Ian Clark of Dichotomy Capital presented his investment thesis on Portland General Electric (US: POR) at Best Ideas 2025.

Thesis summary:

Portland General Electric is a vertically integrated electric utility serving over 900,000 customers in the Portland metropolitan area, with a peak load capacity of 4,500 MW. Historically, the company has achieved 5-7% EPS growth and expects load growth of approximately 2% annually through the end of the decade. Recent shifts in industrial demand, driven by semiconductor and AI-related energy consumption, present a significant growth opportunity that POR has been slow to fully acknowledge. However, its upcoming Integrated Resource Plan (IRP) in Q1 2025 is expected to reflect this increased demand, supporting further investment in capacity and infrastructure expansion.

Regulatory developments are also working in POR’s favor. While Oregon’s Public Utility Commission (PUC) has been cautious about allowing higher returns on equity (ROEs), recent reforms have improved the company’s ability to recover energy cost volatility, reducing earnings unpredictability. Additionally, POR’s planned entry into California’s Extended Day Ahead Market (EDAM) in 2026 will enhance regional resource optimization and dampen price volatility, creating a more stable earnings environment. These factors, along with a substantial capital expenditure program, position POR as a growth-oriented utility with improving fundamentals.

Despite these positive tailwinds, POR faces key challenges, including the need to raise $300 million in the near term to fund its expansion plans. Oregon’s regulatory environment, while not as restrictive as some states, remains a potential headwind, particularly as affordability concerns limit the PUC’s willingness to approve aggressive rate increases. Additionally, while industrial load growth has accelerated, there is some uncertainty about the long-term sustainability of AI and semiconductor-driven electricity demand. Energy price volatility also remains a risk, though recent regulatory adjustments provide a degree of mitigation.

From a valuation perspective, POR recently traded near book value, with upside potential as it benefits from load growth and declining earnings volatility. Applying an EV/EBITDA framework that accounts for these factors, a fair value estimate ranges from $45 to $70 per share, with a base case of $65. If the company successfully executes on its growth initiatives, particularly in industrial demand and market participation through EDAM, it could see a significant re-rating, presenting investors with an attractive risk-reward.

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About the instructor:

Ian Clark is the Managing Member of Dichotomy Capital, a power focused investment manager that looks for opportunistic returns in the public and private markets. Ian leads the public security selection process for Dichotomy Partners, a long/short hedge fund that primarily invests in utilities, power companies, and the power industry daisy chain.

He is also the Chief Commercial Officer of Elevate Power LLC, an entity that owns and operates renewable energy assets that produce more than 120 GWh/ yr of power and has a dedicated retail energy arm. He is a regular contributor to State level energy policy and is active in numerous energy trade groups.

Prior to founding Dichotomy, Ian was an analyst for a NY-based hedge fund where he led research on private power investments and analysis of publicly traded independent power producers. He received his M.S. in Chemistry from the University of Oregon.

Stephen Dodson of Bretton Fund presented his investment thesis on Eagle Materials (US: EXP) at Best Ideas 2025.

Thesis summary:

Eagle Materials is a long-term compounder in a so-so, cyclical industry. It has $2.5 billion in revenue and an $8 billion market cap.

The business mix is ~50% cement, ~50% wallboard. Eagle has best-in-class margins and returns on capital (2-3x average). Tailwinds include favorable industry growth, combined with structural competitive advantages.

Management has exhibited excellent capital allocation. Eagle is a best-in-class operator with 40% ROE and a modest valuation at a P/E of less than 15x. The company remains relatively unknown, but is a compounder, with a long runway. The business enjoys structural, durable advantages.

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Stephen Dodson is the president and founder of Bretton Capital Management and serves as the portfolio manager to the Bretton Fund, a mutual fund with a long-term, concentrated, value strategy. Stephen serves on the San Francisco advisory board for YIMBY Action, a housing advocacy group.

Prior to founding Bretton in 2010, he served as president, portfolio manager, and chief operating officer of Parnassus Investments, a family of mutual funds. He previously worked for the venture capital group of Advent International, a private equity firm, and was an investment banker for Morgan Stanley in New York and Menlo Park.

Jean Pierre Verster of Protea Capital Management presented his investment thesis on PDD Holdings (US: PDD) at Best Ideas 2025.

Thesis summary:

PDD is a holding company that operates two mega online marketplaces: Pinduoduo (China) and Temu (ex China in 86 countries), following a “consumer-to-merchant” business model. The company has a recent market cap of USD 135 billion, is quite secretive, and has very strong valuation metrics.

PDD Holdings is registered in the Cayman Islands, headquartered in Ireland, functionally operates mainly from Shanghai, and has depository shares listed on the Nasdaq. It was founded by Colin Huang (ex Google engineer) in 2015 as Pinduoduo, a China social buying platform focusing on agricultural products. The company grew very strongly and launched Temu in 2022.

PDD has exhibited very strong revenue and profit growth over the past few years, and is an asset-light business. PDD has a high net cash position (~33% of market cap) and high cash generation, with ROCE and ROE of 30+%. Management has proven its ability with Pinduoduo and is repeating this success with Temu. PDD operates an attractive two-sided marketplace with “scale economies shared” business model. The company is continuing to gain market share from incumbent online marketplaces (e.g. BABA, AMZN). The founder still owns ~25% of the company (now one of China’s richest persons).

Based on an analysis that considers an earnings-based valuation and an EVA valuation, Jean Pierre projects fair value of USD ~240 per share in January 2029, a four-year CAGR of ~25%.

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Jean Pierre Verster is the founder and CEO of Protea Capital Management, an investment management firm headquartered in Johannesburg, South Africa. The firm manages long-only equity portfolios as well as long/short equity hedge funds, investing globally. Jean Pierre serves as an independent non-executive director at Capitec Bank, the largest retail bank in South Africa by number of clients, where he was appointed chairman of the audit committee in 2015 for a 9-year term. Jean Pierre also serves on the Regulation Advisory Committee of the Johannesburg Stock Exchange. He is a regular contributor in South Africa’s financial media across print, radio and television.