Hedge Fund Boss Who Shorted Oil Stocks Says Strategy Blew Up

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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.

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.” Over the past 12 months, an investor in Exxon Mobil Corp. has benefited from a stock price increase of close to 30%. A shareholder in Vestas Wind Systems A/S, meanwhile, has hardly seen any change in value. Orsted A/S, the world’s largest developer of offshore wind farms, is down more than 40% in the same period.

Such predictions have been underscored by the spike in extreme weather events, as continued increases in greenhouse gas emissions coincide with record heat waves, droughts, flash floods and wildfires across huge swathes of the planet. United Nations Secretary-General Antonio Guterres declared in July that “the era of global boiling has arrived,” as efforts to curb reliance on fossil fuels fall well short.

“The energy transition is only going to make energy prices more unstable,” Jampel said. The outlook for oil consumption will become “less clear,” which will “lead to greater volatility and greater mispricing opportunities,” he said.

 

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