While engagement is sometimes seen as ‘soft’ and intangible, without the hard metrics so common to much of investment practice, in our experience the value that it creates can be just as meaningful.
The solar sector enjoyed its day in the sun back in 2007-2008 when there were some spectacular returns to be had from investing in solar stocks. Of course, it all came to a similarly spectacular end when the build-out of polysilicon capacity brought the polysilicon price down from what were clearly unsustainable levels. This coupled with the relentless build out of module capacity by Chinese manufacturers to levels way in excess of demand took pricing into a virtual free-fall. Adding to the woes was the trend to cut subsidies around the world – especially as austerity became the fashion – all of which caused share prices to fall precipitously. Virtually all the leading companies proceeded to fall by over 90% from their peak, many turned loss-making, and some went bust. The nadir was in late 2012 when even the most patient of investors finally quit the sector, some swearing never to return.