‘Ordinary’ but exceptional: firms leading the US’s infrastructure renaissance

Short Briefings on Long Term Thinking - Baillie Gifford

The US’s transformational upgrade of its drainage, power and road networks is a long-term investment opportunity hiding in plain sight. In this podcast, Michael Taylor reveals some of the outstanding companies involved and makes the case that the markets have yet to fully appreciate the advantages working in their favour.

Background:

Michael Taylor is an investment manager in Baillie Gifford’s US Alpha strategy. In this Disruption Week briefing, he explains why years of neglect coupled with the destructive consequences of wild weather and our insatiable appetite for data-processing power have led the US to embark on a massive renewal of its physical infrastructure.

Taylor suggests that many of the companies creating long-term value benefit from supply advantages, which help them defend their commoditised products’ prices. These range from ownership of gravel quarries, which are difficult to get planning permission for, to the use of a gigantic, portable plastic drain-making machine.

In addition, Taylor discusses what a second Trump presidency might mean for the sector and why finding standout companies involves travelling off the beaten track.

Resources:

Disruption Week

Building back: the great US infrastructure opportunity

Spotting the winners from the great US infrastructure renaissance

Companies mentioned include:

Advanced Drainage Systems

Eaton

Comfort Systems USA

Martin Marietta

NVIDIA

Stella-Jones

Timecodes:

00:00 Introduction

1:35 Exceptional businesses confronting an exceptional problem

3:20 The US v global infrastructure opportunity

4:35 Donald Trump’s second presidency

6:40 The benefits of patience

7:35 Wild weather

8:45 Investing in Advanced Drainage Systems

11:05 Labour shortages

12:15 Stella-Jones’s wooden telegraph poles

14:05 Tree-spotter specialists

16:15 Martin Marietta’s supply-side advantage

18:55 Recycled aggregates’ limitations

20:15 Finding US infrastructure investments

21:45 Comfort Systems USA and keeping datacentres cool

24:20 “Massive in terms of magnitude of spend and duration”