Investment trust insider on renewables – James Carthew: ‘Buy’ great opportunities in run-down renewables
Last month’s rise in US inflation knocked UK renewables funds, which I was happy to exploit. Don’t be surprised if we see bids in the sector.
February was an odd month for markets and the main culprit was stronger-than-expected US inflation data. The knee-jerk response of government bonds was a drop in prices and a jump in yields that struck a fresh blow to the ratings of funds, such as those in the renewable energy sector, whose valuations are sensitive to higher interest rates.
As a result, I think some of the yields available in renewable energy are compelling. Although their share prices can be quite volatile, this throws up great opportunities and, early last month, I picked up some SDCL Energy Efficiency Income (SEIT) when the shares traded close to a 12% yield and a discount of more than 40%.
These have already rallied by 24% but still look way too cheap to me.
However, at the same time, shares in NextEnergy Solar (NESF) have hit new lows and offer a yield of more than 11% on a discount below asset value of nearly 30%.
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