Hedge Fund Manager Jampel Stops Shorting Fossil Fuel Stocks

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(Bloomberg) -- A hedge fund manager who made a name for himself shorting fossil fuel stocks says the strategy is no longer viable, as oil’s ascent proves too strong to fight.Most Read from BloombergEx-Goldman Bankers Make a Fortune With Controversial Bet on CoalIndia Suspends Visas, Canada Pulls Diplomats Amid TensionsMcCarthy Ambushed as Republican Hardliners Change Course on Spending PlanWall Street Trading Roiled by ‘Post-Fed Hangover’: Markets Wrap‘Dead Space’ Co-Creator Departs Startup Afte

James Jampel, the founder of Massachusetts-based HITE Hedge Asset Management, said he still believes oil will lose steam in the longer term. But thanks in large part to the geopolitics of oil, that moment is further away than he once imagined and shorting fossil fuel producers has become untenable, he said.

After returning almost 30% in 2020, the strategy started losing money in 2021, which the hedge fund manager initially thought would end up being “the biggest dead-cat bounce in history.”He said he still thinks fossil fuel securities will underperform the market in the long run. “But getting the timing right is very difficult.”

Those performances are reflected in broader indexes, with the S&P Global Oil Index up about 14% in the past year, compared with a 28% slump in the S&P Global Clean Energy Index. Even clean energy proponents are warning of years of pain when they look at sectors like wind. The IEA says there’s a possibility that oil demand may plateau this decade as households rely increasingly on renewable energy sources. It also says that in order to achieve net zero emissions by 2050, oil demand needs to sink to about 25 million barrels a day by the middle of this century, which is one-fourth the current level.

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