Hedge fund manager Ben Koeppel, who made big money for BXK Capital betting on renewable energy earlier this year, said he’s optimistic about a recovery in 2021, which will spark “an inflection point” in the clean energy infrastructure sector.
“The rally hasn’t even started. We think the next several months are going to bring radical change to the renewable energy sector, further solidifying it as the secular play of the decade,” Koeppel said in a one-on-one interview. “It’s simple math. You add a Democratic sweep, which paves the way for a massive clean energy infrastructure deal; couple that with lower-for-longer interest rates and higher energy prices; slap on an extension and increase to ITC and PTC benefits; and consider a likely tax rate increase in 2022, which largely benefits the tax equity market, as investors with increased tax capacity flock to renewables to monetize their increased tax benefits; and that leaves you with one thing – a market ripe for a boom like no other,” Koeppel added as he pounded the table. “Even the largest asset managers in the world [BlackRock] are making new ‘impact scores’ such that a company’s value is no longer measured by just its growth, but its environmental, social, and corporate governance impact, as well.”
Koeppel sees the current state of the market as one characterized by record levels of cash on the sidelines – $5 trillion ready to be plowed into the market, as those who missed out on the most recent rally experience the ‘FOMO’, or fear of missing out, on the next one. He goes on to say, “Look, we’ve got a ‘Fed put’ on the market right now. Stimulus at this scale is unprecedented, and at some point or another, we’re going to get the reflation we’ve been looking for – you want to be long equities before that happens.”
Equities act as an economic hedge for inflation, and the reopening of the economy is seen as one comparable to the beginning of the 1945 Baby Boomer generation, as vets returned from World War II.
“Could it take longer to reopen than expected? Sure. Could every day, non-elderly, non-frontline workers, civilians be reluctant to take the vaccine? Of course. But guess what – as long as the vaccine is accessible, there will be no defendable reason to shut down small businesses. You don’t bet against America. Not today, not ever.”