In this article, we discuss the 5 best climate change stocks to buy according to hedge funds. If you want to read our discussion on the recent climate change developments, go directly to the 11 Best Climate Change Stocks To Buy According To Hedge Funds.
5. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 39
Shell plc (NYSE:SHEL) is a London-based integrated energy company that is making a rapid transition towards renewable energy. This is evident by the fact that the company has appointed the current head of the renewable division Wael Sawan as the new CEO, effective from January 1 next year. He will take over from current CEO Ben van Beurden.
Shell plc (NYSE:SHEL) is on an ambitious goal of achieving 500,000 EV charging ports globally by 2025. The company is already operating 90,000 charging ports across 46,000 locations globally. Shell plc (NYSE:SHEL) is targeting the biggest EV market in China through its partnership with NIO Inc. (NYSE:NIO) for EV charging and battery swapping facilities at its stations. The growth of the global EV industry is expected to compound by 24.3% annually, from $246.7 billion in 2020 to $1.31 trillion by 2028.
Here’s what Third Point Management said about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:
“We have continued to add to our position in Shell, as it trades at the same deeply discounted multiple today that it did last year due to a move up in commodity prices. We are engaged in discussions with management, board members, and other shareholders, as well as informal talks with financial advisors. We have discussed various alternatives with the aim of both increasing shareholder value and allowing Shell to effectively manage the energy transition. We have reiterated our view that Shell’s portfolio of disparate businesses ranging from deep water oil to wind farms to gas stations to chemical plants is confusing and unmanageable. Most investors we have discussed this with agree that the company would be more successful over the long term with a different corporate structure. Discussions among the parties have been constructive and will be ongoing since stakeholders clearly see these corporate changes as instrumental, particularly if Shell wishes to become a leader in the energy transition rather than be left behind as a tarnished legacy brand.
Beyond our discussions around corporate structure, there have been two important developments since our last update. First, Shell announced a plan to redomicile its headquarters to the UK and create a single shareholder class. This move allows greater flexibility to modify its portfolio (either through asset sales or spin-offs) and allows for a more efficient return of capital, specifically via share repurchases. Second, fundamental and geopolitical events have highlighted the strategic importance of reliable energy supplies, especially in Europe. Shell’s LNG business, the largest in the world outside of Qatar, will play a critical role in ensuring energy security for Europe. In our view, the value of this business has increased dramatically since our original investment.
While Shell continues to trade at a large discount to its intrinsic value, with proper management we believe the company can simultaneously deliver shareholder returns, reliable energy and decarbonization of the global economy. We look forward to continued engagement with management and other shareholders and to more strategic clarity from the Company.”
At the end of Q2 2022, Shell plc (NYSE:SHEL) was held by 39 hedge funds.
