Oil and gas companies are accelerating investment in plastics, in response to the shift away from fossil fuels. But is this pivot sustainable? Could plastic become the next stranded asset?

When factors have historically become crowded, they’ve often experienced significant drawdowns in subsequent months. So investors may find it instructive to consider which factors were relatively crowded at the end of 2018 — and how those same factors performed in the first half of 2019. Based on our crowding analysis, we found the risks to the U.S. price momentum and global profitability factors were elevated as of December 2018. And, in fact, when we looked at these factors from January through June 2019, we found U.S. momentum suffered a large drawdown in the first four months of 2019, before rebounding in May and June. Global profitability’s performance was negative through June.