Intelligent Cloning: The Spring 2019 Edition

April 24, 2019 in Commentary, Equities, Idea Generation, Letters, Quantitative

This article is authored by Peter Coenen, a value investor based in the Netherlands.

There is a reason why there is a select group of exceptional investment professionals. These people work harder and smarter than everyone else. They dig deeper than everyone else and have a more holistic approach towards investing. They have better emotional control and behave differently. They have superior individual networks and better access to industry veterans and CEO’s that helps them to gain better and differentiated insights. And often, these investors study companies for many, many years before making the final decision. There are those amongst us, who call all this “accumulated experience”.

If you think you can beat these great investment teams, I tip my hat to you. For the most of us, just following what they do is a very compelling alternative. The idea is to ride the coattails of their expertise – without having to pay for it. Not many people do so, but it’s interesting. And certainly not easy. It’s called “cloning”.

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Investing Titans on When to Sell

April 22, 2019 in Commentary, Featured, Portfolio Management, Process

Few numbers matter more to investors than the intrinsic value of the business, the price you pay for it, and the price you sell it for. A significant portion of time in the asset allocation process is devoted to those first two–figuring out what the business is worth, and how much to pay for it. But what about the last number? When, if ever, is the optimal time to sell the stock of a business?

The following conversations and quotes will explore this question thoroughly. Navigating the decisions involved with selling is challenging psychologically and emotionally. Luckily, we’ve picked the brains of some of the very best. Here’s what they have to say.

Philip Fisher’s Three Reasons to Sell

Philip A. Fisher is a notable name in the investing community. He founded Fisher & Co. investments in 1931 and later wrote the 1958 classic, Common Stocks and Uncommon Profits pioneering his 15-step stock selection process. The entirety of his money managing career spanned 70 years, and he was among the first advocates for seeking out high-quality, growth stocks. Even Warren Buffett took some pages out of Fisher’s playbook: “I’m 15% Fisher and 85% Benjamin Graham,” said Buffet. And when it came to the subject of selling, Fisher had three very clear rules.

“I believe there are three reasons, and three reasons only, for the sale of any common stock which has been originally selected according to the investment principles already discussed. The first of these reasons should be obvious to anyone. This is when a mistake has been made in the original purchase and it becomes increasingly clear that the factual background of the particular company is, by a significant margin, less favorable than originally believed. The proper handling of this type of situation is largely a matter of emotional self-control. To some degree it also depends upon the investor’s ability to be honest with himself.”

Obviously, if you realize that you’ve overlooked some critical component when you initially assessed the business, there’s no shame in selling your position. Mistakes happen in every profession, no matter how careful you are. To mitigate mistakes, top investors regularly implement checklists.

Mohnish Pabrai, even goes so far as to not talk about his current holdings publicly, because he knows he’ll feel biased to stand behind his statements. By keeping his positions private, there is no psychological commitment to the company, and he can feel free to correct any mistakes he makes at any time.

Philip’s second rule, reflects the effects of the passage of time. Circumstances can always change, and when a company no longer would fit your original criteria for an attractive position, it could easily indicate that it’s time to sell.

“Sales should always be made of the stock of a company, which, because of changes resulting from the passage of time, no longer qualifies in regard to the fifteen points outlined in Chapter Three to about the same degree it qualified at the time of purchase. This is why investors should be constantly on their guard. It explains why it is of such importance to keep at all times in close contact with the affairs of companies whose shares are held .”

No matter how long-term your thinking when you initially buy a company, an investment position isn’t a set-it-and-forget-it deal. You’ve got to periodically and consistently go back and evaluate if your initial thought-process still makes sense. Value investors don’t “trade”, but they do adapt. Which, brings us to Philip’s final rule for selling. Sometimes, there’s just a more attractive opportunity.

“If the evidence is clear-cut and the investor feels quite sure of his ground, it will, even after paying capital gains taxes, probably pay him handsomely to switch into the situation with seemingly better prospects. The company that can show an average annual increase of 12 per cent for a long period of years should be a source of considerable financial satisfaction to its owners. However, the difference between these results and those that could occur from a company showing a 20 per cent average annual gain would be well worth the additional trouble and capital gains taxes that might be involved.”

While rare, compelling opportunities can occur suddenly and for small windows of time. So switching a position with dwindling prospects for another position with much higher long-term potential could easily pay off. Again, the idea isn’t to be jumping from one stock to the next like a frog leaping from a sinking lillypad. Rather, it’s to remain flexible in your thinking, and allow for new opportunities to bloom out of the old.

