil-company shares in June and placed bets that would profit if crude prices slide. It bought stakes in TerraForm Global, a SunEdison unit that was set to go public, having already taken a position in another of that company’s units, TerraForm Power, which owns wind and solar power plants.
For Einhorn, proposals to cut fossil-fuel emissions in U.S. power plants may be a mixed bag. This year, Greenlight raised its stake in Consol Energy Inc., a coal and natural gas producer, according to data compiled by Bloomberg.
A spokesman for Kingdon said he couldn’t immediately comment and a spokesman for Greenlight didn’t respond to messages.
The proposals may also go both ways for another titan of energy investing, Warren Buffett. The energy division of his Berkshire Hathaway Inc. has about $80 billion in assets, according to its 2015 brochure. While that includes $17 billion of investments in renewable energy generation, such sources still account for less than a third of the company’s more-than 32,000 megawatts of power-generating capacity. Buffett didn’t respond to a request for comment sent to an assistant.
Berkshire was among companies that last week pledged to cut their carbon footprints under a White House initiative. The company said it will invest as much as $15 billion more in renewable energy generation while retiring some fueled by coal.
Energy companies Exelon Corp., Dynegy Inc. and Calpine Corp. would be expected to enjoy the largest percentage gains in earnings based on Clean Power Plan rule proposals last year, Sanford C. Bernstein analyst Hugh Wynne wrote in a research note July 31. FirstEnergy Corp. and NextEra Energy Inc. also would probably benefit, Wynne said.
All five of those companies’ biggest shareholders include asset managers such as BlackRock Inc. and Vanguard Group Inc., which in turn oversee money for governments, companies, pensions and individuals.