Latest news with #ElectronCapital
Business Insider
29-04-2025
- Business
- Business Insider
Energy-focused stock picker Electron Capital is raising funds while 'waiting in the bush' for the right market moment
After tackling succession, one of the biggest hurdles in the $4.5 trillion hedge fund industry, Electron Capital is on to its next challenge: raising money in the current, chaotic environment. Electron, which invests in infrastructure, utilities, and companies powering the "energy transition," believes its strategy will succeed regardless of who is in the White House, according to current CIO and managing partner Ran Zhou, who noted it began managing money when George W. Bush was president. The firm declined to specify a specific figure it hopes to raise, but the manager believes it has a strong pipeline of potential backers even as the industry has moved away from single-manager funds and toward multistrategy behemoths. Zhou, speaking with Business Insider during a recent interview in New York, stressed that the firm's long-term focus, in particular on companies' rising energy demands and the need to provide this power cheaply and sustainably, is still viable. For example, infrastructure for artificial intelligence's power needs has become a hot topic for big-name investors to talk about, but Electron has been thinking about the burgeoning field's energy needs for years. Regulatory filings show the manager first invested in Quanta Services, an electricity infrastructure company, in 2019 when the stock, now trading at nearly $300 a share, could be bought for less than $50. "The power thesis is not changing," said Zhou, who joined Electron in 2005 from a Columbia grad program and never left. Even clean energy, which is "facing a lot of headwinds," Zhou said, could be attractive soon as capital leaves the sector and valuations drop. The Trump adminstration has pledged to support the oil-and-gas industry and cut support to cleaner intiatives. The firm is "like hunters waiting in the bush, waiting for the right moment," Zhou said. One of those moments may be happening now: An investor document states that the firm is up more than 3% in its long-short strategy in April through the 25th, cutting losses this year to 1.8%. The S&P 500 is down more than 6% on the year as of press time. Last year, the manager made more than 21%. Shaver departs, but capital stays The $2.8 billion asset manager was started by Jos Shaver, who first ran the strategy as a standalone fund from 2005 to 2008 before joining Steve Cohen's now-shuttered hedge fund, SAC Advisors. Shaver then relaunched the manager in 2013. He passed the reins to his longtime lieutenant Zhou in October 2023, although he remains a senior advisor to the firm and has a majority of his net worth still invested in the manager. Unlike many single-manager funds, which are often molded by and marketed around their founders, Electron was able to successfully transition to the next generation, in part thanks to a global roadshow Shaver and Zhou embarked on in 2023 to explain the change to existing LPs. The result: Net inflows in 2023 despite the leadership change. The manager has enjoyed long-lasting relationships with many backers — more than half of Electron's top 10 investors have been with the manager for more than a decade. Zhou said the firm's message during the roadshow was that there was no star at Electron but instead an investing team that "hunts as a pack," which resonated with LPs. The connection with its backers has allowed Electron think beyond the next quarter or year, and the manager has built out its team to handle more capital and more work. The field since Electron's strategy started trading nearly 20 years ago has grown significantly, and Zhou said there are now 700 stocks in the firm's investible universe. Given the expansion, the manager has slowly built out its investing team over recent years, hiring five analysts since 2019 to support Zhou, utilities-focused portfolio manager Neil Choi, and Shaver. "The majority of gains come from long-term holdings and identifying the structural changes coming early," Zhou said, and the firm plans to keep to that script.
