Jay Smith @jaynemesis: "𝗨𝗻𝗿𝗮𝘃𝗲𝗹𝗹𝗶𝗻𝗴 𝘁𝗵𝗲 𝗖𝗮𝗯𝗹𝗲 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆 -..."

United Kingdom

𝗨𝗻𝗿𝗮𝘃𝗲𝗹𝗹𝗶𝗻𝗴 𝘁𝗵𝗲 𝗖𝗮𝗯𝗹𝗲 𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆 - 𝗣𝗿𝘆𝘀𝗺𝗶𝗮𝗻’𝘀 𝗣𝗼𝘄𝗲𝗿 𝗣𝗹𝗮𝘆 //𝑃𝑎𝑟𝑡 1 𝑜𝑓 2 //𝑆𝑒𝑒 𝑐𝑜𝑚𝑚𝑒𝑛𝑡𝑠 𝑓𝑜𝑟 𝑝𝑎𝑟𝑡 2 𝙒𝙝𝙮 𝘾𝙖𝙗𝙡𝙚𝙨? Cables seem like such a dull area to invest in, but I have made it a core theme of my portfolio over the past few years. Why? Because it benefits from all 3 of my biggest portfolio themes; AI & big Data, Renewable Energy, and Electrification. AI & big data have driven demand for semiconductors, as everyone knows. But those semiconductors sit in servers, and those servers are located in large data centers. The data center market anticipated to grow by around 11% annually over the next 6 years. These data centers require many miles of networking cables and power cables, not to mention the external infrastructure required to deliver power and data to the physical locations. Renewable energy is also still growing. Although slower in recent years, the growth of rooftop solar, both residential and commercial - has accelerated the need for grid infrastructure improvements due to the decentralised nature of solar. This ranges from upgrading residential areas to 3-phase power, through to major undersea cables and country interconnectors to help transfer excess power to where it has a higher demand. Larger renewable projects, such as wind farms also require a lot of hardware. Finally, there’s Electrification - Broadly speaking, this is a multi-decade trend of switching from fossil fuels, to electricity to power our world. This includes vehicles like Trains, Cars and boats, through to heating solutions and industrial applications. It also encompasses much of what was mentioned above - the upgrading of current electric infrastructure at every level, from individual homes & businesses, to local and regional distribution. I have exposure to these themes in various ways, the more obvious examples being $ABBN.ZU (ABB LTD) and $ETN (Eaton Corp PLC) . These companies offer exposure to broader industrial markets though, and I wanted more direct exposure to the core infrastructure, and saw cables as an avenue to benefit from the growth of large mega-projects. 𝙏𝙝𝙚 𝘾𝙤𝙢𝙥𝙖𝙣𝙞𝙚𝙨 𝙄 𝙇𝙖𝙣𝙙𝙚𝙙 𝙊𝙣 After researching the market, then narrowing down the businesses thought were more investable I found a couple of companies I really liked - $WIRE and $PRY.MI (Prysmian Group). Encore Wire is a US based company who produce copper and aluminium cables, they product electrical cables for distribution, some smaller cables for industry and more specialist cables for renewable energy, and data center applications. Although the company is reasonably small, they are extremely focused, and face little direct competition in the US. The companies who do compete with them in the US are smaller than Encore and aren't publicly traded. This makes Encore a good choice for direct Exposure to the US and surrounding markets. Prysmian Group are based in Italy, they are significantly larger than Encore Wire, and offer a broader range of products that are more geared towards large infrastructure, industrial and commercial applications. What first caught my attention was their sizable presence in the subsea cables sector. They are responsible for many of the world's major interconnectors - cables that connect the power grids of different countries. Likewise, they are also a leader in the broader category of HVDC (High Voltage Direct Current) cables, which are used to move electricity over long distances. They are also a leader in Fibre Optic cables, so benefit from not just large electrical infrastructure, but also major internet infrastructure. I started investing in $WIRE around 3 years ago, and in Prysmian a year later. Both companies have performed well appreciating by approximately 69.59% for $WIRE and 56.81% for $PRY.MI over the post 12 months alone. //𝐸𝑛𝑑 𝑜𝑓 𝑃𝑎𝑟𝑡 1 𝑜𝑓 2 //𝑆𝑒𝑒 𝑐𝑜𝑚𝑚𝑒𝑛𝑡𝑠 𝑓𝑜𝑟 𝑝𝑎𝑟𝑡 2

Not investment advice. The author may have financial interests in the mentioned instruments.

3 Mentioned

ABBN.ZU

ABB LTD

ETN

Eaton Corp PLC

PRY.MI

Prysmian Group

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