October 16, 2021 — Hedge funds cash in as green investors dump energy stocks

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October 16, 2021

Hedge funds cash in as green investors dump energy stocks by Laurence Fletcher and Derek Brower
Appeared in The Financial Times on October 7, 2021

Gina's Thoughts

A section on the InvestNow website titled "Why Divestment is Wrong" reads, "The usual consequence of divestment is often a mere transfer of ownership of divested shares from one investor to another." Or in other words, for every seller of shares there's a buyer of shares. In this case the "ESG-embracing" big institutions are the sellers of oil and gas shares and the buyers are hedge funds. "Hedge funds have been quietly scooping up the shares of unloved oil and gas companies discarded by environmentally minded institutional investors, and are now reaping big gains as energy prices surge." For the sellers, big returns are being left on the table, demand for hydrocarbons is increasing, and underinvestment in and divestment from the hydrocarbon sector is stifling innovation and affecting supply. All of these consequences underscore the need for increased investments in the sector, not divestment.

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