Follow The Money, Even If It Requires Battery To Do So

Recently, prominent asset management firms have started racing to invest in battery-recycling companies, from names like Goldman Sachs (NYSE:GS) and BlackRock (NYSE:BLK), that are investing heavily into the battery-recycling market with the aim of sowing the strategic seeds for future ROI.   

Several startups are emerging, like Ascend Elements, which raised $460Mn in a round with investors including companies like BHP and Pacific Investment Management Co., while also acquiring two US Department of Energy grants equalling $480Mn. Another lithium-ion battery-recycling startup Redwood Materials, raised more than $1Bn in a new funding round including investments led by Goldman Sachs Asset Management, Capricorn and T.Rowe Price (NASDAQ:TROW). In line with expectations, in February, 2023, Redwood also acquired a $2Bn loan from the federal government. 

Despite these significant capital commitments from prominent firms, it is clear these clean-energy startups seem to be quite dependent on government funding. Furthermore, there have not been significant breakthrough advances in the lifespan of lithium-ion batteries in the past 2 years, only incremental.

As the world goes digital and batteries become vitally essential for all devices to be powered – wirelessly. The recycling-battery manufacturers are uniquely in a potential position to benefit from this over the long haul. Additionally, acknowledging the recent trend that we see for recycling battery companies, as savvy money rallies behind it, suggests that there could be large quantities of batteries – being produced, used, recycled, reused – and in demand in future. 

In light of this, one company to keep in mind is – EnerSys (NYSE:ENS), “the world’s largest battery manufacturer” – which is hovering close to its 52-week high, trailing only 12% behind on Sep 6, 2023, and hitting all-time highs, as recently as July 18, 2023 with a stock price of $112.98, in the summer months. 

In parallel, it is noteworthy that 97% of EnerSys (NYSE:ENS) is under institutional shareholders. From one perspective, this could be a sign of a lack in charismatic leadership, though from another vantage point, it signals a sustainable long-term business that could grow exponentially.