François Rochon on the Four Reasons to Sell a Stock

François Rochon, is a Canadian-based Value Investor and the Portfolio Manager of Giverny Capital. We’ve featured François’ creative thoughts before in our post about What to Look for in a CEO. If you want a quick overview of François’ thought process and a taste for Giverny Capital’s investment philosophy, read this statement from his website:

“I often compare the craft of a money manager with that of a gardener: To have a great garden takes decades, not a few months. To successfully grow great trees and flowers, you have to understand your environment and capabilities (you can’t grow the same flowers in Quebec than in Florida). You have to know the soil, the temperatures, the orientation of the sun, etc. And to build a garden is a dynamic process: you have to continually take great care of your plants.”

It’s obvious François takes his craft very seriously. With a personal passion for art collection, he infuses this artistic flare into his investing style. So, what does he have to say about selling?

Well, we don’t like to sell. We’re not being sellers in general. We’ll sell for, we have four reasons that we’ll sell a stock. The first reason is that we believe the fundamental is not as good as when we purchased it and that’s the life of investment. I mean, things change and sometimes they don’t change for the best and when you realize that the best thing is to sell and buy something else.

Like Fisher, François doesn’t like flipping and flopping his positions. And similarly, if the fundamentals of the business change over time, François is willing to cut it from his portfolio. But one idea that François introduces which isn’t on Fisher’s list, takes management into consideration. Great investors like to say they think of themselves as business owners. So, when the investors don’t agree or get along with the management of a company, it can be a source of conflict another signal to sell.

The second reason which happened sometime is that we don’t agree with a management decision, usually it’s a big acquisition, not all the time. But most of the times we sold a stock for that reason because they made a big acquisition that we thought was made at a very high price or we thought that was not very central to their business. I mean, Peter Lynch has this word, diworsification, the reason that so many times, so when one of our company does that then we don’t agree with the management, the assessment of the acquisition we won’t fight with them. We just sell our investment.

Buffett can’t stress enough the importance of working with great management. If you’re intending to hold onto your shares for the long run, it probably makes sense to be on the same page with your managers.

The third reason, it’s been awhile since it happened, it’s when we think the stock is overvalued. I mean, if Visa would go to thirty or 35 times at one point, you have to say it’s too high. So, we do sell when we think that the stock is overvalued. Usually, when I think that the price is at a level that I won’t be able to earn 10% a year in the next five years, usually we’ll sell.

When the increase in the market price of the business far outpaces the increase in the intrinsic business value, François suggests that it might be time to sell. To be very clear, he’s not recommending you sell your winners. What François is getting at is the inverse of value: overvalue. In the same way the market undervalues companies, the market most certainly overpays for businesses, and it’s at these attractive prices that a value-seeking investor could be tempted to trim a position.

And fourth reason which probably is the most common is when we just find something else that we like better, so we’ll sell A to buy B not because A has some kind of big problem, it’s just that we like B a little better or a lot better, depending.

François’ last reasons is also a nod to Fisher. Sometimes, there’s just a better looking fish. Nothing personal to the original selection, but part of managing money is factoring in opportunity costs. A dollar allocated in one company could be more efficiently used elsewhere, and it’s the responsibility of a money manager to make and act on these differences.

Paul Lountzis on the Decision to Sell

To wrap up this post on the optimal time to sell a business, we’ll listen to one more outstanding value investor from our community. Paul Lountzis is the founder and portfolio manager of Lountzis Asset Management. One of the unique points that Paul makes, is that it can feel easier or harder to sell your position depending on macro-economic cycles. For example, in a bear market it feels like everybody else is selling, so it doesn’t seem as contrarian. But when everyone around you is buying, it takes guts to sell.

“Selling, when things are really going well like now, is much more difficult, but we’re not averse to selling when we are convicted and even if it continues to rise, if that valuation didn’t make sense to us, we’ll still sell it. You’re never able, really, to get it at the final point, but when the numbers don’t make sense to us, we’re eager sellers.”

In summary, no matter how optimistic things look, Paul Lountzis falls back on quantitative logic. If things don’t look or feel right, there’s probably a reason for it. At the end of the day, the books must balance. So when all else fails, go back to the fundamentals, and use them as your guide.

