WEBVTT 1 00:00:05.040 --> 00:00:08.599 With Laurent's segal And from London and Gerard Reed from Berlin. 2 00:00:09.119 --> 00:00:13.759 This is redefining energy Today. On redefining Energy, we're going 3 00:00:13.800 --> 00:00:17.760 to talk about investing in clean energy and that wider 4 00:00:18.000 --> 00:00:19.480 green technology space. 5 00:00:19.879 --> 00:00:22.800 Yeah, especially we're going to talk about public markets. And 6 00:00:22.839 --> 00:00:26.199 as you may have noticed, I did a prediction last 7 00:00:26.280 --> 00:00:30.079 year that green equities would go up and they did. 8 00:00:30.239 --> 00:00:33.399 Know you owe me about the Champagne because I lost 9 00:00:33.399 --> 00:00:39.600 four because of your investment advice. Never listen again, forget 10 00:00:39.640 --> 00:00:42.240 about it. So I'm so glad. I just decided that 11 00:00:42.320 --> 00:00:43.880 I need to see, we need to get someone on 12 00:00:43.920 --> 00:00:47.159 that knows what they're talking about. What we did is 13 00:00:47.200 --> 00:00:51.159 we contacted Liizard Asset Management and we got Shallow Matthew 14 00:00:51.240 --> 00:00:53.840 to come on and talk about it and I learned 15 00:00:53.880 --> 00:00:55.359 a lot. It was really great. 16 00:00:55.679 --> 00:00:59.520 Yeah, because Shan you compared to me, he's a real expert. 17 00:01:01.679 --> 00:01:04.000 Shadow, I myself agree that if you say buy it, 18 00:01:04.079 --> 00:01:06.000 we said it, like you say sell that, we buy it. 19 00:01:07.000 --> 00:01:10.599 Yeah, when it comes to a compass that indicates the 20 00:01:10.719 --> 00:01:17.879 souths Unfortunately, let's bring on Shannu mate on the show. Shanno, 21 00:01:18.599 --> 00:01:20.719 Happy New Year and welcome to the show. 22 00:01:21.200 --> 00:01:24.079 Eylron Hey, Gerard, thanks for having me on Shanna. 23 00:01:24.359 --> 00:01:26.879 Can we just take a look back at last year, 24 00:01:27.120 --> 00:01:30.200 which looks from the outside looked like a difficult year 25 00:01:30.239 --> 00:01:31.359 in terms of clean tech? 26 00:01:31.879 --> 00:01:35.120 How did you see it? Absolutely, your framing is a 27 00:01:35.120 --> 00:01:37.400 correct one, but just just just a step back a 28 00:01:37.439 --> 00:01:40.040 little bit and highlight the landscape. I'll start at a 29 00:01:40.120 --> 00:01:41.640 high level and kind of we can go down into 30 00:01:41.719 --> 00:01:43.959 individual sectors. But the way that I look at clean 31 00:01:44.000 --> 00:01:46.439 tech is I define it in two big buckets. And 32 00:01:46.480 --> 00:01:49.480 so there's traditional clean tech, which is what you traditionally 33 00:01:49.480 --> 00:01:52.879 think of solar, wind batteries, evs, and then you have 34 00:01:52.920 --> 00:01:56.319 clean tech adjacent, which I consider different pockets of multi 35 00:01:56.319 --> 00:01:59.840 industrial companies that benefit from sustainability and climate related tailwinds 36 00:02:00.159 --> 00:02:03.319 like ellectrical equipment and HVAC low growth, but may not 37 00:02:03.359 --> 00:02:06.480 be traditionally considered, you know, your traditional clean tech. So 38 00:02:06.560 --> 00:02:08.560 if we look at how clean tech did, the way 39 00:02:08.560 --> 00:02:12.560 that I'll use to describe performance of broader indices and 40 00:02:12.599 --> 00:02:14.879 so for the listeners that aren't as close to financial markets, 41 00:02:15.120 --> 00:02:18.759 indexes are a makeup of a variety of stocks or 42 00:02:18.800 --> 00:02:21.599 companies from different sectors into a broad index. So, for 43 00:02:21.680 --> 00:02:23.680 like the broad US stock market, we use the S 44 00:02:23.680 --> 00:02:26.039 and P five hundred to gauge the overall performance of 45 00:02:26.080 --> 00:02:29.120 the stock market, whereas like an index might be a 46 00:02:29.159 --> 00:02:32.479 select composition of different clean tech companies. And so for 47 00:02:32.879 --> 00:02:35.319 trailing three year period, if you look at what the 48 00:02:35.360 --> 00:02:38.000 broader SMP has done, so the broad star market, it 49 00:02:38.120 --> 00:02:41.360 returned forty percent. And then that same period, if you 50 00:02:41.400 --> 00:02:43.639 look at kind of the global clean energy index or 51 00:02:43.680 --> 00:02:47.159 a global solar index, they were down forty to fifty percent. 