Using AlternativeSoft’s asset selection software, we were able to find the top 3 performing hedge funds to see how they performed vs the top 5 hydrogen stocks vs the top 3 ETF clean energy, during 2020.
| Cumulative return during Jan2020 - Dec 2020 | |
|---|---|
| Top hydrogen stock | 1560% |
| Top ETF clean energy | 222% |
| Top hedge fund | 729% |
Source: AlternativeSoft, HFR, Eurekahedge, Morningstar
Combating climate change is on the core agenda of President Biden. On his first day, he addresses this issue by rejoining the Paris Climate Agreement, ending the Keystone XL pipeline and revoking oil and gas development at national wildlife monuments.1 As climate change has such a priority in Biden’s agendas, it has brought attention to the hydrogen economy.
Hydrogen economy is the process of producing hydrogen to use it as fuel, hence replacing fossil fuels and cutting carbon emission significantly.2 Companies that operate under the Hydrogen Economy are the companies that sell fuel cells, renewable energy equipment, and supply hydrogen gas. The stocks of these companies have been soaring, driven not only by President’s Biden support for clean energy, but also by 60 countries agreeing to reduce their net carbon emissions by 2050 to zero,3 as well as by the rising adaptation of zero-emission.
The top 5 Hydrogen stocks, Ballard Power Systems (BLDP), Cummins (CMI), Plug Power (PLUG), Bloom Energy (BE) and FuelCell Energy (FCEL), had very impressive cumulative returns in 2020. PLUG had the highest return at 1560%.FCEL comes as a second with a return of 1247%, followed by BE’s return of 385%, BLDP 269% and, CMI 50%. What has also boosted this increase, is the falling costs and rising capital coming in the industry not just in the United States but globally. In the beginning of January this year, Plug Power got a $1.5 billion investment from SK Holdings. 4
Figure 1: Hydrogen Equities Cumulative Returns Jan 20-Jan 21
Figure 2 shows the three hydrogen-related ETFs cumulative returns during 2020. During Jan2020-Jan2021 included, the First Trust NASDAQ® Clean Edge® Green Energy Index Fund (AUM $=1.9b) had total returns of 222%, the SPDR® Kensho Clean Power ETF (AUM $=218m) of 189% and Invesco DWA Industrials Momentum (AUM $=206m) of 42%.
Figure 2: Hydrogen Related ETFs Cumulative Returns Jan20-Jan21
The three hedge funds with highest cumulative returns, were Delphi Global (AUM=USD184m), Gammon Tailwind Fund (AUM=USD23m) and CIF Cayman Fund SPC - Chaos Alpha Fund SP (AUM=USD227m). The Gammon Tailwind Fund had a total accumulative return of 730%, followed by CIF Cayman Fund SPC - Chaos Alpha Fund SP at 590% and Delphi Global at 412%.
Figure 3: Top Hedge Fund Returns investing in hydrogen, Dec 19- Dec 20, source: Eurekahedge, Nilssonhedge
We conclude that selecting the correct hedge funds or the correct stocks, with skills, could have generated large returns during 2020.
N.B. This article is not intended to provide any professional investment advice and should be treated as more of an opinion piece.
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1 Erickson, B. (2021, January 21). Biden signs executive actions on COVID, climate change, immigration and more. Retrieved from https://www.cbsnews.com/news/biden-signs-executive-orders-day-one/
2 Bloom, SunPower, Cummins: Hydrogen Economy Stocks To Watch As Biden Administration Takes Over. (2021, January 21). Retrieved from https://www.forbes.com/sites/greatspeculations/2021/01/21/bloom-sunpower-cummins-hydrogen-economy-stocks-to-watch-as-biden-administration-takes-over/?sh=7c28d846b55e
3 Sengupta, S., & Popovich, N. (2019, September 25). More Than 60 Countries Say They'll Zero Out Carbon Emissions. The Catch? They're Not the Big Emitters. Retrieved January 22, 2021, from https://www.nytimes.com/interactive/2019/09/25/climate/un-net-zero-emissions.html