Tuesday, December 1, 2020

A Small Cap Equity holding: Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI, $52.43): “With Biden as President, Renewable Energy Can Expect to See Rapid Growth” by: Garrett Gajewski, AIM Student at Marquette University

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI, $52.43):“With Biden as President, Renewable Energy Can Expect to See Rapid Growth”

By: Garrett Gajewski, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI) is the first United States pubic company that is solely dedicated to investing in climate change solutions. This includes solar, wind, stormwater remediation, and others. 

• First REIT to invest a significant amount of capital into solar energy, with only several other REIT’s just getting started.

• The return on equity for the first quarter of 2020 was 12.2%, due to its pipeline of orders.

• Has a pipeline of $2.5B worth of deals to be done in the next 12-month period.

• The Biden presidential win will help the entirety of the renewable energy industry, more specifically HASI, and will significantly hurt fossil fuels like oil and coal.

Key points: Hannon Armstrong Sustainable Infrastructure Capital, Inc. has been able to distinguish themselves as the first major player in the newly developing sustainable REIT industry. Other REIT’s are finally starting to realize the profitability and potential and are slowly tip toeing into sustainability. It is expected that HASI will remain the dominant player in the coming years and grow at a significant rate due to their pipeline. 

For the upcoming 12-month period, HASI has a pipeline of $2.5 B, which includes 54% from Behind-the-Meter (BTM), 28% from Grid Connection (GC), and 18% from Sustainable Infrastructure (SI). To top this off, HASI saw an average ROE of 9.2% in 2019 and saw a quarterly ROE of 12.2% for its Q1 report in 2020.

It is very well known that Millennials and Generation Z’s are pro-environment and pro-sustainability as many of these individuals have been expressing their beliefs a lot lately. A plethora of people voted for Joe Biden in early November solely because of his plans that are focused on helping the environment. President Trump had no plans to implement environmental and sustainability regulations and policies during a second term as President. Furthermore, Trump made it aware that he was in full support of the fracking and oil industries, which many environmentalists were unhappy with. Now that Biden will be taking over the White House in January, some of his first regulations to be implemented will be environmentally and sustainability focused.

What has the stock done lately?

HASI has beat their past four EPS quarterly reports and is poised to beat again in December. Their most recent EPS consensus was 0.26 in September, and HASI beat that consensus with a 0.28 EPS, representing a 7.69% surprise. On November 4th, the day after the election, HASI closed at $42.83. As of November 18th, the stock price was $52.43 and has continued climbing. Biden’s presidency was the macroeconomic catalyst that this company has been waiting for. 

Past Year Performance: HASI has increased 82.56% in value over the past year. During the March Covid-19 selloff, HASI saw a low of $15.01 and has seen an impressive recovery. Currently, the price of HASI is sitting at $52.43 and should continue to see growth as renewable energy and real estate thrive. 

Source: FactSet

My Takeaway

Renewable energy, energy efficiency, and other sustainable infrastructures are the future and will eventually put an end to fossil fuels. With the recent Joe Biden presidency, he has plans to help significantly reduce methane and carbon emissions, along with a 400B dollar investment in clean energy over the course of 10 years. I anticipate that Biden’s presidency alone will help launch HASI’s share price to a level that has never been seen and will help HASI to become one of the fastest growing REITS in the next four years. Additionally, I will not be surprised if HASI is the best performing REIT in the AIM portfolio, and if not one of the best performing holdings.

Source: FactSet