52 00:02:47.639 --> 00:02:51.280 So in terms of relative underperformance, you know, that's materially 53 00:02:51.479 --> 00:02:53.199 very very poor, and a lot of that happened in 54 00:02:53.199 --> 00:02:55.199 the last year. Act to your point, in the last year, 55 00:02:55.400 --> 00:02:58.039 the broader market was up thirty percent, whereas the various 56 00:02:58.080 --> 00:03:00.000 clean tech industries were down anywhere from twenty to three 57 00:03:00.000 --> 00:03:03.039 thirty percent. So again relative under performance of anywhere from 58 00:03:03.080 --> 00:03:07.039 fifty to sixty percent. And so that's a really challenging 59 00:03:07.159 --> 00:03:09.919 predicament in terms of what happened. And there's a variety 60 00:03:09.960 --> 00:03:11.240 of factors, and I'm sure we can kind of get 61 00:03:11.240 --> 00:03:14.240 into some of the secret specific things, but broadly, the 62 00:03:14.280 --> 00:03:18.080 big takeaways were interest rates, the normalization of power prices, 63 00:03:18.439 --> 00:03:21.159 which deteriorate some of the payback or advantages that some 64 00:03:21.199 --> 00:03:24.719 of these new cleaner technologies have reduced focus from governments 65 00:03:24.719 --> 00:03:28.319 and corporates as well as broader just weak end market condition. 66 00:03:28.479 --> 00:03:31.039 We look at things like slowing edy adoption and incremental 67 00:03:31.080 --> 00:03:33.919 growth countries. You look at kind of the slowing adoption 68 00:03:34.280 --> 00:03:37.599 or saturation of certain things like solar adoption in various 69 00:03:37.599 --> 00:03:40.560 markets that are supportive in terms of policy, and so 70 00:03:40.879 --> 00:03:42.800 you have a variety of confluence of factors that are 71 00:03:42.800 --> 00:03:45.960 really challenging overall end market performance as well as you know, 72 00:03:46.039 --> 00:03:49.000 valuations in terms of clean tech adjacent which I think 73 00:03:49.000 --> 00:03:51.560 often gets missing this conversation or a nuance. You actually 74 00:03:51.599 --> 00:03:54.000 have some companies that have done tremendously well. So if 75 00:03:54.039 --> 00:03:57.439 you look at lacross broader industrial companies, two of the 76 00:03:57.439 --> 00:04:00.400 strongest performing, if not the strongest performing subsectors of have 77 00:04:00.520 --> 00:04:03.759 been electrical equipment and HVAC, and both those are very 78 00:04:03.840 --> 00:04:06.960 much driven by energy efficiency, the move to more sustainable 79 00:04:06.960 --> 00:04:09.719 options as well as kind of addressing the electrification of 80 00:04:09.759 --> 00:04:11.919 everything trends that we often talk about when we talk 81 00:04:11.960 --> 00:04:13.800 about climate, but don't really I forget to discuss when 82 00:04:13.800 --> 00:04:15.599 we're thinking about the stock equity performance. 83 00:04:16.360 --> 00:04:19.879 Shann thank you for this big picture that's pretty ugly 84 00:04:19.920 --> 00:04:22.759 when it comes to kin tech, and much better when 85 00:04:22.800 --> 00:04:26.879 it's adjacent. As you say, can you explain what type 86 00:04:26.879 --> 00:04:30.240 of shares or main shares you have in that ten 87 00:04:30.319 --> 00:04:32.720 tech segment and what type of shares you have in 88 00:04:32.759 --> 00:04:34.480 the teen adjacent segment. 89 00:04:34.920 --> 00:04:38.319 So in terms of clean tech, you have traditional sectors 90 00:04:38.360 --> 00:04:40.800 like residential solar WHI show this will be like your 91 00:04:40.800 --> 00:04:45.800 stolar installer companies, your solar inverter companies, solar module companies, 92 00:04:46.040 --> 00:04:49.839 utility scale solar side, you have electric balance system, you 93 00:04:49.959 --> 00:04:53.600 have solar modules, things like for solar and those types 94 00:04:53.600 --> 00:04:56.560 of companies. In terms of like other subsectors, lithium, you 95 00:04:56.560 --> 00:04:59.800 have litium producers like Albemarle or live ND, and then 96 00:05:00.279 --> 00:05:02.480 kind of moving up the stream the evs, you have 97 00:05:02.720 --> 00:05:04.600 people up and down the supply chain, whether it's the 98 00:05:04.639 --> 00:05:08.600 actual auto OEMs things like Tesla or Rivian or various 99 00:05:08.600 --> 00:05:11.879 components or suppliers into those subsectors as well. When we 100 00:05:11.920 --> 00:05:14.399 think about clean tech adjacent this is more companies that 101 00:05:14.519 --> 00:05:17.600 sell various equipment that may benefit from these broader trends 102 00:05:17.639 --> 00:05:19.560 but may not be traditionally things that you think of 103 00:05:19.600 --> 00:05:22.319 like solar modules or wind turbines, but you know electrical equipment. 