The Next Big Thing: Climate Technology
Twenty-five years ago, at the height of the dot com boom, while every financial services firm on Wall Street was scrambling to find the next big internet name, New American Energy Chief Investment Officer Walter Nasdeo was focused on the next big thing; climate technology. Then the Head of Energy Technology Research at Bluestone Capital, Nasdeo produced his first report on hydrogen fuel cells in 1997. Nasdeo didn’t stop there, building out a research team and franchise over the last twenty years at Ardour Capital spanning solar, battery storage, wind, biofuels, enabling technologies, and other technology verticals within the emerging sector.
At the height of the financial crisis, and the subsequent volatility that ensued as a byproduct, Nasdeo was on CNBC discussing the impact of a high oil price on the alternative energy sector, while New American Energy Co-CEOs Nicholaus Rohleder and Andrew Gold stood on the platform of an oil rig in Texas discussing the future of the energy sector. Rohleder and Gold grew up together in Oklahoma, with deep roots in the traditional energy sector. The three would meet in New York in 2019 and launch New American Energy to merge energy’s past and energy’s future, engineering and finance skills sets, and institutional research and portfolio management experience to construct a portfolio positioned to capture the economic opportunities emanating from the decarbonization of the global economy.
Rohleder, Co-CEO & Portfolio Manager, stated “In general, climate technology is a developing industry resembling what the broader technology sector looked like 20 years ago as the internet was developing – the foremost experts are still in training. We differentiate ourselves in that we bring tremendous sector specific experience along with a vertically integrated staff mending the gap between the engineering and finance skill sets, which is crucial to simultaneously managing technology and financial risk in climate technology investments.”
The Climate Technology Opportunity: Knowing Where the Bodies are Buried
The clean technology space has gone through multiple cycles of boom and bust, much like its traditional energy counterpart. However, this time around the situation is much different. Across both public and private markets, the investable universe of high-quality technology securities available for investment has expanded dramatically. For the first time, companies situated at the intersection of growth and value, not in the thick of cutting edge research and development, are available for investment. This is coupled with unprecedented global environmental awareness, demand pull, governmental and corporate mandates and money flows dovetailing to present a unique investment opportunity for the space that has not been present before.
Despite the extensive and growing addressable market for climate technology, there is only room for a certain number of winners. Knowing where the bodies are buried in this space is exceptionally crucial to success. This requires not only experiencing cycles, but the combination of the engineering and finance disciplines to understand the unique risks associated with companies in the sector. This is the area where New American Energy excels – combining the dual engineering and finance backgrounds of its investment team with Nasdeo’s multi-decade experience throughout all climate technology cycles on record.
Due to Nasdeo’s extensive longevity in the cleantech space, NAE is able to take a unique, historical view on past, present, and future developments. “We have witnessed micro-trends, peaks, and valleys along with paradigm shifting developments. Events such as fuel cell stocks getting overheated in the early 2000s to a rapid and unsuccessful buildout of ethanol plants in the mid-2000s,” said Nasdeo. “We have also seen the concurrent advancements in materials development and electronic miniaturization which has contributed to overall efficiencies in this space. We believe this gives us a differentiating advantage in our portfolio construction.”
Nasdeo went on to state “we believe NAE has combined a unique and diverse set of attributes to provide our LPs with significant, risk mitigated returns now and into the future.”
Compounding for the Future: New American Energy’s Strategy
New American Energy draws upon the investment team’s extensive experience in the sector, research, technology due diligence, and investment management experience to provide a long-only equity strategy with a passive hedge component in a liquid hedge fund structure. New American Energy seeks a carefully concentrated portfolio of high-quality technology securities positioned to benefit from the decarbonization of the global economy. The portfolio construction methodology combines clean & environmental technology growth, value, and dividend securities in a single portfolio to provide adequate upside linked to the growth in the climate economy while managing volatility without the use of complex derivatives or excessive leverage. This is coupled with a quantitative mandate and portfolio risk control mechanism developed by New American Energy’s investment staff to ensure adequate risk and impact measurement tools.
New American Energy is a generalist within the clean & environmental technology sector, which combined with ample liquidity, allows for sophisticated tail risk management within the sector. In past climate technology downcycles, managers in the sector have been generally concentrated to one mandate or theme such as fuel cells or solar energy. In times of turmoil, this narrow focus within the sector has led to drawdowns due to the varied fundamentals and limited investable universe within a specific theme. By focusing on the entire sector, New American Energy is able to adequately control for thematic concentration and focus on compounding for the future under the growth of the broader sector.
Andrew Gold, Co-CEO & Head of Fundamental Equity stated, “Our unique generalist approach within the clean & environmental technology sector allows us to construct a diversified clean-technology portfolio positioned well to compound for the future tied to the decarbonization of the global economy.”
About New American Energy
New American Energy is an investment management firm focused on the clean & environmental technology sector. Founded in 2019, New American Energy has successfully capitalized on its extensive technical experience, research capabilities, and quantitative discipline to provide investors with innovative solutions designed to provide attractive returns linked to the megatrend of decarbonization. For more information, please visit www.newamenergy.com.
This material is not intended to be investment advice, nor is it a solicitation of any offer to invest. Any such solicitation will be made by an offering memorandum. The information is for illustrative purposes only as it highlights recent market events. 3346-NHPAF-11112021.
