Massif Capital, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. The Massif Capital Real Assets strategy returned 15% net of fees in the first quarter of 2022. The quarter marked a milestone in the firm’s evolution as it switched from running separately managed accounts to standing up a fund structure on March 1st on the heels of an investment from a family office. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Massif Capital mentioned Siemens Energy AG (NYSE:SMEGF) and explained its insights for the company. Founded in 2020, Siemens Energy AG (NYSE:SMEGF) is a Munich, Germany-based energy company with a $12.2 billion market capitalization. Siemens Energy AG (NYSE:SMEGF) delivered a -33.22% return since the beginning of the year, while its 12-month returns are down by -43.14%. The stock closed at $17.03 per share on May 13, 2022.
Here is what Massif Capital has to say about Siemens Energy AG (NYSE:SMEGF) in its Q1 2022 investor letter:
“We allocated 3% of the portfolio to Siemens Energy AG. Siemens Energy went public in September 2020 on the Frankfurt exchange as a spin-off of the gas & power segment of Siemens AG, along with a 67% equity stake in Siemens Gamesa. Siemens Energy covers the entire energy value chain, from conventional generation to renewables to transmission. The gas & power segment has the largest market share of gas turbine production globally, is a top-three player globally in oil and gas process compression, holds the top spot for electricity transmission infrastructure, and has a growing “new energy” segment comprised mainly of hydrogen electrolyzer technologies. The firm’s 67% equity stake in Siemens Gamesa gives it exposure to the global leader in offshore wind turbine manufacturing and the third-largest onshore wind manufacturing.
Broadly, it has the opportunity to leverage several significant trends over the coming years in energy demand growth, decarbonization, digitization, and the decentralization of generation. The current business plan offers top-line renewable growth with margin improvement potential. Relative to data released in 2019 before their separation from Siemens AG, forecasts suggest a 50% earnings growth and a double of EPS by the end of 2023.
Specifically, we think the potential for thermal gas is underestimated, with significant baseload applications in both emerging and developed markets on the horizon. On hydrogen, the company has substantial scale advantages and, more importantly, expertise as it has already engaged with large-scale industrial hydrogen via working relationships with Bayer, Shell, and BASF. We do not place much weight on the near-term value of a developing hydrogen business – there are too many unknowns regarding what market would accept such technology at scale – but, should it gain traction, we think Siemens Energy captures quite a bit of that value…” (Click here to see the full text)
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Our calculations show that Siemens Energy AG (NYSE:SMEGF) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Siemens Energy AG (NYSE:SMEGF) delivered a -17.53% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.