Miami Herald
07-04-2025
- Business
- Miami Herald
After blowout week, Wall Street decision-makers brace for more chaos
There was little rest on Wall Street this weekend. There was plenty of anger, anxiety, frustration and fear. Anger at President Donald Trump for a brash and chaotic rollout of tariffs that erased trillions of dollars in value from the stock market in two days. Anxiety about the state of the private equity industry and other colossal funds with global investments. Frustration among Wall Street's elite at their sudden inability to influence the president and his fear of what may come next. Hedge funds tallied up their losses and bragged if they only lost a little. Bankers and lawyers tore up already sparse calendars for deal-making, reasoning that no chief executive would risk a big merger or public offering soon. Major banks played out emergency scenarios to guess whether one client or another would fail in the cascading effects of an international trade war. In conversations with The New York Times over the weekend, bankers, executives and traders said they felt flashbacks to the 2007-08 global financial crisis, one that took down a number of Wall Street's giants. Leaving out the brutal, but relatively short-lived, market panic that erupted at the start of the coronavirus pandemic, the velocity of last week's market decline -- stocks fell 10% over just two days -- was topped only by the waves of selling that came as Lehman Brothers collapsed in 2008. Like then, the breadth of the sudden downdraft -- with oil, copper, gold, cryptocurrencies and even the dollar caught up in the sell-off -- has Wall Street's biggest players wondering which of their competitors and counterparties was caught off guard. Banks have asked trading clients to post additional funds if they want to continue borrowing money to trade -- so-called margin calls that haven't nearly reached the level of a generation earlier but are nonetheless causing unease. Most hedge funds and other private investors don't share details of their portfolios daily or weekly, so it will take more than a weekend for the potential damage to be known. One venture capitalist, speaking on condition of anonymity because he had not formally notified his investors, estimated that his portfolio had lost $1.5 billion. That's if his thinly traded investments could be sold at all. 'It definitely feels similar to 2008,' said Ran Zhou, a New York hedge fund manager at Electron Capital, who canceled weekend plans and put on a button-up shirt to sit in his Manhattan office and read Chinese news sources to get the jump on China's plans. What is unique about this crisis is that rather than counting on the government to help pick up the pieces, the financial sector sees little hope of an immediate rescue. A world order built on interconnectedness has been ripped up by the White House itself, and the United States' position at the epicenter of that network is in doubt. 'The pain is self-inflicted' by Trump, said Mike Edwards, an adviser for a private investor, who spent the weekend on calls with other investors, starting late Friday. 'You're not going to learn anything with a calculator,' he said in an interview Saturday from his home in Connecticut. 'It's more about what your neighbor is doing than what's the right price.' For generations, Wall Street enjoyed a role advising the leaders of both major political parties, and there was hope that the appointment of Scott Bessent, a hedge fund manager and onetime Democrat, as Trump's Treasury secretary, meant the industry had a friend near the Oval Office. Bessent, however, has shrugged off the tumult. 'The market consistently underestimates Donald Trump,' he said Sunday on NBC program 'Meet the Press.' That has left even some of Trump's bigger Wall Street defenders with little to do but gripe publicly. 'It was fun while it lasted,' Daniel S. Loeb, a billionaire hedge fund manager, wrote on the social platform X last week in a post he later deleted. Bill Ackman, a hedge fund manager who is outspoken in his support of Trump, had a long post Saturday afternoon on about the start of the newest tariffs. 'Why wouldn't a pause make sense?' he wrote. 'The risk of not doing so,' Ackman added, 'is that the massive increase in uncertainty drives the economy into a recession, potentially a severe one.' Among Ackman's recent bets was Nike, the apparel giant that shifted its supply chain to Vietnam from China, only to get caught in the crossfire after Trump announced a tariff of 46% on imports from Vietnam. (Vietnam has since offered to drop its tariffs on U.S. goods to zero, urging the United States to do the same.) There were some bright spots. Several bank and hedge fund executives pointed out that, despite the frenzied selling, trading in the wake of the tariff announcement had so far proceeded without any unexpected glitches, a point that Bessent also made Sunday. 