Time in the Market
               Not Timing the Market

ASSET HUNTING: THE QUEST FOR COMMODITY TRADERS

Amidst this era of mass investment by our industry leaders, Mergers and Acquisitions (M&A) teams have gained unprecedented popularity. Companies operating in the field of wind farming, hydroelectric, geothermal, and nuclear energy should anticipate potential overtures from the formidable M&A teams of our esteemed commodity giants, who’ve been sent out into the wild to seek and expand their portfolios.

In periods of reduced trading profitability, characterized by PnL (profit and loss) shortfalls that fail to meet the anticipated performance, traders with insufficient assets can be disproportionately impacted. Conversely, traders with a robust asset base can better withstand losses and effectively navigate the challenges presented by PnL downturns.

However, the commodity industry has enjoyed unprecedented profitability over the past two years, with soaring PnLs reaching all-time highs. But while the internal front, middle and back offices rub their hands in delight for coming bonuses, the CEO and executive teams actively enhance their M&A teams to bolster their purchasing power, providing their internal portfolio managers with new opportunities to deploy their expertise.

Against this backdrop, effective asset management is poised to be a critical differentiator for firms in the 2023-24 period and beyond.

Driven by the imperative to expand their asset bases and fulfill ambitious targets for decarbonization, significant players in the commodity industry are increasingly turning their attention to wind farming and geothermal projects throughout Europe. After years of relative neglect, these energy sources are now enjoying a long-awaited surge in interest and investment from commodity firms seeking to bolster their already impressive portfolios.

Alternative energy sources such as nuclear, solar, ethanol, and wind power are gaining increasing attention as industries worldwide shift towards more sustainable and eco-friendly practices. However, despite their growing popularity, fossil fuels dominate global and domestic energy markets.

While these alternatives have yet to prove themselves as economic substitutes for fossil fuels due to their relative inefficiency and higher costs, governments are providing substantial subsidies to promote their utilization in households and vehicles.

Some countries, such as France, have a more significant concentration of nuclear energy, generating nearly 70% of their electricity. According to the Department of Energy, nuclear power is considered the most reliable energy source compared to others, and it can be run more cheaply than other clean energy forms like solar, wind, and hydropower. Nevertheless, nuclear expansion has been restricted for decades due to public safety and political concerns. Strange that, wouldn’t you say ?

However, with the development of safer nuclear energy technology, there is potential for nuclear power to power entire cities eventually. Despite the criticisms and fear surrounding nuclear energy, it is essential to consider the benefits it can bring to the table instead of merely pushing it aside, which only increases fuel prices.

Here is what type of projects should be included in the Traders Asset Portfolio Geothermal – Hydropower – Biomass – Tidal power – Solar thermal

Hydropower:

Hydropower uses the energy of moving water to generate electricity. This can be done using large dams or small turbines in rivers and streams. Hydropower is a clean and renewable energy source that does not produce greenhouse gas emissions.

Geothermal:

Geothermal energy uses heat from the earth’s core to generate electricity. This can be done by drilling into the earth’s crust and using steam and hot water to drive turbines. Geothermal energy is a clean and renewable energy source that has the potential to provide a significant amount of electricity.

Biomass:

To generate electricity, biomass energy uses organic matter, such as wood, agricultural waste, and municipal solid waste. This can be done through combustion, gasification, or anaerobic digestion. Biomass energy is a renewable energy source that can help reduce greenhouse gas emissions by replacing fossil fuels.

Tidal power:

Tidal power uses the energy of ocean tides to generate electricity. This can be done by building turbines that are turned by the flow of water during high and low tides. Tidal power is a clean and renewable energy source that has the potential to provide a significant amount of electricity.

Solar thermal:

Solar thermal energy uses the heat of the sun to generate electricity. This can be done by using mirrors to concentrate the sun’s rays and heat a fluid that is used to drive turbines. Solar thermal energy is a clean and renewable energy source that can provide electricity even when the sun is not shining through the use of energy storage

In short, the commodity industry is experiencing unprecedented profitability, and the formidable M&A teams of esteemed commodity giants are seeking to expand their portfolios through potential overtures to companies operating in the field of wind farming, hydroelectric, geothermal, and nuclear energy.

Effective asset management is poised to be a critical differentiator for firms in the 2023-24 period and beyond. As industries worldwide shift towards more sustainable and eco-friendly practices, alternative energy sources like geothermal, hydropower, biomass, tidal power, and solar thermal are gaining increasing attention. While nuclear energy has faced criticism and fear due to public safety and political concerns, it can bring significant benefits to the table, and with the development of safer nuclear energy technology, it has the potential to power entire cities eventually.

Traders should consider including these alternative energy projects in their asset portfolios to better navigate the challenges presented by PnL downturns and contribute to a more sustainable future.

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