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Thoughts on Our Investment in Alphabet

April 22, 2019 in Equities, Ideas, Large Cap, Letters, North America, Technology, Transcripts, Wide Moat

This article is excerpted from a client call transcript featuring MOI Global instructor Sean Stannard-Stockton, president and chief investment officer of Ensemble Capital.

I’m going to talk about our investment in Alphabet, the holding company that controls Google. While the company has moved into a lot of areas outside of just search advertisements, 20 years after its founding the core of the Google profit machine is still its ad business. As Larry Ellison first put it all the way back in 2006, Google is “a one-trick pony, but it’s a hell of a trick.” What’s amazing is how steady the growth of Google’s ad business has been even in the face of massive changes to the internet, most importantly the shift to mobile computing. We believe the key metric for investors to track Google’s ad business is to look at the rate of growth of currency neutral ad revenue net of traffic acquisition costs. This is basically the amount of money Google collects from all of their ad products after subtracting the amount they pay to acquire traffic on their sites. For instance, when you search for something on your iPhone the results you get are Google results. This is because Google pays Apple to make them the default search engine on Apple’s iPhones. Amazingly, since 2016, the company has reported average growth in this key metric of 20% with every quarterly report showing growth of between 17% and 23%. In fact, over half of all quarterly reports have seen this metric increase by within 1% above or below the 20% average.

High growth companies aren’t supposed to exhibit this sort of stability. But think about what drives growth for Google. The most important demand driver is the time people spend online. While many tech companies offer discretionary products that see variable demand and can see abrupt declines when the economy weakens, we would posit that time spent online is more of a consumer staple type behavior. In good times and bad, people around the world are turning to Google products to answer their questions. The persistent nature of this high level of growth is remarkable and has been instrumental in driving up the intrinsic value of Alphabet.

That growth is partly being driven by YouTube. With over 5 billion YouTube videos viewed every day and growing, the ad opportunity is huge. Depending on your own use of YouTube, you may not fully appreciate the power of this platform. While famous for viral cat videos and the like, YouTube is effectively the default global video platform for non-TV type content. With more and more time spent online consuming video, YouTube is in the pole position to benefit. While paid subscription products like Netflix may be a better business model for curated quality content such as TV and movies, the ad-supported YouTube format is far superior for short form, non-narrative content.

Interestingly Google does not break out the standalone financials of YouTube, leaving the investment community to guess at how profitable it currently is. Many investors believe that YouTube is currently less profitable than Google overall and yet as they grow, they will become more profitable, leading to longer, faster profit growth than might be apparent at first glance. While we are somewhat ambivalent about the validity of this thesis, primarily because we think YouTube fueled profit growth is needed to offset other parts of Google’s business slowing and so is not strictly additive to corporate growth, we do think that the breaking out of YouTube’s financials is going to occur before too long and it may have a dramatic positive impact to investors understanding of Google’s long-term prospects.

YouTube isn’t the only part of Alphabet that may have more value than generally appreciated. When they formed Alphabet, they created two subsegments, Google and what they refer to as Other Bets. The Other Bets group contains what Google historically called Moonshots, such as Waymo, their self-driving car business, Fiber and Loon, their internet access businesses and Verily, their health sciences business. Today, the Other Bets segment is losing approximately $4 billion a year. But when I say “losing” I mean they are burning this amount of cash as they seek to build profitable businesses. Today, the existence of Other Bets inside of Alphabet reduces the company’s reported earnings by about 10%.

So, Alphabet could boost current earnings by 10% by simply shutting down Other Bets. Of course, that would be a mistake. Any reasonable investor knows that Waymo in particular, but the other parts of Other Bets as well, have significant value. So, in thinking about the value of Alphabet, you need to remove the currently money losing Other Bets segment, value Google as a standalone business without the Other Bets losses and then add to that whatever you think the value of Other Bets is.

Of course, the value of Other Bets is highly uncertain. We’ve seen some investors talk about the value of Alphabet in relation to a PE multiple it should trade at. But given the negative earnings of Other Bets, this methodology implicitly values Other Bets as a liability. Believe me, there is a wide range of venture capitalists who would happily take ownership of Other Bets and so it is clearly not a liability. We’re also seen some analysts attribute as much as a $100 billion of value to Waymo alone. While Waymo is very valuable, in our view, on a probabilistic basis, $100 billion is way too high of an estimate. It could be worth that much, but it could be worth much less. In fact, Waymo could even end up failing without ever earning a dollar of profit.

