Jeff Tannenbaum made his fortune through investing; now he’s investing that fortune.
He’s chairman emeritus at New York-based Fir Tree Capital Management LP, the hedge fund he founded in 1994, though he began handing over investment responsibilities in the early 2000s and had ceased day-to-day portfolio management by the middle of the decade. In recent years the firm has struggled with staff departures, soured investments, and a drop in assets of more than half from a peak of $13 billion in 2015.
Now, Tannenbaum, 56, is again managing a portfolio. This time he’s running his own money at a new firm called Titan Grove. After more than a decade of advocating for clean energy to address climate change, he created Titan Grove to fund growing businesses rooted in sustainability.
“I probably couldn’t do this at Fir Tree,” Tannenbaum says. Fir Tree’s clients “sign up for classic value investing. Investments have to be very large. Here I can do startups. I can do smaller investments and investments with longer time horizons.”
Then there’s sustainability. Fir Tree has taken stakes in energy companies such as Ultra Petroleum Corp., a gas driller whose shares plunged more than 90 percent in 2018. “The move into distressed oil and gas investments occurred well after I relinquished portfolio control,” Tannenbaum says. “I remain a large investor in Fir Tree’s funds but am in a share class where I do not participate in any future fossil-fuel-related investments.”
Titan Grove does share one common thread with Fir Tree: Both blend finance vehicles. Fir Tree is a hedge fund with private equity roots. It typically makes investments for one to three years and sometimes plows more than $100 million into mature, cash-generating businesses. Titan Grove, meanwhile, is like a family office combined with an impact fund. It’s structured as a B corporation, a company set up to create some kind of public benefit rather than only maximizing shareholder value. The aim, Tannenbaum says, is to build and own profitable businesses that promote sustainable, healthy, and just capitalism.
Titan Grove, which is targeting investments of up to $50 million, has done two deals. Both involve San Francisco-based NextEdge Networks, a smart-cities business focused on wireless infrastructure. NextEdge is also a B corporation. Titan Grove is nearing an investment in a for-profit entity that will work with apparel factories around the world to reduce energy, water, and chemical use and improve labor standards.
Tannenbaum’s climate advocacy began in 2001. After the Sept. 11 terrorist attacks, he organized a conference on energy security with an eye toward helping wean the U.S. off foreign oil. “I didn’t understand why we weren’t financing energy improvements,” he says.
Seven years later, he hosted a gathering for candidate Barack Obama’s energy advisers at his family’s summer home in Sagaponack on Long Island. There he met Obama’s future director of the Office of Science and Technology Policy, who later suggested that Tannenbaum look into a home-improvement program being piloted in Berkeley, Calif. Within the Sustainable Energy Financing District, homeowners could finance sustainable and clean-energy upgrades and pay back the costs over time via their property tax bills. “It’s very important that we fix our buildings—that’s a third of carbon emissions,” says Amory Lovins, co-founder of the Rocky Mountain Institute, a Boulder, Colo., nonprofit focused on sustainability.
Tannenbaum liked the concept but not the name. He rebranded it Property Assessed Clean Energy, or PACE, and founded an advocacy group to market it and lobby for government support. The program soon expanded beyond Berkeley. “It seemed revolutionary to me,” Tannenbaum says. “People had spent 20 to 30 years trying to figure this out. The problem was homeowners were reluctant to pay for retrofits, and businesses weren’t interested in retrofitting.”