Westbeck’s battery-focused fund powered by surging energy transition theme

Battery technology

The Westbeck Volta Fund, a global long/short equity strategy launched last year by London-based energy specialist hedge fund Westbeck Capital to trade the emerging battery revolution, has advanced more than 18 per cent so far in 2020.

The strategy returned 4.8 per cent last month, driven mainly by strong H1 results from Dutch energy equipment provider Alfen Beheer, which saw energy storage and charging infrastructure gains, as well as Livent, LG Chem and Lynas Corporation.

Westbeck said the pace of the energy transition has continued during August, with electric vehicles increasing their market share in Europe – reaching 9 per cent in Q2 this year – while EV sales in China are showing year-on-year growth.

At the same time, energy storage systems and renewable power potential have come into sharp focus following power outages in California during August.

“We reduced the fund’s gross exposure towards month-end as we became cautious of broader market direction, and the net exposure remained neutral,” Westbeck said in a strategy update.

The Volta fund trades an assortment of markets and sectors long and short around the nascent revolution in battery-based energy transition. This theme is built around the increased usage of rechargeable batteries in laptops, tablets and smartphones globally, which is fuelled further by their presence in transport, utilities, and the industrial and home storage sectors.

The strategy – which has a USD500 million capacity – takes positions in areas including electric vehicles, energy storage, consumer products, battery manufacturing, as well as renewables such solar, wind and hydrogen, and certain metals, chemicals and recycling stocks.

“Our conviction in the opportunities offered by the energy transition remains undimmed, but the blue-sky valuations afforded to some companies in the space does leave pause for thought. We continue to prefer companies elsewhere in the value chain offering transformational growth at reasonable valuations.”

Since its July 2019 inception, the Westbeck Volta Fund is up some 26.3 per cent, with year-to-date returns now at 18.5 per cent.

The strategy is headed by Westbeck chief investment officer Will Smith, a former partner and head of the natural resources team at Sir Michael Hintze’s multi-strategy hedge fund giant CQS, and co-CIO Jean-Louis Le Mee, ex-founding partner of BlueGold Capital, who also had stints at York Capital and Goldman Sachs. Lee Mee is also CIO of the firm’s flagship strategy, the Westbeck Energy Opportunity Fund, which is so far up more than 67 per cent in 2020, despite falling 1.3 per cent in August.