The sharp decline in oil prices caused a selloff outside of traditional energy companies. But some of that selling—particularly in solar and water businesses—was misguided and presents an excellent buying opportunity, according to a leading natural resources and alternative energy investor.
"There isn't really a correlation. The market got nervous and ran too far," Ken Locklin, a director at $4.6 billion Impax Asset Management, said at an energy investing event Wednesday in Manhattan organized by the New York Hedge Fund Roundtable.
Locklin said that Impax had used the price decline as a buying opportunity. The firm added to its already large positions in water businesses, which investors sold in anticipation of beat-up energy companies slowing their hydraulic fracking, an extraction process that relies on huge volumes of water. Locklin said that related water companies actually had relatively low exposure to energy and actually focused more on industrial and municipal demand.
Impax also used the oil dip to add to its solar holdings, which sold off as the market anticipated higher use of oil as an energy source given its suddenly much-lower price. The stocks of large solar companies such as SunEdison and First Solar fell by double digits over the second half of 2014.