104 00:05:22.319 --> 00:05:26.199 These are things like bus bars, transformers, switch gear, circuit breakers. 105 00:05:26.720 --> 00:05:29.879 HVAC is actually you know the chillers or the HVAC 106 00:05:29.959 --> 00:05:32.759 systems of heating, ventilation and air conditioning systems that go 107 00:05:32.800 --> 00:05:36.279 into big commercial buildings. And these shares or companies have 108 00:05:36.360 --> 00:05:38.759 done tremendously well in terms of the overall pricing power 109 00:05:38.759 --> 00:05:40.959 they have, the volumes and orders are seeing, and that 110 00:05:41.000 --> 00:05:43.000 comes from a variety of factors, including a focus on 111 00:05:43.079 --> 00:05:46.279 energy efficiency, load growth, as well as trying to save 112 00:05:46.360 --> 00:05:48.560 on energy costs in various equipment, and as well as 113 00:05:48.560 --> 00:05:51.319 the electrication of everything. As we've discussed, increase content for 114 00:05:51.319 --> 00:05:53.040 a lot of these companies in terms of selling into 115 00:05:53.240 --> 00:05:56.160 data centers or new commercial buildings, and we can kind 116 00:05:56.160 --> 00:05:58.959 of get into the non residential construction trends and manufacturing 117 00:05:59.560 --> 00:06:01.279 and what's the story that's going on in the US. 118 00:06:01.319 --> 00:06:02.959 But a lot of those companies have been beneficiar areas 119 00:06:03.000 --> 00:06:03.759 of that spend. 120 00:06:04.000 --> 00:06:06.399 Yahan new It's very interesting what you're saying, which is 121 00:06:06.399 --> 00:06:10.920 your differentiating the clean tech guys and the adjacent area 122 00:06:10.920 --> 00:06:14.439 clean tech adjacent? Can I dig into the differences between 123 00:06:14.480 --> 00:06:16.879 the two, is the differences between the two, the fact 124 00:06:16.959 --> 00:06:20.920 that the clean tech adjacent guys really have competitive advantages 125 00:06:21.240 --> 00:06:24.480 and it's much more difficult to enter those areas and compete. Well, 126 00:06:24.600 --> 00:06:27.839 let's be clear, if you're a battery manufacturer, very different 127 00:06:27.920 --> 00:06:30.040 compete with the Chinese. If your soda guy is the 128 00:06:30.079 --> 00:06:32.680 same thing, that's not why we have the relative performance 129 00:06:32.800 --> 00:06:33.879 or as there something else. 130 00:06:34.079 --> 00:06:36.560 I think it's a really fair characterization, to be honest. 131 00:06:36.680 --> 00:06:38.920 One of the things that really stood out for me 132 00:06:39.319 --> 00:06:42.040 when I was observing performance over the last years and 133 00:06:42.120 --> 00:06:43.560 in the last few years, if you look at some 134 00:06:43.560 --> 00:06:45.480 of the clean tech companies, right the big story that 135 00:06:45.480 --> 00:06:48.480 everyone got excited about, especially in late twenty one, was 136 00:06:48.519 --> 00:06:51.439 that you had this massive energy transition that needs to happen. 137 00:06:51.560 --> 00:06:54.519 It's a completely one directional tailwind. It's going to only 138 00:06:54.600 --> 00:06:59.120 increase in velocity. So in otherwise commodity type or cyclical 139 00:06:59.199 --> 00:07:02.879 industries right equipment selling into power markets like you would 140 00:07:02.920 --> 00:07:04.639 thought that there's gonna be this tailwind that would help 141 00:07:04.680 --> 00:07:07.399 subside the traditional cycles. And what we just saw in 142 00:07:07.439 --> 00:07:09.480 this cycle was that that didn't happen. A lot of 143 00:07:09.519 --> 00:07:12.800 these companies really out of themselves is having minimal visibility 144 00:07:13.160 --> 00:07:17.160 overstuffed inventories, minimal pricing power, especially when competing against the Chinese, 145 00:07:17.279 --> 00:07:19.879 and then that leads to just weak margins and weak 146 00:07:19.879 --> 00:07:21.600 cash flow generation. And so when you compare it to 147 00:07:21.600 --> 00:07:23.920 some of these other incumbent industries like you mentioned, you 148 00:07:24.040 --> 00:07:27.240 have more of a moat. They're more all gopaalistic industries, 149 00:07:27.279 --> 00:07:30.319 so you have much better volume and pricing