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 discuss 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.
Editor’s note: This conversation was recorded on February 15, before last week's invasion of Ukraine.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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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