We estimate that after removing Other Bets’ losses and removing the excess cash that Google has on its balance sheet (not all of its cash, just that amount we believe is not required to run the company), Alphabet is trading at around 20x what we expect them to earn in 2019. Given the company’s growth rate and its strong returns on invested capital, we think the stock will perform well from these levels.

That being said, we do have two concerns about the company’s management. In general, we evaluate corporate management primarily on their ability to create value and their abilities in allocating excess cash flow. On the first question, Google excels. It is amazing that they have become one of the most valuable companies the world has ever seen just 20 years after they were founded. As I mentioned earlier, their services have become a required part of modern life, almost a form of oxygen for internet connected populations.

But in allocating their excess capital we have been less enthusiastic. While Google has been criticized in the past for the M&A they engage in, YouTube and DoubleClick are two hugely successful acquisitions with YouTube ranking as one of the smartest acquisitions in the internet age. But Google has now built such a war chest of cash that they clearly have more than they will ever need, and we think shareholders would be better served if the company began to pay a dividend, bought back stock and used more debt in their capital structure to finance more return of capital. We had hoped that Ruth Porat, the CFO they brought in from Morgan Stanley, would be instrumental in improving capital allocation. But after some initial positive signs, it seems that for whatever reason, Porat is no longer focused on making this happen.

The other management issue we’re tracking is the company’s relations with their employee base. For pretty much all of their history Google has been considered one of the very best places to work. They have pioneered much of what we think of as modern Silicon Valley corporate culture with an employee base that has been raving fans of the company. But last year, employee concerns around the company’s work with the military and issues of gender equality and sexual harassment became flashpoints between management and employees. Of particular note to us was the various reports on the company paying large severance packages to key senior employees who were forced out after accusations of sexual harassment.

In our view, Google management’s handling of these cases has not been good. We believe for the short-term health of their corporate culture and their long-term ability to attract the best and brightest employees, they must do better. By “do better” we mean behave in a way that satisfies their employee base and preserves the belief that Google is one of the best places to work for the smartest, most technically savvy people in the world. To the extent that the company is not able to manage employee relations constructively, our confidence in the long term success of the business would deteriorate and should we decide to exit our position, something we are not currently contemplating, it would be due to our assessment of the long-term health of the business, which is very much a function of the company maintaining a positive corporate culture.

Read the full transcript.

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Clients, employees, and/or principals of Ensemble Capital own shares of Alphabet, Inc (GOOGL). The information contained in this post represents Ensemble Capital Management’s general opinions and should not be construed as personalized or individualized investment, financial, tax, legal, or other advice. No advisor/client relationship is created by your access of this site. Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. If a security discussed in this blog entry is owned by an employee, principal and/or client of Ensemble Capital you will find a disclosure regarding the security held above. Should an employee, principal and/or client of Ensemble Capital subsequently purchase or sell any position in a security discussed in this blog entry, we will not update the above disclosure nor revise any archived blog entry after the date it is originally posted. If reviewing this blog entry after its original post date, please refer to our current 13F filing or contact us for a current or past copy of such filing. Each quarter we file a 13F report of holdings, which discloses all of our reportable client holdings. Ensemble Capital is a discretionary investment manager and does not make “recommendations” of securities. Nothing contained within this post (including any content we link to or other 3rd party content) constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instrument.

Sandstorm Gold: FCF Enables Investments and Buybacks

April 22, 2019 in Equities, Ideas, Letters

This post is excerpted from a letter by MOI Global instructor Jim Roumell, partner and portfolio manager of Roumell Asset Management, based in Chevy Chase, Maryland.

Sandstorm Gold reported very strong fourth quarter results. SAND sold 14,182 gold equivalent ounces in the fourth quarter, an increase of 18% from the prior year. Revenue for the quarter came in at $17.5 million, an increase of 14% from the prior year. Cash flows from operating activities (excluding non-cash working capital) for the quarter came in at $10.9 million, an increase of 14% from the prior year. Of the gold equivalent ounces sold by SAND during the fourth quarter of 2018, approximately 32% were attributable to mines located in Canada, 25% from the rest of North America and 43% from South America and other countries.

In addition to the very strong fourth quarter, SAND delivered record full year 2018 gold equivalent ounces sold and revenue. For 2018, SAND’s average cash cost per gold equivalent ounce was only $278 per ounce. This resulted in impressive cash operating margins of $991 per ounce. The combination of the increased sales and strong operating margins resulted in full year operating cash flow of $48.1 million, an increase of 9.3% from 2017.

