Abhay Deshpande presented his in-depth investment thesis on Air Liquide (Paris: AI) at Best Ideas 2017.
Air Liquide is a blue-chip French industrial company whose shares have recently languished due to weakness in certain end markets and concerns about global economic growth more broadly. Despite the near-term headwinds, the long-term growth outlook for the company continues to be attractive, especially in end markets like healthcare and refining. In addition, the company should continue to benefit from a long-term trend toward outsourced gas production, which is still at a relatively early stage in developing market countries. Air Liquide’s competitive position also remains intact, supported by high customer switching costs and the significant cost advantage the company enjoys due to the density of its network. This already-strong competitive position should be further bolstered by the Airgas acquisition, as the deal means that Air Liquide will be a fully vertically integrated player in the U.S. for the first time since World War II. Abhay believes the market is giving too little credit for the durability of Air Liquide’s franchise and the shares trade at a meaningful discount to Abhay’s estimate of intrinsic value.
About the instructor:
Abhay Deshpande founded Centerstone Investors and serves as the Chief Investment Officer. He has more than 25 years of experience researching and investing in businesses globally. Prior to establishing Centerstone, Mr. Deshpande was a Portfolio Manager at First Eagle Investment Management, advisor to the Global and Overseas strategies that comprised the vast majority of the firm’s approximately $100 billion in assets under management. During his 15-year tenure, his responsibilities included hiring and training analysts along with leading the research team during times of market turbulence. He spearheaded the research efforts during both the 2001 technology and 2008 credit crises, and in both cases his direct efforts helped clients minimize losses, and ultimately thrive, during his career at First Eagle. Previously, Mr. Deshpande was a Research Analyst with Harris Associates, advisor to Oakmark International Fund and other International and Global products. He also was an Analyst for Morningstar responsible for following a variety of International mutual funds. He began his career at a boutique investment advisor in Louisville, KY. Mr. Deshpande holds a BS in Finance from the University of Louisville. He is a CFA Charterholder and a member of the New York Society of Security Analysts.
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