Biggest Winners In The New Energy Paradigm

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In the latest episode of the Acquirers Podcast, Vincent Daniel, Porter Collins, and Tobias Carlisle discuss Biggest Winners In The New Energy Paradigm. Here’s an excerpt from the episode:

Tobias: If we’re going to be spending a lot on EVs and batteries over the next decades, isn’t that a good thesis for owning Tesla?

Vincent: Mm, good question. Good question. Perhaps, although I would argue that a good portion of the valuation in Tesla is already there. So, it’s ahead of the curve. I would argue, even though I’m not necessarily a huge believer in solar and wind as a predominant energy source in the next absent technology in the next 10, 20 years, the valuations are there for a lot of these names as well. It’s actually picking through the Inflation Reduction Act and finding, “Okay, what is going to win and no one’s really giving it the value or the credence of the value for it?”

Very good question. Based upon what you said, the question is should we really even be short Tesla? But I would say a bigger question is who are the winners that people are just not really ascribing the value towards the winners in this new energy paradigm where we’re trying to go. One of the biggest ones we come up with is nuclear and uranium.

Porter: I’m going to go off tangent here. Vin and I both bought your book last year.

Vincent: We did.

Tobias: Which one?

Porter: The Acquirer’s Multiple.

Tobias: The Acquirer’s Multiple?

Vincent: Yep.

Porter: We said, “Hey, we’ll see if it works.” And so, we have on our screen. And so, I’m pulling up The Acquirer’s Multiple screen that we’ve done.

Vincent: You’re not going to find Tesla on that screen.

Porter: Not going to find Tesla on that one.

Tobias: [laughs]

Vincent: I’ll tell you that.

Porter: But the two biggest market caps, it’s loading here, I believe are both GM and Ford.

Tobias: There might be still [unintelligible 00:27:28] in there too– [crosstalk]

Porter: Number one is GM, number two is Ford, number three is Valero, four the Diamond– I’m doing the biggest market caps. Diamondback energy and we get to the homebuilders. Dr. Horton, Winnaar. CF Industries and Mosaic, those are both fertilizer companies, Sun Communities, a builder. [crosstalk]

Vincent: To be fair, this is US based. We did not do a global screening.

Porter: No.

Vincent: But a global screening should be done. So, yes.

Porter: There’s a reason that Ford and GM are on The Acquirer’s Multiple. They’re cyclical businesses. The car business is hard.

Tobias: Yeah.

Porter: Historically, they’ve been bad businesses, right?

Tobias: Yeah.

Porter: Look, what happened to the GM during the recession? All of them, they had to be bailed out. And so, I think that Tesla is going to prove to be much more cyclical than people expect. It’s only lived during a boom expansion and mania over electric cars. And so, let’s see how it acts in a normal business cycle.

Tobias: To be fair though, does it seem to have been expanding its margins pretty impressively?

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