'Everything is working very smoothly,' he said during the NBC interview. A senior executive at one major bank also said there was relief after a call Friday night with the bank's regional heads and top executives that nobody could point to a specific client in danger of immediate implosion. Traders at $66 billion hedge fund Citadel, had, for roughly a month, been reducing the use of leverage and other volatile trading instruments as the fund's founder, Ken Griffin, became increasingly convinced that Trump would cause tumult, said two employees not permitted to be named discussing the fund's machinations. The hedge fund, which approached the brink of collapse in 2008, was roughly flat last week, they said. In interviews, investment bankers said they had been flooded with calls from big companies willing to pay hefty fees for advice on how to proceed. At the bank Lazard, the message to employees was to be available for clients but not to offer conviction about what would happen next, given the immense uncertainty of the moment. Indeed, the true depth of the impact is yet to be determined. Bank of America estimates that profits for companies in the S&P 500 may fall by one-third if retaliatory levies are enacted by the countries subject to Trump's tariffs. But the dire assessments could change, if countries begin to strike agreements with the White House that will lower the tariffs. Even before the latest tariffs were announced, U.S. deal-making in the first quarter fell 14% compared with last year, according to LSEG Data & Analytics. And in the middle of last week's meltdown, some of the highly anticipated public offerings that bankers had hoped would set the stage for other listings were pulled or paused, including offerings by payments giant Klarna and StubHub, the online ticketing business. One bank executive said he planned to spend more time in Europe, where deals in the first quarter outpaced those in the United States. Two private equity executives said they expected that market turmoil and souring global relations would make it more difficult for private firms like theirs to raise money, adding to the challenges they are already facing as a dwindling deals market has made it harder to return cash to their investors. Pressures on those firms will only increase as the businesses they invest in begin to feel the impact of tariffs, these executives said. Shares of Apollo and KKR fell more than 20% Thursday and Friday. One prominent deals lawyer described himself as 'flabbergasted' as he grappled with how far the share prices of his clients had fallen. A top Goldman Sachs executive summed up the frustration with Trump succinctly: Someone has to stop him. The financial world's top leaders have stayed silent. JPMorgan Chase CEO Jamie Dimon, who two days after Trump's inauguration said that people should 'get over' the threat of tariffs because they were good for national security, was spending the weekend putting the finishing touches on his annual shareholder letter that will be released Monday, after speaking to a group of Chase tellers in Nashville, Tennessee. He declined through a spokesperson to be interviewed. Steve Eisman, the investor made famous in 'The Big Short' for having foreseen the 2007-08 housing market collapse, said some humility was in order. 'Everybody in the stock market went to college, and everyone who went to college took Econ 101 and had it drummed into their heads that trade wars are bad,' Eisman said Saturday. He suggested that investors were ignoring the potential that the United States, thanks to its economic strength, may be the best positioned of any nation to prosper in such scenarios. Few companies have discussed their outlooks publicly since last week's tariff announcements, but major banks including JPMorgan and Wells Fargo will begin holding investor calls to address their earnings (and prospects) Friday. The uncertainty was neatly exemplified by Loeb, who Saturday wrote on X: 'Sometimes market bottom when things look most bleak.' 'Not a prediction,' he added, 'but keeping an open mind.' Stocks in Asia, US futures tumble Financial markets were hit hard by another wave of selling at the start of trading in Asia on Monday, with investors and economists grappling with rising odds of a severe economic downturn caused by Trump's tariffs. Trading was extremely volatile. Stocks in Japan plunged more than 8%, while South Korea tumbled about 5%. In Australia, stocks fell more than 6%. Trump doubled down Sunday evening, saying that he would not ease his tariffs on other countries 'unless they pay us a lot of money.' He also dismissed concerns that his steep new taxes on imports will lead to higher prices. 'I don't think inflation is going to be a big deal,' he told reporters on Air Force One. On Monday, stock benchmarks in Hong Kong and Taiwan plunged about 10% when they started trading. Stocks in mainland China were down about half that amount. Technology stocks across Asia were getting clobbered. Taiwan Semiconductor Manufacturing Co., the world's largest chip manufacturer, was down nearly 10%, while Apple's main contract manufacturer Foxconn, also plunged 10%. In Hong Kong, the Chinese technology giants Alibaba, Tencent and Xiaomi all tumbled. South Korea's Samsung Electronics, which makes much of its products in Vietnam, fell 4%. Japan's Nintendo, which delayed preorders for the sequel to its bestselling Switch hand-held video game device, declined nearly 5%. The stock had fallen as much as 10% at the open of trading. Futures on the S&P 500, which allow investors to bet on the index before the official start of trading in New York on Monday, dropped roughly 4% Sunday evening. In oil markets, prices fell more than 3% — adding to steep losses last week. And the price of copper, considered a broad economic indicator, slid more than 5%. New York Times writers Joe Rennison and River Akira Davis contributed to this report. This article originally appeared in The New York Times. 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