We have an audio only post due to some travel this week. One of the best parts of not being a covering equity analyst anymore is not having to process the deluge that is quarterly earnings season. But we have kept the discipline of reading transcripts for a wide swath of companies. As always, we want to provide our longer-term perspectives on the sectors and corporate strategy. Here are six areas where we would most push against what we think are consensus narratives.
1) Resist pro cyclical capital return narratives, especially in deeply cyclical sectors like we know exists in refining.
2) Differentiate companies that might be in need of restructuring, typically exemplified by having sub-scale businesses that are earning sub-par returns on capital, versus believing every non-pure play needs to become one.
3) The Strait of Hormuz may never return to pre-war “normal.”
4) What are the growth opportunities companies should be leaning into?
5) Power sector growth is economic growth. Economic growth is geopolitical security.
6) We are concerned about energy policy risk in the United States.
There is no more important sector in the world than those involved in energy and power. It’s a hedge to Tech. It’s an enabler of tech growth. It’s a geopolitical hedge. It’s about as exciting a time as we have experienced in our 34-year career. Even now, reading upwards of 80-90 earnings season transcripts is borderline fun.