trends. You 150 00:07:30.399 --> 00:07:32.480 have an established brand that's been built over fifty to 151 00:07:32.480 --> 00:07:35.120 one hundred years versus a more nascent company, and those 152 00:07:35.160 --> 00:07:38.399 things allow you to perform better in cycles. So I 153 00:07:38.439 --> 00:07:40.600 would categorize it broad as one is like the macro 154 00:07:40.680 --> 00:07:42.600 for the subsector, it's been weak for clean tech, what's 155 00:07:42.639 --> 00:07:44.279 been strong for clean tech adjacent? Just give it on 156 00:07:44.279 --> 00:07:46.399 the construction spend, and then you kind of think about 157 00:07:46.399 --> 00:07:49.879 the overall economics and industry composition. And as an investor, right, 158 00:07:49.879 --> 00:07:52.959 you're always looking for that sustainable competitive edge remote what 159 00:07:53.000 --> 00:07:54.879 we call and I think to your point you're answering 160 00:07:54.959 --> 00:07:57.639 is that clean tech companies haven't necessarily defined their remote 161 00:07:57.720 --> 00:08:01.160 yet or a little bit fewer and far between today. 162 00:08:01.279 --> 00:08:05.000 What's extraordinary in two twenty four is that Siemens and 163 00:08:05.160 --> 00:08:10.120 LG grew almost as Puss, Nvidia, which is phenomenon, and 164 00:08:10.399 --> 00:08:15.000 even g Velanova. The branch of gu was split, and 165 00:08:15.160 --> 00:08:16.800 those the gas still buying I mean the guest still 166 00:08:16.839 --> 00:08:19.240 buying market is on fire like they haven't seen in 167 00:08:19.279 --> 00:08:22.279 a decade. Those type of shares, that's what you would 168 00:08:22.360 --> 00:08:23.560 characterize as. 169 00:08:23.360 --> 00:08:26.000 The adjacent fought on LARN. If you look at the 170 00:08:26.079 --> 00:08:29.360 contributors or hot performers in the index last year, you'll 171 00:08:29.360 --> 00:08:33.320 see names like ge Vernova or Vistra, or Constellation or 172 00:08:33.399 --> 00:08:36.360 Energy Energy. These are companies that are taking advantage or 173 00:08:36.360 --> 00:08:39.639 should benefit from all the anticipated load growth and data centers. 174 00:08:39.679 --> 00:08:42.000 And as you alluded to, g Bbnova is a little 175 00:08:42.000 --> 00:08:43.399 bit of an interesting one because it has three different 176 00:08:43.440 --> 00:08:46.879 subsegments that relate to the transition, whether it's the gas 177 00:08:46.919 --> 00:08:50.039 drimine business, the wind business, or electrification business. But some 178 00:08:50.080 --> 00:08:53.240 of those other companies may have traditional natural gas plants 179 00:08:53.320 --> 00:08:55.480 or nuclear plants, and there's been a reserveence of thermal 180 00:08:55.720 --> 00:08:58.159 generation just as we have to address all this load. 181 00:08:58.399 --> 00:09:00.399 And so some of those shares have done tremendos well 182 00:09:00.440 --> 00:09:03.879 to your point, and in some ways it's interesting because 183 00:09:04.080 --> 00:09:05.919 depending on how you define it, some people wouldn't consider 184 00:09:05.919 --> 00:09:07.799 that clean tact, but I very much do in terms 185 00:09:07.799 --> 00:09:10.639 of it's a global energy transition. It's not just only 186 00:09:10.639 --> 00:09:13.320 certain types of energy. So the companies that do well 187 00:09:13.480 --> 00:09:15.399 depend on the subsector that you're exposed to. And right 188 00:09:15.399 --> 00:09:18.440 now it feels that those that can deliver on load growth, 189 00:09:18.480 --> 00:09:20.279 if it actually materializes, are the ones that are going 190 00:09:20.279 --> 00:09:21.759 to stand up benefit. And so those shares have done 191 00:09:21.759 --> 00:09:22.480 tremendously well. 192 00:09:23.200 --> 00:09:27.399 Yeah, I like that. So Weirdly, the incubans started, although 193 00:09:27.440 --> 00:09:33.559 bit lately, riding the wave, whereas all those specs who 194 00:09:33.559 --> 00:09:36.120 came out of nowhere were just like big four points 195 00:09:36.159 --> 00:09:38.200 with three years ago. I mean, they've all gone down 196 00:09:38.320 --> 00:09:42.720 ninety five percent. It's an unmitigated disaster. Yeah. 197 00:09:42.759 --> 00:09:45.399 Absolutely, I'm solid definitely in the spac mania in terms 198 00:09:45.440 --> 00:09:48.600 of companies that probably went public far too early and 199 00:09:48.679 --> 00:09:51.600 didn't really have provable or defensable business models or scale. 