Clean energy returns will eclipse tech boom's, says T8 Capital founder

Electricity – 90% of the world’s population have access to it but are hungry for more. With global consumption set to triple by 2050, humankind has started warming up to the idea of replacing the coal and gas our planet is limited to with the near infinite power of the sun.

Thus was realised the dawn of a solar age, the ensuing industry and market forces moving it forward and the birth of a business within the sector that found fundie Roscoe Widdup’s favour.

Speaking on Reach Markets’ The Insider: Meet the Fund Manager in May 2023, Mr Widdup, Co-Founder and Portfolio Manager of Triple 8 Capital touted SolarEdge Technologies Inc (XNAS: SEDG) as one of his favourite stocks and a major operator within the US and potentially global solar market. Watch the full The Insider: Meet the Fund Manager session.

Mr Widdup believes that successfully investing in disruption has been a winning investment formula. He claimed that the investment returns made from the ‘winners’ in clean energy will eclipse those made from investing in tech boom titans Apple, Amazon, Google and Meta.

“[SolarEdge] is the world leader in power inverters and every solar panel needs an inverter,” Mr Widdup said about the Israeli-headquartered business that he thinks has been a ‘big success’ over the past five years. “We were exposed to it for the whole part of that track record.”

SolarEdge began its journey on the NASDAQ stock exchange in March 2015 and was put through the paces, trading relatively flat over its first circa four years. Around the end of March 2019, the company’s share price started gaining momentum, going from ~US$37 to ~US$280 in March 2023.

“In the last five years [SolarEdge] is up over 400% or nearly 40% per annum. Putting that into context, relative to the ASX…the ASX is up about 20% over that period or about 30% per annum,“ Mr Widdup said. “On the balance of that research and analysis, the outlook for SolarEdge is nonetheless attractive.”

Mr Widdup also highlighted SolarEdge’s 40% market share in the US and its revenue growth rate of 20-30% per annum. “There is some prospect in that market share increasing internationally,” he added.

At the end of 2022, the company had reported a record-setting US$3.1 billion in Generally Accepted Accounting Principles (GAAP) revenue complemented by an array of other record earnings for the business. In the same year, SolarEdge also reported record quarterly solar revenues in the Netherlands, Spain, France and Brazil.

Worth noting is that the US’s solar market has grown 20.1% per year on average between 2017 and 2022, faster than the country’s economy. Considering the burgeoning nature of the sector, Mr Widdup admitted to finding comfort in what he touted as the key part of Triple 8’s conviction with SolarEdge.

“The thing that we get most comfort from in terms of protecting the competitive advantage that protects the fundamentals is its investment in research and development,” he said. “It reinvests just shy of 10% of its revenue in research and development [and] employs about 1,000 R&D electrical engineers.”

“That investment we believe is something that creates a moat which will continue to keep [SolarEdge] ahead of its competitors, protect the growth rate, protect the margins and allow it to increase market share.”

Click here to view more videos from Roscoe Widdup’s The Insider: Meet the Fund Manager session.

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