Sustainable Infrastructure

This post is in response to the @TradingView long short competition. For the competition, Trading View asked users for their best pair trade idea for the given market conditions.

My entry is long HASI and short HESS.

Many of you may already be familiar with HESS corporation.

HESS is an oil company that engages in the exploration, development, production, transportation, purchase & sale of crude oil. Hess has production operations located primarily in the United States, but also it pumps fossil fuels out of Guyana, Thailand, and Malaysia. I am short HESS because the price action is forming an onimous shooting star candle on the quarterly chart. Furthermore, this bearish candle is occurring right at the Fibonacci high created right before the Great Recession.

HESS is also the company that makes those adorable little toy trucks to instill the love of fossil fuels in the public from a very young age:

Fewer of you may be familiar with HASI or Hannon Armstrong Sustainable Infrastructure Capital.

HASI is the first U.S. public company solely dedicated to investments in climate solutions. It provides capital for leading companies in energy efficiency, renewable energy, and other sustainable infrastructure markets. Importantly, HASI provides capital for real estate to be used for sustainable infrastructure development. Website: https://www.hannonarmstrong.com

HASI currently has more than $9 billion in managed assets. Its core purpose is to make climate positive investments with superior risk-adjusted returns. I am long HASI because its price has been growing exponentially since its inception. Despite its recent pullback, the quarterly candle was cleanly supported by the 20 EMA. This is a great opportunity to go long.

I have chosen HASI and HESS for another important reason. Their ratio reflects the insurmountable challenge that climate change poses.

According to the Global Commission on the Economy and Climate, the world will have to invest $90 trillion in sustainable infrastructure by 2030 to combat climate change.

To put that into perspective, investment in sustainable infrastructure companies like HASI will need to increase hundredfolds, if not thousandfolds or more, relative to investment in fossil fuel exploration and production companies like HESS, if we are to successfully tackle climate change.

This chart shows just how tremendous this magnitude of change in capitalization must be. Even with logarithmic adjustment, the growth curve still looks exponential.

I chose a yearly chart to illustrate how few candlesticks we have left to increase the magnitude of this ratio in order to successfully combat climate change.


Just 8 candlesticks are left until 2030...

Comment:

Unfortunately, I was stopped out of this position due to the news of a short seller alleging accounting fraud of the company. I plan to see if price can rebound off the next Fibonacci level. If that level holds and price begins to outperform the broader market, I will re-enter my position. The long-term charts still suggest this asset is worth buying.