BlackRock’s Jewell Bet on Green Stocks When No One Wanted Them

The CIO's well-timed bet hinged on AI driving demand for all forms of energy productionAuthor of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Betting on clean-energy stocks a month after President Donald Trump rolled back into the White House last year, championing his “drill, baby, drill” agenda, seemed like a fool’s errand.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.For Helen Jewell, international chief investment officer for fundamental equities at BlackRock Inc., it was a prescient call that solidified her reputation as an astute contrarian. It was a hard sell for the CIO to her clients, who doubted the virtues of solar energy producers and wind power generators — and with good reason. Permitted projects were being iced, renewable subsidies slashed and federal funding redirected to fossil fuel energy projects. And that was just in the US. While other countries continued some investments, green energy had become tainted. A global renewable energy index sat 65% below its 2021 peak.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.“The key thing we were hearing from clients was, ‘We’re too nervous about regulation. We’ve basically had our fingers burned on this already. Why is it different this time?,’” Jewell said in an interview.Fast forward a year: The S&P Global Clean Energy Transition Index has surged 61% through Wednesday’s close, beating by far a 23% advance in the S&P 500 Index. It’s also better than a 39% rally in the Magnificent Seven, and nearly double the gain in oil stocks even as the commodity itself rises above $100 a barrel amid the Iran war.There’s reason to expect the clean energy rally will continue, Jewell said, as the US-led war in the Middle East provides a stark reminder about just how dependent the world is on oil and gas from the region. The Iran strikes “underscore the strategic importance of energy independence, grid resilience and domestically secure power generation,” Jewell said. “Clean energy names can continue to gain given the need for fast, secure additions to national power networks.”Jewell’s original insight, in retrospect, was somewhat plain to see — artificial intelligence’s unquenchable thirst for computing power would benefit all forms of energy production. That would include utilities, makers of power plant equipment and solar panel producers, she reasoned. Her bet was hinging on countries around the world pouring billions of dollars into AI-related grid development and infrastructure for the energy transition.“We were very clear that in order for AI to succeed, you’re going to need so much energy that the story is no longer about ‘instead of traditional energy,’ it’s about ‘as well as traditional energy,’” Jewell said. “Once we broke it down into the three components — production, efficiency and delivery — that’s when people started to realize Europe really does have capabilities here.”The global clean energy index bottomed after a four-year selloff about a month following Jewell’s bullish call. Since then, shares of Germany’s Siemens Energy AG have tripled in value, while Danish company Vestas Wind Systems A/S and UK utility National Grid Plc are up 80% and 35%, respectively.Jewell, 49, earned a degree in mathematics from the University of Oxford before starting in investment banking with stints at Deutsche Bank AG and Goldman Sachs Group Inc. She moved to BlackRock in 2015, and was promoted to CIO of fundamental equities for the Europe, Middle East and Africa region in 2023, taking over from Nigel Bolton.“Everybody probably has that one person who changed their career. Nigel was mine,” Jewell said. “He said to me, look, Helen, the one thing you know better than almost anybody is investment processes. So lean into that because that is where you can really add value from a CIO perspective.”Jewell’s mandate was recently expanded to include funds in the Asia Pacific, and her team of sector specialists play a key role in developing and coordinating investment ideas. She likens her job to managing a major football club.“The portfolio managers are the players and I start off my day to make sure they are all fit and healthy,” the Tottenham Hotspur supporter said. “Are they taking enough risk or not too much risk? And I make sure that if we’ve got a fund that’s supposed to be a goalkeeper, they are in fact acting as a goalkeeper.”Contrarian CallsThe win on clean energy isn’t her first call that cut against the investment grain. Her team was among the few backers of European banks four years ago when the sector was mired in a long-term underperformance thanks to sub-zero interest rates. The Stoxx 600 Banks Index has more than doubled since the end of 2021 amid higher rates, and last year, was the best performing sector in the region.“I remember some clients just being like, ‘European banks, really?,’” Jewell recalls. “It was the same skepticism that we saw with clean energy later.”Jewell says some of that doubt has crept back into clients’ minds when it comes to AI as investors dumped stocks that are deemed to be at risk of disruption from the technology. The selloff engulfed sectors ranging from software to wealth managers and even logistics. The US technology heavyweights sank in February after rallying for three straight years.None of that is relevant to her call on clean energy though, she said, touting Siemens Energy, cable maker Prysmian SpA and electricity provider SSE Plc among the standouts.“You have to just think that AI is going to stop tomorrow to think you’re not going to need the data spend,” she said. “No matter where AI goes, unless it disappears altogether, you’re going to need power.”Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.