Third Point Capital published its Q1, 2022 letter and the firm is increasingly involved in the commodities sector.

After becoming an activist in Royal Dutch Shell and supporting a break-up of the high and low-carbon business parts, Third Point is increasing its position.

"While Shell continues to trade at a large discount to its intrinsic value, with proper

management we believe the company can simultaneously deliver shareholder returns,

reliable energy and decarbonization of the global economy. We look forward to continued

engagement with management and other shareholders and to more strategic clarity from the

Company."

Third Point initiated a long position in Glencore in Q1. Glencore is a diversified miner that

supplies copper and nickel, two metals that will be critical inputs for the transition to

renewable energy. Renewable energy assets require between three and 15 times the amount

of copper compared to conventional power generation, and electric vehicles have about five

times the amount of copper as internal combustion engine (“ICE”) vehicles. Nickel is a key

ingredient for batteries for electric vehicles and energy storage. We believe that these two

metals are undergoing a substantial acceleration in demand that will outpace supply growth

as miners maintain capital discipline after a decade of poor returns. Nickel prices have

already begun to price in scarcity, and we see similar potential in copper over the next few

years as electric vehicles replace ICE vehicles and the renewable generation buildout occurs.

As economies around the world are increasingly focused on energy security, it will be interesting to see different capital allocators weigh ESG initiatives with the increasingly attractive value offered in the commodities industry.