200 00:09:51.799 --> 00:09:53.559 But even I would point out some of the companies 201 00:09:53.559 --> 00:09:55.879 that were quote unquote clean tech darlings would point to 202 00:09:55.919 --> 00:09:58.960 the residential solar inverter space, for example, the companies that 203 00:09:59.000 --> 00:10:01.519 were up on a three basis through twenty one twenty 204 00:10:01.559 --> 00:10:04.519 two a three hundred five hundred percent, they're down eighty 205 00:10:04.519 --> 00:10:07.200 to ninety percent off all time highs. Even companies that 206 00:10:07.240 --> 00:10:09.519 we once thought were going to be trendous, high flying 207 00:10:09.559 --> 00:10:12.639 cleantech companies have come down considerably, and it just goes 208 00:10:12.679 --> 00:10:15.000 again to that point of ultimately comes down to economics. 209 00:10:15.000 --> 00:10:17.720 And I always kind of make this point that despite 210 00:10:18.000 --> 00:10:20.879 increasing amounts of dollars going into the transition at a 211 00:10:20.919 --> 00:10:23.480 macro level or an economic level depending on the country, 212 00:10:23.720 --> 00:10:25.840 it doesn't necessarily mean that the value capture a cruise 213 00:10:25.879 --> 00:10:29.200 to the companies themselves, right, It can be dispersed across 214 00:10:29.200 --> 00:10:31.200 the subsector, and that's where it gets back down to 215 00:10:31.240 --> 00:10:34.120 pricing power and your ability to generate profitable growth. 216 00:10:35.440 --> 00:10:37.799 The way I'd be looking at it is that the 217 00:10:37.840 --> 00:10:39.919 big change is the fact that for the first time 218 00:10:39.919 --> 00:10:43.960 in a decade, we have expectations that electricity demand is 219 00:10:43.960 --> 00:10:46.720 going to grow, and it's cirly grows significantly for the 220 00:10:46.759 --> 00:10:50.039 next years, and the main reason is data centers and 221 00:10:50.039 --> 00:10:52.679 the move to AI. I'd love to hear your thoughts 222 00:10:52.679 --> 00:10:56.039 on how you see that sector, because obviously, if you'd 223 00:10:56.039 --> 00:10:58.480 invested in that last year, you would have done incredibly 224 00:10:58.480 --> 00:10:59.360 well right. 225 00:11:00.240 --> 00:11:02.559 On Gerard in terms of the number one theme. If 226 00:11:02.600 --> 00:11:04.759 I had to identify and just the broader market. It 227 00:11:04.840 --> 00:11:07.960 is this whole AI and load growth related theme. We 228 00:11:08.000 --> 00:11:09.919 talked about some of the top contributors of the index 229 00:11:10.000 --> 00:11:12.159 last year, and it's very much related to the theme. 230 00:11:12.200 --> 00:11:14.279 And so just a step back again for listeners, the 231 00:11:14.360 --> 00:11:16.440 last two decades pretty much in the US, we've had 232 00:11:16.480 --> 00:11:18.639 flatish load growth. A lot of people have heard that. 233 00:11:18.720 --> 00:11:20.960 And then in terms of the near term acceleration of 234 00:11:21.000 --> 00:11:23.600 load growth that's going to come from these AI different 235 00:11:23.799 --> 00:11:27.440 credit data centers, the electrication of transport, electrication of heating, 236 00:11:27.440 --> 00:11:29.639 and spacing, and we're going to enter an era right 237 00:11:29.639 --> 00:11:31.840 where different estimates have it as up to two to 238 00:11:31.840 --> 00:11:34.879 three percent, which nominally doesn't sound that large, but actually 239 00:11:34.919 --> 00:11:38.600 from an infrastructure challenge is extremely large. And so I'll 240 00:11:38.600 --> 00:11:40.639 just focus on data centers to your point, with the 241 00:11:40.679 --> 00:11:43.679 general thinking being that we're in this era of a 242 00:11:43.720 --> 00:11:46.840 new technology that's one of the fastest adopting technologies in 243 00:11:46.919 --> 00:11:49.879 terms of consumer and corporate interest. And the way that 244 00:11:49.919 --> 00:11:53.519 this has developed is hyperscalers building these data centers filled 245 00:11:53.559 --> 00:11:56.799 with these GPUs that are incredibly energy intensive, and the 246 00:11:56.960 --> 00:11:59.360 conventional thinking right now is that to scale it, you 247 00:11:59.360 --> 00:12:02.000 need to build large GPUs with higher thermal rating and 248 00:12:02.039 --> 00:12:05.519 ability to process more compute, and that means more energy growth. 