SAND’s strong cash flow generation has provided ample liquidity to make investments and repurchase shares when the company deems the stock to be undervalued. During the fourth quarter, SAND’s Board of Directors approved the purchase of up to 18.3 million of its common shares by the end of 2019, subject to Toronto Stock Exchange approval. This 18.3 million share repurchase approximates 10% of the total shares outstanding.

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The specific securities identified and described do not represent all of the securities purchased, sold, or recommended and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Errores de Inversión: OHL

April 22, 2019 in Miscelánea, MOI Global en Español

NOTA DEL EDITOR: El siguiente texto escrito por Javier Ruiz, CFA,  es un extracto de una carta trimestral de Horos Asset Management.

* * *

En el mundo de los negocios, las malas noticias suelen aflorar en serie: si te encuentras con una cucaracha en tu cocina, según pasen los días, conocerás a sus familiares.
— Warren Buffett

El segundo error de inversión que vamos a comentar es aún más doloroso por la manera en que se ha producido y, especialmente, por su impacto en la rentabilidad de nuestros fondos. Se trata de OHL [BME: OHL], inversión por la que hemos apostado a lo largo del último año y cuyo deterioro, adelantado en la última carta trimestral, nos ha llevado a su liquidación.

En su inicio, se trataba de una inversión tan fácil y tan clara que, como se terminó demostrando, era demasiado buena para ser verdad. La venta de OHL Concesiones supuso un cambio absoluto en el perfil financiero de la compañía, dejando su balance con una posición de caja neta muy importante, hasta el punto de que hubo momentos en los que esta caja, incluso asumiendo salidas futuras por necesidades de circulante y pérdidas por proyectos en curso, era superior al valor bursátil de OHL. Esto despertó nuestra atención. No entendíamos que se pudiera estar produciendo esta aparente ineficiencia en el mercado. Conocíamos sobradamente la histórica gestión del equipo directivo, pero el margen de seguridad era, en ese momento y con los datos encima de la mesa, tan claro que decidimos realizar una inversión muy significativa en la compañía. En cierto sentido, se puede decir que acudimos como abejas a un tarro de miel, sin cuestionarnos si había gato encerrado.
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Howard Marks on the Importance of Experience

April 20, 2019 in Interviews, Video Excerpt, YouTube

In the following excerpt from an exclusive interview with MOI Global, Howard Marks, co-chairman of Oaktree Capital Management, reflects on the significance of experience in investment management.

Learn more and see the full interview with Howard.

Since the formation of Oaktree in 1995, Howard Marks has been responsible for ensuring the firm’s adherence to its core investment philosophy; communicating closely with clients concerning products and strategies; and contributing his experience to big-picture decisions relating to investments and corporate direction. From 1985 until 1995, Howard led the groups at The TCW Group, Inc. that were responsible for investments in distressed debt, high yield bonds, and convertible securities. He was also Chief Investment Officer for Domestic Fixed Income at TCW. Previously, Howard was with Citicorp Investment Management for 16 years, where from 1978 to 1985 he was Vice President and senior portfolio manager in charge of convertible and high yield securities. Between 1969 and 1978, he was an equity research analyst and, subsequently, Citicorp’s Director of Research. Howard holds a B.S.Ec. degree cum laude from the Wharton School of the University of Pennsylvania with a major in finance and an M.B.A. in accounting and marketing from the Booth School of Business of the University of Chicago, where he received the George Hay Brown Prize. He is a CFA® charterholder and a Chartered Investment Counselor. Howard serves on the Investment Committee of the Helmsley Charitable Trust, the Board of Trustees of Mount Sinai Hospital, and the Board of the University of Pennsylvania, where from 2000 to 2010 he chaired the Investment Board.

Thoughts on Fossil Fuels and Global Warming

April 19, 2019 in Commentary, Energy, Europe, Letters

This article by MOI Global instructor Robert Leitz is excerpted from a letter of Iolite Partners, based in Switzerland.

“If a problem has no solution, it may not be a problem, but a fact – not to be solved, but to be coped with over time.” –Shimon Peres

Earlier this year, Germany announced it would exit coal power generation by the year 2038. Prior to this, Norway (a country whose wealth is almost entirely based on fossil fuels) and the Rockefeller family charity started to divest their stakes in businesses related to fossil fuels. Accomplished investor Jeremy Grantham has publicly stated “thermal coal is dead meat”.

