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Electron Capital Partners fund rebounds from 2023 losses

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Electron Capital Partners’ Global Fund is poised for its best performance in four years, rebounding from last year’s losses with a strong start in 2024, according to a report by Institutional Investor. 

Under new leadership by Ran Zhou, the hedge fund has surged 16.03% year-to-date through May, including an 8% gain in May alone. 

The fund strategically pivoted early in 2024 to mitigate volatility caused by the clean energy sector’s “hangover” effect from temporary 2023 headwinds, a shift that has helped Electron recover from a 9.8% loss in 2023 and exceed gains from 2021 and 2022. 

Jos Shaver, Electron’s former CIO and managing partner, resigned last year, passing the reins to partner and portfolio manager Ran Zhou. Shaver originally launched Electron Capital’s investing strategy in 2005, and following a stint within Steve Cohen’s SAC Capital, he spun it out as a standalone hedge fund in 2012. 

According to a June investor report, for the first five months of 2024, long positions contributed about 20% to gains, while short positions detracted 3.8%. 

Infrastructure investments, entirely on the long side, accounted for 11.6% of gains, while transitioning and classic utilities added nearly 8 percentage points. However, the alternatives and clean energy sectors cost the fund 3.6% in performance due to lingering effects from last year’s challenges. 

Electron adjusted its portfolio at the beginning of the year, reducing both long and short exposures to clean energy by half, bringing it down to 10% of the portfolio. Simultaneously, it increased infrastructure exposure from 45% to 55%, reallocating primarily into classic and green infrastructure. Exposure to utilities and renewable developers remained steady at 35%. 

In Q1 2024, General Electric, operating as GE Aerospace, emerged as Electron’s largest US long, making up about 10.5% of assets after a 75% increase in its stake. The stock has risen approximately 63% year-to-date. Constellation Energy, the second-largest long with 8.5% of assets, has surged over 90% this year. Vertiv Holding, which supplies power, cooling and IT infrastructure products, has more than doubled in price, becoming the third-largest long at 8.3% of assets. 

In its June report, Electron noted it had slightly increased its clean energy exposure and reduced its stake in large winners by taking profits. The fund has identified several investment opportunities for the remainder of the year, including US electricity/power demand, US electric grid infrastructure, US classic infrastructure and US renewable development. Conversely, sectors facing potential challenges include auto/EV manufacturers, auto/EV suppliers, lithium battery manufacturers and hydrogen. 

Electron Global Fund operates as a long-short fund focusing on infrastructure, transitioning and clean utilities, and alternatives and clean energy. Last year, Institutional Investor reported that energy transition was Electron’s primary focus going forward. 

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