249 00:12:05.759 --> 00:12:08.360 And so there's all numbers storing out there, And just 250 00:12:08.399 --> 00:12:10.000 to give a little bit of sense, like the current 251 00:12:10.039 --> 00:12:12.320 gigawats in the US is roughly I think like around 252 00:12:12.399 --> 00:12:14.879 twenty to twenty five gigawatts, and in terms of the 253 00:12:14.919 --> 00:12:17.840 next six years, so twenty thirty, the amount expected is 254 00:12:17.879 --> 00:12:20.639 anywhere from another twenty five all the way up to 255 00:12:20.679 --> 00:12:22.519 I saw an estimate of one hundred and thirty yo 256 00:12:22.559 --> 00:12:24.720 wats the other day, And just to put some dollars 257 00:12:24.759 --> 00:12:26.759 on it, in terms of the build an AI data center, 258 00:12:26.879 --> 00:12:28.519 it can be anywhere from like ten million dollars in 259 00:12:28.559 --> 00:12:31.480 megawatt to twenty five depending on if your quitting chips 260 00:12:31.559 --> 00:12:33.360 or not. And so that's anywhere from like a low 261 00:12:33.480 --> 00:12:35.799 end five hundred million dollar opportunity, it's like a two 262 00:12:35.799 --> 00:12:38.919 point five trillion dollar opportunity. So who benefits from that, 263 00:12:38.960 --> 00:12:42.600 to your point, it's the chip providers, the server's racks, 264 00:12:42.799 --> 00:12:45.799 the thermal cooling, the electrical equipment that goes into these things, 265 00:12:45.799 --> 00:12:48.399 the actual labor that goes and installs and builds the 266 00:12:48.399 --> 00:12:51.960 electrical infrastructure, or the mechanical systems that go into these things, 267 00:12:52.200 --> 00:12:54.600 and all shares of the companies up and down the 268 00:12:54.600 --> 00:12:56.960 supply chain have really been poured over to see what 269 00:12:57.000 --> 00:12:59.240 your exposure is the data center and that's probably the 270 00:12:59.320 --> 00:13:02.240 most excited in that everyone is really fixated on and 271 00:13:02.240 --> 00:13:05.200 focusing on. And that's why some of the subjectors I 272 00:13:05.200 --> 00:13:09.519 mentioned earlier, whether it's electrical, mechanical or labor engineering, pyramid 273 00:13:09.559 --> 00:13:12.799 and construction firms have done tremendously well because everyone expects 274 00:13:12.840 --> 00:13:14.600 a lot of this build to come in and so 275 00:13:14.639 --> 00:13:16.519 I think the question really becomes now as we get 276 00:13:16.559 --> 00:13:19.759 from last year, in this year and next year, is 277 00:13:20.159 --> 00:13:22.200 does the load growth actually start to come. You know 278 00:13:22.279 --> 00:13:24.279 a lot of these buildings won't go into service here 279 00:13:24.320 --> 00:13:26.679 until twenty twenty six, twenty seven, and so we don't 280 00:13:26.720 --> 00:13:28.879 really have the first evidence of such. But right now 281 00:13:28.919 --> 00:13:31.120 we're seeing a lot of the speculative load requests as 282 00:13:31.120 --> 00:13:33.399 well as the construction start and so it's a matter 283 00:13:33.399 --> 00:13:35.200 to see like will that load growth come and will 284 00:13:35.200 --> 00:13:36.919 it come with the velocity that people are expecting. 285 00:13:37.799 --> 00:13:41.919 Okay, so I've got one stud and one quote. The 286 00:13:41.960 --> 00:13:46.080 first thirty is ten years ago NVDA cheap sales to 287 00:13:46.200 --> 00:13:50.360 data center was three hundred million DOLLA, so three hundred 288 00:13:50.399 --> 00:13:55.000 million DOLLA in twil twenty four. This one hundred billion dolla. 289 00:13:55.519 --> 00:13:56.200 It's insane. 290 00:13:56.360 --> 00:13:57.039 It's staggering. 291 00:13:57.720 --> 00:14:02.000 And the second quote, which I like a lot, is 292 00:14:02.759 --> 00:14:07.600 the stock market has correctly predicted eighty out of the 293 00:14:07.720 --> 00:14:14.759 last three technology booms. I think that AI think, you know, 294 00:14:14.840 --> 00:14:17.559 smell a bit like the same guys that were doing 295 00:14:17.759 --> 00:14:19.879 ESG three four years ago. You know, everything was ESG 296 00:14:19.919 --> 00:14:23.279 and now everything's AI. Yes. Of course, over the long term, 297 00:14:23.360 --> 00:14:25.480 HEI is going to be there, and I think a 298 00:14:25.519 --> 00:14:28.960 lot of people are overly optimistic. But that's that's my 299 00:14:29.000 --> 00:14:29.639 two cents. 