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Bearish Hedge Fund Manager: ‘Nothing Can Save Oil’

The oil industry is in a terminal decline, hedge fund manager James Jampel told Bloomberg on Friday, noting that this year’s rise in oil stocks has been “the biggest dead-cat bounce in history.”

Jampel, who manages the HITE Carbon Offset hedge fund that aims to profit from decarbonization by “shorting decarbonization losers”, is extremely bearish on oil, despite the 33-percent rise of the S&P’s energy index this year.

The oil industry will be the loser of the energy transition, says Jampel, whose $187-million hedge fund is focused on shorting the most overvalued and vulnerable stocks in the carbon value chain, such as producers, transporters, marketers, processors, and users of oil, natural gas, and coal.

“Industries where volume is declining, where demand is declining, have a lot of trouble making money,” Jampel told Bloomberg in an interview published on Friday.

According to the hedge fund manager, nothing can save oil as the energy transition will only accelerate from here thanks to improving technologies for alternative energy sources.

Despite being short on oil, Jampel isn’t long on renewable energy and renewable assets.

“The reason we don’t do that is because that kind of fund would be far, far too volatile,” the hedge fund manager told Bloomberg.

Jampel’s hedge fund is betting that the broader market will outperform old energy.

This year, inflows into U.S. large-cap energy funds have jumped as oil demand started to recover and oil prices reflected this recovery. Last week, the Energy Select Sector SPDR ETF (NYSEARCA:XLE) saw the fourth highest inflows into U.S. large-cap funds at $1 billion.

Shares in several U.S.-based oil firms have provided more than 100-percent returns so far this year, excluding dividends. The five top returns were Antero Resources Corporation with 206.6% year-to-date share return as of last week, Range Resources Corporation with 182.8%, Continental Resources with 157.5%, Magnolia Oil & Gas Corporation with 136.7%, and PDC Energy with 114.6%.

By Tsvetana Paraskova for Oilprice.com

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Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.  More

Comments

  • Fred bear - 27th Sep 2021 at 8:22am:
    Hedge fund manager getting short squezzed squealing in pain and lashing out. Not a manager for long.
  • Maarten De Vries - 26th Sep 2021 at 3:07am:
    So you’re now saying it’s in terminal decline again. Maybe where you live it is.

    Well, let’s just watch this space and see shall we.

    As far as I can tell, the Middle East and Asia are gearing up for a bright future and investing heavily in their oil industries.
  • Curtis Bader - 25th Sep 2021 at 11:08pm:
    Imagine investing 187m of other people's money based on feelings. Not only is he wrong about the fossil fuel demand side of his thesis, he's also counting on some future technology (fusion, perhaps) to not only become available, but also to be financially competitive and be widely adopted before his hedge fund runs out of money. Not only that, but we're in a market where short positions based on reasonable thesis' are getting clobbered by the Wallstreets Bets crowd (AMC, BB, etc). Just my 2 cents and I'm an idiot, not as much as an idiot as this fund manager though.
  • Robert Berke - 25th Sep 2021 at 7:51pm:
    All this while he's losing everything as oil prices have tripled in a year, and show no signs of weakening.
  • Mike s - 25th Sep 2021 at 3:54pm:
    Guess this fund is about to be squeezed out of all the 13 filings
  • Arch Region - 25th Sep 2021 at 9:14am:
    Now that clean health giving renewables are less expensive, any spike in fossil fuel prices does not simply result in unexpected windfalls, vast monetary gains for the fossil fuel economy. It also incentivises more rapid transition to clean renewables heisting the end of toxic misery for our planet. The end of fossil fuels will come faster than anticipated.
  • Big Bazooka - 25th Sep 2021 at 2:37am:
    He is obviously losing big! lol
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