Sectors
Palissy Advisors is particularly focusing on the oil & gas segments rather than other sources of energy that are used for power generation. Oil remains the key commodity for transport, industry and petrochemical operations around the world and in spite of a urgent need to decarbonise, consumer habits have not changed much and science is slow to offer a disruptive alternative. With recent LNG developments, gas is also becoming a global commodity and it will surely become the key commodity of the energy transition over the coming decades.
We must and will continue to invest in industry expertise that will help our clients navigate an increasingly complex energy environment. This ultra-cyclical sector is not an easy one to invest in by nature. That requires deep expertise across many regulatory, political, geologic, tax environments around the entire world, coupled with a growth mindset that allows us to learn and adapt faster.
Due to the horrendous capital allocation by most managements in the space over the last decade, this sector had been left alone by the investor community. The understandable lack of interest combined with the very low amount of resources allocated to research departments on the sell side and the buy side has lead to what we think is one of the greatest alpha generation opportunity-set we have encountered over the last 20 years. These alpha generation opportunities have never been so attractive in number and risk reward.
Palissy Advisors’ expertise is centred around the most traded commodities: bulk commodities like iron ore and coal, base metals like copper and precious metals like gold are at the core of our expertise. Working on supply and demand balances while constantly updating our macro scenario on China and global trade is paramount.
We must and will continue to invest in industry expertise that will help our clients navigate an increasingly complex mining environment. This ultra-cyclical sector is not an easy one to invest in and in today’s world, half-century-old trade regimes can be seemingly upended at the speed of a tweet. That requires deep expertise across many regulatory, political, geologic, tax environments around the entire world, coupled with a growth mindset that allows us to learn and adapt faster. Due to the horrendous capital allocation by most managements in the space over the last decade, this sector has been largely exited by the investor community. The understandable lack of interest combined with the very low amount of resources allocated to research departments sell side and buy side, lead to what we think is one of the greatest alpha generation opportunity-set we have encountered over the last 20 years. These alpha generation opportunities have never been so attractive in number and risk reward.
The energy world is changing fast: decarbonisation, decentralisation and digitalisation bring both challenges and opportunities for all stakeholders. The pace of change will only increase in the years ahead and – while there are different views on how fast the transition will come – we are convinced it is inevitable and we want to be your trusted partner.
With tremendous changes happening in solar and wind, energy transition investments have been mainly focusing on electricity generation. However, this is less than 20% of global energy consumption. Unless progress is made reducing fossil fuel use by industry and transport, decarbonisation goals might not be met within the timeframes often cited. If so, outcomes argue for more flood mitigation investment, and a greater appreciation of the critical role that natural gas will play over the next century.
In the next 20 years, gas will play a very important role in the energy transition. Natural gas is the cleanest fossil fuel and is helping in the decarbonisation of the energy and heat sectors
worldwide.
Gas is set to become a global commodity; however, individual geographies face quite different challenges. Palissy can offer an independent viewpoint across a range of markets that vary in levels of liberalisation, regulation, size and opportunities. We are at the heart of these developments with our team.
E.S.G. strategies have mostly been exclusion investing over the recent years. We believe that especially in Europe, E.S.G will evolve to impact investing and therefore expect the large integrateds to be at the core of the investments in energy transitions decided by asset managers and pension funds. The transition is complex, and stakeholders will face very different issues. Transport and industry on the demand side and natural gas/LNG on the supply side being our forte; Palissy brings deep insights and helps to enable and implement sharper decisions and sustainable investment success to its E.S.G and environmental conscious clients.