300 00:14:29.919 --> 00:14:31.919 I think it's a really fair point. And to be honest, 301 00:14:32.159 --> 00:14:35.240 just like the market rewards a certain theme or narrative 302 00:14:35.279 --> 00:14:38.000 in one year, doesn't necessarily mean that the trend is 303 00:14:38.039 --> 00:14:40.159 true or that even it will materialize to the extent 304 00:14:40.159 --> 00:14:42.360 that people are expecting. And that's why I think this 305 00:14:42.399 --> 00:14:45.080 is such an interesting point in time where a lot 306 00:14:45.120 --> 00:14:47.360 of the share prices of certain companies that benefits from 307 00:14:47.360 --> 00:14:50.679 this trend have gone up fifty one hundred, couple hundred 308 00:14:50.720 --> 00:14:53.679 percent in a single year, and so that means expectations 309 00:14:53.720 --> 00:14:55.440 are moving up and so these companies will need to 310 00:14:55.480 --> 00:14:58.240 deliver high single digit, double digit type top line growth. 311 00:14:58.279 --> 00:15:01.120 They'll need to deliver significant in earnings growth to actually 312 00:15:01.120 --> 00:15:03.399 grow into these valuations. And if they don't, these shares 313 00:15:03.399 --> 00:15:05.240 that benefited a lot might be the ones that actually 314 00:15:05.240 --> 00:15:07.279 get penalized the most in coming years. And I think 315 00:15:07.279 --> 00:15:09.840 that's the trade that investors really need to pay attention to. 316 00:15:10.200 --> 00:15:12.279 One of the things you brought up earlier was gas turbans, right, 317 00:15:12.320 --> 00:15:14.399 whether it's like the Semens or gie Vnova's of the world. 318 00:15:14.639 --> 00:15:17.039 I've seen a lot of enthusiasm about that space, both 319 00:15:17.039 --> 00:15:18.799 in the share price movement as well as the overall 320 00:15:18.879 --> 00:15:21.679 just interest in the calls and the meetings that people schedule. 321 00:15:22.080 --> 00:15:24.120 For example, just for a little bit of background for people, 322 00:15:24.360 --> 00:15:27.360 gas turbine market in the early two thousands was considered 323 00:15:27.399 --> 00:15:30.440 like a resurgence because the US market just became deregulated 324 00:15:30.440 --> 00:15:32.000 and you were selling a lot of turbines, and at 325 00:15:32.000 --> 00:15:34.159 one point you sell up to one hundred gigawatts of 326 00:15:34.159 --> 00:15:36.480 turbines I think it was like twenty one, and so 327 00:15:36.600 --> 00:15:39.000 that market up until like two years ago was considered 328 00:15:39.039 --> 00:15:40.480 a little bit of a melting ice cube in the 329 00:15:40.480 --> 00:15:42.159 sense of like everyone knew that gas was going to 330 00:15:42.159 --> 00:15:46.240 play a transition role in the overall energy transition, but 331 00:15:46.639 --> 00:15:49.799 pacing new equipment installations wasn't necessarily a given. So we 332 00:15:50.080 --> 00:15:53.240 our market now is roughly like forty gigawatts. Now you 333 00:15:53.279 --> 00:15:55.320 have estimates that some people have it going up to 334 00:15:55.360 --> 00:15:57.200 sixty seventies, some people have it going backup to one 335 00:15:57.240 --> 00:16:00.080 hundred gigawats per year by twenty twenty seven, all the 336 00:16:00.120 --> 00:16:01.720 way through like you know, in the mid twenty thirties. 337 00:16:01.759 --> 00:16:03.919 And so again that's massive moves, and that explained some 338 00:16:03.919 --> 00:16:05.960 of the share price movements and of those gas urban companies. 339 00:16:06.000 --> 00:16:09.159 But to your point, the velocity of expectations has gone 340 00:16:09.360 --> 00:16:11.360 very very high paced, and so it will be to 341 00:16:11.559 --> 00:16:14.000 be proven for these companies. But it's interesting to even 342 00:16:14.000 --> 00:16:16.000 see the management teams get a little cough guard, where 343 00:16:16.080 --> 00:16:18.120 two years ago they might have been managing down capacity 344 00:16:18.240 --> 00:16:20.120 and now they're talking about capacity increases, and that's a 345 00:16:20.159 --> 00:16:20.879 pretty big swing. 