Don't forget opportunities in the real physical world of commodities, agriculture and building products, far from today's over-hyped story stocks
Transcript
| Chris Davis: | Industrial is sort of a strange category. It's a bit of a catch-all. But you know, in these days, when everybody's all excited about AI, I think about a billboard that I saw down in Texas where it said, hey, ChatGPT, finish this building. Oh, wait, right? Because, of course, the nature of AI and disruption and all of the hype that's on people's minds, we forget that we live in and from stuff. stuff needs to be made. So industrials is an interesting sector, and as value investors, the opportunity we find is because industrial earnings often have some volatility that is related to economic sensitivity. And as a result of that volatility, often investors sort of discard them or will only put very low valuations on them because they don't like that the company isn't predictable in 12-week cycles. But what we're interested in is not 12 weeks, but 12 years. So what we focus on is what we call not linear growth, right? | |
| It could be growth that is durable rather than linear. And so we're thinking about where a company can be over time rather than the fact that it might have a down year or two between here and there. And so that's sort of a characteristic of how we think about the sector. And then within the sector, I'm gonna let Danton talk about some of the opportunities that we see within specific companies in this very broad sector. So, Danton. | ||
| Danton Goei: | And we like the industrial sector because it is a very broad sector where there's a lot of overlooked companies. They're not usually the sexiest companies out there or the names that are in the media at the time, but they can be great compounding machines over time. | |
| And so when we look at the portfolio, So we own mining companies with tech resources, which is a large copper producer. We own agricultural companies. There we own Tyson Foods and AGCO, which is a farm equipment company. We also own building products companies in Owens Corning. And so these are a very diverse set of companies, but they're all very strong businesses in their sub-sectors and niches and with great long-term outlooks. |
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