Investment trust insider on Hydrogen – again! – James Carthew: The hydrogen bubble burst, but there is substance to this green power
At risk of overkill, I’m having a second look in a month at HydrogenOne Capital Growth (HGEN) after the investment trust’s day with analysts and investors in the City last week.
This saw presentations from each of the 10 unlisted companies that are the core of the fund, accounting for 83% of net assets at the end of December. The relatively small (3%) listed portfolio is just a way of parking liquidity ahead of it being deployed into unlisted investments.
Any scepticism over my repeat visit reflects its small size with a £93m market value following poor share price performance that has seen the stock tumble to 72p from £1 at launch in July 2021, with no dividend declared and amid a collapse in the share prices of green hydrogen providers such as ITM Power (ITM). More than once over the course of the presentations, the word ‘bubble’ was used to describe the hydrogen sector, and it seems clear that the bubble has burst.
To be fair, this is a sector that attracts more than its fair share of hype. The numbers bandied around for the potential addressable market over the next few decades run into the high billions/trillions depending on who you talk to. Yet, across HGEN’s 10 unlisted stocks, which were valued at £104m at end December 2022, aggregate revenue for 2022 was about £30m and none of the companies is profitable. However, I am increasingly convinced that there is real substance to what it owns.
Within the constraints of its 10-stock portfolio… read more here