346 00:16:21.440 --> 00:16:24.720 As you're opinion, if I had access to gas and BTU, 347 00:16:24.879 --> 00:16:28.879 I would put the gas sturbine in my backyard everywhere, 348 00:16:29.360 --> 00:16:33.200 cheaper on coals, cheaper than new gear. A two METU 349 00:16:33.399 --> 00:16:35.000 is so cheap, I mean there are very very few 350 00:16:35.039 --> 00:16:39.519 countries on this planet who can benefit from gast. Okay, 351 00:16:39.559 --> 00:16:43.000 you've got the Gulf States, Russia, whatever that is, but 352 00:16:43.039 --> 00:16:46.440 that's pretty much it. When you start importing the liquefying 353 00:16:46.559 --> 00:16:48.639 and moving and importing, you end up with guests with 354 00:16:48.960 --> 00:16:53.039 five times more expensive So outside the US, gas is 355 00:16:53.039 --> 00:16:58.279 an expensive, important form of energy. And I hear the 356 00:16:58.360 --> 00:17:02.440 energy guys, but they don't realize that they are importers 357 00:17:02.559 --> 00:17:05.160 on the other side who really wish they would not 358 00:17:05.240 --> 00:17:08.319 have to import, which means the push for clean energy 359 00:17:08.559 --> 00:17:11.000 is not for the environment. Okay, it's for the environment, 360 00:17:11.000 --> 00:17:13.920 but it's also a security of supply play that you 361 00:17:13.960 --> 00:17:16.000 don't have to do in the US because you are 362 00:17:16.640 --> 00:17:19.799 blessed by God and swimming in a cornucopia of energy 363 00:17:19.920 --> 00:17:23.759 coming from all over the place means that whatever success 364 00:17:23.839 --> 00:17:25.799 of vision you have in the US is very difficult 365 00:17:25.799 --> 00:17:26.880 to replicate elsewhere. 366 00:17:27.039 --> 00:17:29.079 I think that is such a good point and one 367 00:17:29.119 --> 00:17:31.680 that's tremendously under appreciated. Is like the US, as you mentioned, 368 00:17:31.960 --> 00:17:35.319 that blests with this plentiful amount of natural gas. It's 369 00:17:35.359 --> 00:17:37.720 extremely cheap, and we have the infrastructure and the ability 370 00:17:37.720 --> 00:17:39.759 to produce it at a very low rate, which isn't 371 00:17:39.799 --> 00:17:42.079 the same across countries. To actually have a question for you, 372 00:17:42.079 --> 00:17:44.160 because this is something that's been really I've been percolating 373 00:17:44.200 --> 00:17:46.119 in my mind. Where again, as you mentioned, is due 374 00:17:46.160 --> 00:17:48.880 to the kind of the economic considerations, natural gas will 375 00:17:48.880 --> 00:17:52.400 probably serve a disproportionate amount of the incremental load growth 376 00:17:52.400 --> 00:17:55.839 in the United States given our abundant natural resources and infrastructure, 377 00:17:55.920 --> 00:17:57.920 but that's not the same in different countries. But one 378 00:17:57.960 --> 00:18:00.240 of the points that have been made to me is, 379 00:18:00.279 --> 00:18:02.960 for the first time in a really long time, utilities 380 00:18:03.000 --> 00:18:06.680 have buyers that are willing to pay premiums or access 381 00:18:07.079 --> 00:18:09.519 rents in the system that they're willing to actually pay 382 00:18:09.559 --> 00:18:11.319 up for, and so utilities can be a little bit 383 00:18:11.319 --> 00:18:13.839 more experimental in terms of how they serve this load 384 00:18:13.839 --> 00:18:16.480 growth versus traditionally. You know, you're trying to operate, execute 385 00:18:16.519 --> 00:18:18.839 on the cheapest possible route to execute against your regulated 386 00:18:18.839 --> 00:18:21.599 way to return. And so have you seen utilities in 387 00:18:22.279 --> 00:18:25.240 Europe or elsewhere be a little bit more experimental about 388 00:18:25.279 --> 00:18:28.640 how they serve their commensurate load growth because it's happening globally, right, 389 00:18:28.640 --> 00:18:30.880 it's not just a US story. Be curious as that 390 00:18:30.920 --> 00:18:32.200 if you're seeing a little bit more of that, because 391 00:18:32.200 --> 00:18:33.599 in the US you might default a little bit more 392 00:18:33.599 --> 00:18:36.319 in natural gas, but elsewhere it might be fuel cells 393 00:18:36.400 --> 00:18:38.519 or batteries or things like that. So what do you 394 00:18:38.559 --> 00:18:39.720 two think about that topic. 395 00:18:40.319 --> 00:18:44.319 The European situation is very, very difficult, and it's also 396 00:18:44.440 --> 00:18:48.480 very different than the US. So what we've got is 397 00:18:48.680 --> 00:18:50.680 we don't have the same level of demand growth for 398 00:18:50.720 --> 00:18:54.240 a start, and we have significant demand of renewables that 399 00:18:54.319 --> 00:18:56.880 have command to the markers and are continue to come 400 00:18:56.880 --> 00:18:59.079 on to market and they are disrupting the markets. So 401 00:18:59.119 --> 00:19:01.799