How to Make Money From the Booming Demand for Energy

SPEAKER_2 (0:02)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:23)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, I saw an interesting headline this morning.

Tracy Alloway (0:27)

Just one.

Joe Weisenthal (0:27)

Ha, good point. I saw a million interesting headlines, but one that sort of caught my eye and it was sort of market moving is that there was this comment from Jensen Wong. He was at a conference, the CES Conference, and he was talking about how in the future, I guess their chips are getting more efficient as chips tend to do, that they may not need as much intense cooling infrastructure or cooling equipment for future data centers. A bunch of those cooling names like train technology, they're really getting clobbered because we know those have been some of the big winners from the AI boom.

Tracy Alloway (0:59)

I can hear all the private equity shops that bought HVAC outfits screaming from over here. No, it is a really interesting headline, right? Because you think about this as a technology space. AI is technology, but it has this huge infrastructure aspect, attached to it. Infrastructure investors, from what I understand, historically have tended to like relatively stable returns, right? You invest in it because you expect this to be a pretty reliable business. But because you have infrastructure that is now tied to tech, it seems like there's a pretty big risk that every year, every two years, or maybe even months now, there's going to be some huge tech upgrade that just changes the equation entirely.

Joe Weisenthal (1:41)

That's a good point. I think the first time years and years ago, I started hearing about infrastructure investing. It was like, we bought a toll road, or we bought an airport. And airports, by and large, they don't get disrupted very much, or a toll road. The basic business of some of these things has remained stable. But yeah, to your point, especially now that there's such a link with tech, there's just the volatility of what's going to win out, or what's needed seems highly uncertain.

Tracy Alloway (2:08)

Yeah. Of course, the other obvious thing going on at the moment is everyone's talking about AI valuations, is the build out getting ahead of itself, and are all these companies actually going to be able to generate enough cash flow that backs up all this investment spend?

Joe Weisenthal (2:22)

The other thing too, and it's something that we've observed, which is if you go back to infrastructure investing, it's not a new thing by any stretch, but you go back to the 2010s, and so much of the money that was made then is financial engineering, financial opportunities, who had dry powder at a time when everyone is broke and so forth. And one of the themes that's recurring over and over again these days is just like, to make money, it feels like you really have to get your hands dirty, physical things of all sorts. And physical things have just been in our face constantly since COVID and then it's accelerated because of there's so much public money pouring into the space. So governments around the world really opening up the tabs. But then over the weekend, we're recording this January 6th, by the way, obviously the Maduro News. And so then there's all of the stuff. It's like, oh, who's going to rebuild all of that oil infrastructure if that oil is ever going to profitably be tabbed? Like this is just sort of the physical world is sort of like the story of our time.

Tracy Alloway (3:23)

Are people talking about public private partnerships yet? I feel like this is another cyclical thing that just pops up every once in a while. I'm going to do, let's bring in our guest. While we do that, I'm going to do a news trend search to see where we are in the public private partnership cycle.

Joe Weisenthal (3:37)

Yes, let's bring in our guest. Well, we really do have the perfect guest, lots of experience in this room. We are going to be speaking with Tyler Rosenlicht. He's a portfolio manager, Global Listed Infrastructure and Natural Resource Equities at Cohen & Steers. So we're going to talk about all this stuff. Tyler, thank you so much for coming on Odd Lots.

Tyler Rosenlicht (3:54)

Thanks for having me. I'm real excited.

Joe Weisenthal (3:55)

What's your job? What do you do? Why are we talking to you? What's Cohen & Steers? Let's get that out of the way.

Tyler Rosenlicht (4:00)

Yeah, so Cohen & Steers were a long only asset manager. We primarily invest in real assets and alternative income strategies. So we're managing mutual funds and ETFs, active ETFs and separate accounts for institutional investors, focused on a couple of niche things, primarily real assets strategies here and now. So that's things like listed REITs, which we're really well known for, commodities. And then where I help is our Global Listed Infrastructure and our Natural Resource Equity strategies. So these are long only strategies, investing across an infrastructure. It's what we call the Qt subsectors. So that's communications, things like cell towers, data centers and satellites, utilities. So this is electric, gas, water, renewables, transportation, the toll roads that you talked about, toll roads, airports, marine ports and freight rails. And then E, energy, it's midstream pipelines and so forth. So we try to look at everything and give investors exposure to what is really a dynamic and exciting place.