Finding a company that can withstand the shock to the markets that COVID has caused is a difficult task however Gore Street Energy Storage Fund seems to be up to the challenge. The investment trust is actually trading at a slightly higher share price compared to last summer, holding firm at 96.75p.
Not only has its share price been resilient, the company brought an additional asset online this week, adding an extra 10 MegaWatts of capacity to the portfolio as a plant in Essex became operational.
Alex O'Cinneide (pictured), CEO of Gore Street Capital, the main adviser to the fund, told Fundeye: “We’re focused on the lowest cost per megawatt, We announced £425,000 per megawatt following a recent deal.”
This price compares favourably to some of its competitors, with larger by market cap peer Gresham House Energy Storage Fund (GRID) price per MegaWatt nearer the £575,000 mark.
Mr O’Cinneide explains how his firm is able to keep costs down, it tends to buy assets that require construction as opposed to those that are already operational. Given the COVID outbreak, the trust’s assets that are under construction have had to be put on hold until normal service resumes. However, with a portfolio capacity of 185 MegaWatts, it started life with just six, the fund is continuing to function normally.
After discussing price forecasts with James Armstrong of Bluefield Partners who run a large solar trust, Mr O’Cinneide is less concerned with the idea of falling energy prices. In fact, it would be beneficial to the fund if they did.
“We’re outside electricity production, we’re not selling it we’re selling a service to the Grid to keep it balanced with renewables. Actually if energy prices go down it’s good for us as electricity is a cost for us to keep things going. The lower the energy prices, the greater our profits,” he said.
This trust is part of essential infrastructure given that it sells hours of access to its portfolio directly to the National Grid. A host of institutional and wholesale investors have already been taken with the idea, including AXA, Premier Miton, Brewin Dolphin and Charles Stanley to name a few. As fund managers have told Fundeye, the holdings they’re looking for are those that aren’t discretionary and although Mr O’Cinneide says his fund is not ‘counter cyclical’, moreover ‘neutral’, many managers would take that right now as markets continue to sell off.
Furthermore, with a dividend yield in excess of 7 percent, with many companies cancelling their payouts, Gore Street's confirmation of its distribution should hearten many investors.