These attention-grabbing headlines make you believe humanity has made great strides and is winning the fight against global warming. In my opinion, a quick look at the facts reveals the material disconnect between this feeling and reality. It seems the (Western) mainstream is driven by wishful thinking and emotion, not rational thought.

Economic prosperity is closely linked with the availability and consumption of electricity. From 2000-2017, global energy consumption increased by about 44%, at an annual growth rate of about 2.2%, while the world’s population increased by 23%. Fossil fuels account for about 85% of the global energy mix, and that share hasn’t changed much since the 1970s. This means the world keeps consuming more coal, gas, and oil.

Over the next two decades, in the absence of a major catastrophic event, the world’s population is likely to grow by more than one billion people and some two billion people are expected to join the “developed” world. Consequentially, the world’s hunger for energy will increase.

The U.N. Intergovernmental Panel on Climate Change found that global emissions would have to be cut nearly in half by 2030 to preserve a chance of capping the planet’s warming to 1.5 degrees Celsius (or 2.7 degrees Fahrenheit).

This goal seems utterly unachievable, given the growing demand for energy and how the world is generating its electricity. As of today, no impactful progress has made to reduce the world’s dependency on fossil fuels and thereby lower CO2 emissions. Any industrialized nation requires reliable baseload (the permanent minimum load that a power supply system is required to deliver). Unfortunately, wind and solar are unreliable sources of energy and we currently also lack the ability to store electricity on a large scale. Hence, nuclear power and fossil fuels are essential pillars of any energy mix.

Let’s spotlight a few issues.


Coal is one of the worst climate offenders. However, coal is also a cheap, reliable and simple way to generate electricity, and therefore the preferred energy source in many developing countries. It makes up about 40% of global electricity generation. Global demand and supply are growing as lower consumption in “Western” nations is offset with growth in “developing” regions such as China, India, Pakistan, and Southeast Asia. In 2018, coal emissions were at the highest level, ever. Developing nations will look to roll out cheap energy first and we can’t deny people the right to live a modern life.


Germany is widely considered a role model in the fight against climate change. It is estimated that the country has invested something like US$ 500+ billion into wind and solar over the last two decades. All coal power supply is to go offline by 2038, and all nuclear power reactors are supposed to go offline by 2022.

Despite the green headlines, Germany is one of Europe’s worst CO2 offenders with an average output of 450g/kWh. Fifty percent of Germany’s energy supply still comes from coal and nuclear (and up to 70% at night and when the wind is not blowing).

Germany’s recent announcement to shut down 50% of its power supply was made without a viable domestic alternative to rely on. In the absence of a major technological breakthrough regarding battery technology, Germany will have to import more energy from its neighbors in times of peak demand (i.e. nuclear from France or coal from Eastern Europe) and increasingly rely on gas sourced from Russia and the Middle East. Does this sound like a good plan?


A look at the electricity map also reveals that Europe’s cleanest energy producers are France (c. 75g/kWh, nuclear), Sweden (c. 50g/KWh, nuclear), and Norway (c. 50g/kWh, hydro). Hydro is restricted to geography (in Europe mainly to Norway, Switzerland, and Austria). Regarding nuclear: it took France and Sweden about 15 years each to roll out their nuclear programs and almost go emission-free. China is in process to materially increase its nuclear electricity generation, and this development could have a very positive impact on the country’s carbon footprint.

People with a rational mindset and not driven by fear and popular opinion are aware of the positive impact modern nuclear power can have on a country’s ability to produce clean energy. One of them is Bill Gates, who is supporting various projects in the field, for example Terrapower, a company working on a next generation reactor that uses nuclear waste to generate safe energy. Unfortunately, attempts to build a prototype reactor in China were halted given the current trade tensions between the U.S. and China.

Concluding thoughts

Despite many conferences on climate change, billions of dollars spent on research, glossy corporate brochures and enough public awareness, we haven’t made notable progress reducing CO2 emissions from fossil fuels on a global basis. Given the circumstances, a meaningful reduction of fossil fuels (in the absence of a huge nuclear rollout, material investment into carbon capture technologies, or a breakthrough in battery technology) in the next two decades is unlikely.

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This information is not intended as financial advice and provided for general information only. It is not a solicitation to buy or sell shares. The historical performance is not indicative of the future. This report or any portion hereof may not be reprinted, sold or redistributed without our prior written consent.