HGEN Double or Quit ?

[yieldhog]

As part of a strategy to diversify my energy and resources I opened a small position in this fund soon after it came out. After a slow start the fund moved up to a price around 120 but thereafter it's done nothing but fall in price. It now trades around 48 although, ostensibly, the NAV is reportedly around 101, a discount of more than 50%
I've had a couple of shares recently where the fund managers decided to liquidate their funds because of persistent trading at substantial discounts to NAV. Sometimes this can benefit shareholders but at other times it's bad news.
In the case of HGEN I would be happy if the fund manager could liquidate at the current NAV but that's not going to happen, so I can either double up at the current market price around 48 or sell at a loss. If I double up it will cost very little and at least my average cost will drop to the mid 70s.
I'm mostly a longer-term investor but if there's little future for this fund I might as well quit now and reinvest elsewhere. The 2023 annual report will be out soon so maybe it's worth waiting to see what that says, but I am thinking more towards selling and moving on.
Any constructive views on this welcome.

Y

[clissold345]

I know little about the sector. You could look up some of the major holdings and try to form your own view of their prospects? Eg Sunfire seem to have had one major commercial order so far (a 100-megawatt pressurized alkaline electrolyzer for a leading European refinery). What are their prospects for getting more such orders? Other customers might hold off until they see this project delivered successfully?

https://www.sunfire.de/en/news/detail/t ... is-in-2023

[Gerry557]

At first I thought you had mistyped LGEN.

On a quick skeg I noticed that there is no dividends so probably why it's not come across my desk.

I also noticed that cash held has reduced from £20m to £5m. Unfortunately I don't know the context. Is it loss making or are they investing etc.

I might take a longer look later as it sounds a bit interesting. It did an update on the 7th Feb.

https://podcasts.apple.com/gb/podcast/h ... 0644116901

I might give this a listen too later too

[WickedLester]

I took a very quick look at this fund and a couple of points I thought worthy of consideration are:

Many of the investments appear to be unlisted so the saleable value is unknown until they're sold.

The Investment managers appear to be a Geologist and a fund manager with an Engineering background. Exactly how useful are these skills in analysing an emerging technology such as clean hydrogen production?

[BullDog]

I think personally, I'd rather hold shares in one of the global industrial gases companies that are already market leaders in hydrogen. APCI (Air Products), Linde or Air Liquide are the three I would think of. Any of them fit the bill nicely. If the hydrogen economy ever gets serious, those companies are going to benefit hugely. If it turns out to be another damp squib, that's OK too because they're very good diversified companies with big market shares anyway.

[yieldhog]

I think personally, I'd rather hold shares in one of the global industrial gases companies that are already market leaders in hydrogen. APCI (Air Products), Linde or Air Liquide are the three I would think of. Any of them fit the bill nicely. If the hydrogen economy ever gets serious, those companies are going to benefit hugely. If it turns out to be another damp squib, that's OK too because they're very good diversified companies with big market shares anyway.

On reflection, I'm definitely going to sell HGEN but may wait for the Annual Report, although it's in my taxable portfolio and will check to see if it it might be useful to offset profits this tax year.

Y

[BullDog]

I think personally, I'd rather hold shares in one of the global industrial gases companies that are already market leaders in hydrogen. APCI (Air Products), Linde or Air Liquide are the three I would think of. Any of them fit the bill nicely. If the hydrogen economy ever gets serious, those companies are going to benefit hugely. If it turns out to be another damp squib, that's OK too because they're very good diversified companies with big market shares anyway.

On reflection, I'm definitely going to sell HGEN but may wait for the Annual Report, although it's in my taxable portfolio and will check to see if it it might be useful to offset profits this tax year.

Y

I think I would too. My thinking is that if the hydrogen economy becomes huge, any of those companies I mentioned will be major beneficiaries. And if it doesn't, they are solid companies anyway and they will continue to be so. Good luck.

[DrFfybes]

I've been looking at Green opportunities for a while now, even dipped my toe in late last year in Gore St and am down nearly 20%.

My decicion now is to stay clear of the entire sector, and the more I looked at it the more I thought that way.

Whilst the technologies are largely established, they ares till evolving and improving and tings quickly become obsolete. The regulatory environment isn't stable, companies are at the whim of govenrnemts imposing windfall taxes, cancelling investment, landlords increasing rents, grid connections being made, conlicts affecting energy prices, supply and price of raw materials, technology changes , the weather affcting output (although fairly predictable), and things I didn't even know could be a problem until they arose such as Grid Balancing and new international connections for importing cheaper(?) power.

I like Hydrogen as an idea, 12- 18 months ago I was convinced it was going to be the future for powering gas boilers. Now a six grand heat pump can supply water at 80C, and is pretty efficient at the 65C that we run our boiler at, and domestic batteries are about 30% cheaper than a year ago so localised storage will become the new way of managing the Grid.

Just need some small nuclear to provide a decent baseline output now

[WickedLester]

I've been looking at Green opportunities for a while now, even dipped my toe in late last year in Gore St and am down nearly 20%.

My decicion now is to stay clear of the entire sector, and the more I looked at it the more I thought that way.

Whilst the technologies are largely established, they ares till evolving and improving and tings quickly become obsolete. The regulatory environment isn't stable, companies are at the whim of govenrnemts imposing windfall taxes, cancelling investment, landlords increasing rents, grid connections being made, conlicts affecting energy prices, supply and price of raw materials, technology changes , the weather affcting output (although fairly predictable), and things I didn't even know could be a problem until they arose such as Grid Balancing and new international connections for importing cheaper(?) power.

I like Hydrogen as an idea, 12- 18 months ago I was convinced it was going to be the future for powering gas boilers. Now a six grand heat pump can supply water at 80C, and is pretty efficient at the 65C that we run our boiler at, and domestic batteries are about 30% cheaper than a year ago so localised storage will become the new way of managing the Grid.

Just need some small nuclear to provide a decent baseline output now

Maybe you've answered your own question there.

It doesn't appear to be the whole idea of green technology you're against, you just haven't decided which is best yet.

[UncleEbenezer]

Maybe you've answered your own question there.

It doesn't appear to be the whole idea of green technology you're against, you just haven't decided which is best yet.

If we knew what's best from an investment PoV, we could be rich!

I like investing in green startups. It's more direct, more feelgood than a fund or a bigco like SSE (OK I hold both), and my tiny stake is making more of a difference. And I've already had some profitable exits there.

But hydrogen? Isn't that a niche richer in hot air than real potential?