In this Stockhead series, corporate advisory firm Barclay Pearce highlights the key trading themes of the week, along with which companies and sectors readers should be keeping their eye on.

So far in November, one thing is clear for ASX small cap investors — hydrogen juniors are running hot.

Investors piled into multiple hydrogen stocks with news flow in recent weeks, while on a broader scale Twiggy Forrest’s Fortescue Future Industries has been booking provisional green hydrogen development deals from Queensland to the Kingdom of Jordan.

Longer-term, the demand metrics for hydrogen technology are firming up as part of the generational clean energy transition. But small cap investors still have the job of cutting through the noise and assessing which companies stand out in a rising hydrogen tide.

It’s in that context that Stockhead’s latest catch-up with Trent Primmer — Head of Trading at corporate advisory firm Barclay Pearce — took place.

And Primmer highlighted some changes taking place in the firm’s sophisticated investor network as hydrogen interest continues to rise.

For starters, Barclay has been active in the space. It’s advised a number of pre-IPO hydrogen companies, including Verdant Earth Technologies, which is building a green hydrogen production hub adjacent to its Redbank Power Station facility — a former coal power station being repurposed to generate energy from waste biomass.

Verdant is now working with Roth Capital Partners in the US where it’s applied to list on the Nasdaq. But back on Australian soil, Primmer says interest in the space has picked up across Barclay’s investor networks — and it’s a recent shift.

“Most of our clients invested in Verdant, so that’s a good example of getting in early,” Primmer said.

“What I mean by that is that when we first started working with Verdant, a lot of people thought it was a technology that would take years and years to get off the ground and we wouldn’t be able to get investment.”

“A lot of brokers weren’t interested but then some planets aligned and we got to where we are now.”

“So from that perspective, in 2021 we’ve really seen that shift. And we’ve worked very hard and those companies have worked very hard to get to where they are now. A lot of work went into it, but what’s happening now really shows how much demand and interest there is in that sector.”

In fact, Primmer said he’d “never seen this much interest on one sector before”.

“And it’s flowing through to other adjacent sectors — for example, hydrogen fuel cell vehicles. So it is interesting to me to see the roll-on effect because 12 months ago, you really wouldn’t have thought it would blow up this much.”

More broadly, that interest is being reflected on a global level by other developments such as the successful IPO of US-based electric vehicle company Rivian, which debuted with the world’s biggest IPO for 2021 last week and surged.

“That got some tongues wagging, and we had a lot of interest on the ground at our firm on asking if we’re working with any similar companies,” Primmer said.

And while there’s a chance that red-hot post-COVID IPO markets will cool into the new year, Primmer expects more capital looking for early-stage returns will move into clean energy.

“2022 might not have the same appetite for IPOs compared to the last 18 months. But I still think people are willing to take the risk to enter early into these hydrogen plays and other renewables technologies,” he said.

“So I think the sector will stand up. That’s just an observation from my standpoint because we’ve had a lot more clients coming on board and dealing with us.”

“I think on the macro level I’d attribute that interest to two factors. It’s partly linked to the ongoing inflation narrative, which has largely been driven by higher energy prices with fossil fuels.”

“And then there’s the policy imperative with things like COP26. That promotes the flow of capital into the sector because companies are operating in a regulatory framework that’s increasingly focused on the shift to renewables over the next decade-plus.”

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.