Invest Like The Best
Episode 266 Investing in the Industrial Economy
Invest Like The Best

Episode 266: Investing in the Industrial Economy

Invest Like The Best

Episode 266

Investing in the Industrial Economy

Eric Mandelblatt is the founder and CIO of Soroban Capital. We cover how the global push towards decarbonization could have massive impacts on the industrial economy, the supply and demand forces at work in commodities production, and why energy and materials represent such a small share of the market today.

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[00:03:01] - [First question] - Soroban’s history and why Eric is qualified to discuss industrial and commodity sectors
[00:04:37] - Overview of what their portfolio looks like today
[00:05:49] - How much of the commodity exposed equity sectors are owned by hedge funds
[00:08:03] - The key history points that makes industrials more interesting today
[00:11:17] - Commodity cycles, what drives them, the role CAPEX plays and how this world works
[00:17:38] - Thoughts on natural demand and the societal push towards decarbonization
[00:22:32] - How deeply one needs to know commodities in order to hold them
[00:23:57] - Big categories to explore as decarbonization becomes more accessible to consumers and the lack of nuclear investing
[00:28:50] - The resurgence of industrial production in the US
[00:32:21] - Rail networks writ large and if we can expect new ones in the future
[00:36:17] - The market gap between rail and technology businesses
[00:41:38] - Commodities and the ways they differ from railroads 
[00:43:47] - Comparing the differences between businesses within the commodity industry
[00:46:52] - Walkthrough of Alcoa’s business and how things like a carbon tax might affect an individual business
[00:52:55] - What is the portfolio manifestation of the fact it's impossible to forecast commodities historically
[00:56:08] - His view of the world in its current state and big things that matter
[01:00:25] - Thoughts on inflation as an investor in the commodity space
[01:01:42] - Utopian to dystopian takes on what growth looks like for the world
[01:04:28] - Juxtaposed positions in big tech against the industrial story
[01:08:45] - The kindest thing someone has ever done for him

Investing in the Industrial Economy

Introduction

Patrick
My guest today is Eric Mandelblatt, founder and CIO of Soroban Capital, a $10 billion investment firm. While many of my conversations focus on technology and emerging industries, Eric has deep roots investing in the industrial economy, which made this conversation a fun change of pace. We discussed why energy and materials represent such a small share of the market today, how the global push towards decarbonization could have massive impacts on the industrial economy moving forward, and how Eric evaluates this dynamic opportunity set. Please enjoy this deep dive discussion with Eric Mandelblatt.

Quick editor's note before the episode. This conversation was recorded on February 15th, before last week's invasion of Ukraine.

Eric's Background and Soroban's Portfolio

Patrick
Eric, since this conversation's going to be in incredible depth about industrials specifically, and a huge set of themes that you and the firm have been working on for a long time, I think it is really appropriate to set the stage a little bit. Normally I'd handle background information and the introductions. I'm the kind of person that skips the childhood in section of biographies. But in this particular case, it's a big and fairly new topic for us. So, I think the background of where you're coming from is really important. So, maybe you can give us the thumbnail sketch of Soroban's history and why you are the right person to be talking to about this big theme.

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