'Don't think that anyone's worried that AI is going to disrupt the pipeline space': Teltscher

Key Concepts

• Nuclear Energy Infrastructure: The critical role of nuclear power as a reliable "base load" energy source.
• Hard Assets vs. Soft Assets: The distinction between tangible, irreplaceable infrastructure (pipelines, utilities, nuclear reactors) and intangible assets (software, intellectual property).
• AI Disruption: The market anxiety regarding how artificial intelligence may render certain software business models obsolete.
• Base Load Energy: The minimum level of demand on an electrical grid over 24 hours, requiring consistent, non-intermittent power sources.
• Valuation Compression: The process where the price-to-earnings multiples of stocks decrease, often due to market volatility or changing interest rate environments.

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AtkinsRéalis and the Nuclear Sector

Rebecca Telure, Portfolio Manager at New Haven Asset Management, highlights that AtkinsRéalis’s recent Q1 revenue beat is primarily driven by its exposure to the nuclear sector.

• Market Performance: While engineering peers like WSP, Stantech, and AECOM have faced significant year-to-date declines (exceeding 20%), AtkinsRéalis has remained resilient, down only approximately 5%.
• Competitive Advantage: AtkinsRéalis serves as the Original Equipment Manufacturer (OEM) and exclusive license holder for CANDU reactors. Their "end-to-end" engineering and management capabilities across the nuclear lifecycle position them to capture growth from any new nuclear development.
• Strategic Outlook: Telure argues that nuclear energy is essential for meeting the surging power demands driven by AI, data centers, and the reshoring of manufacturing. Because current battery technology cannot yet store renewable energy at a large, efficient scale, nuclear and natural gas remain the primary solutions for reliable base load power.

Investment Strategy: Hard Assets vs. Tech

Telure emphasizes a shift in preference toward "hard assets" over the "asset-light" models that dominated the previous decade.

• The Vulnerability of Software: Telure notes that software companies are currently suffering due to "AI disruption fear." She cites specific examples:
  • Shopify: Down 36% year-to-date.
  • Constellation Software: Down 20% year-to-date and 48% over the past year.
• The "Hard Asset" Thesis: New Haven Asset Management favors companies with tangible, irreplaceable assets such as pipelines and utilities.
  • Irreplaceability: Telure points out that building new utility distribution networks or pipelines is practically impossible in the current regulatory and economic climate, making existing infrastructure highly valuable.
  • Stability: Unlike software, which relies heavily on goodwill and intellectual property, hard assets provide steady, predictable growth and are largely immune to disruption by AI.

Portfolio Applications and Case Studies

• AECOM: New Haven Asset Management holds shares in AECOM, which works in tandem with firms like AtkinsRéalis. While Atkins provides the engineering, AECOM handles the physical construction. Telure notes they have held this position for years, benefiting from the nuclear exposure.
• Brookfield Renewables: The firm also holds Brookfield Renewables, specifically for its ownership in Westinghouse, which specializes in nuclear refurbishments.
• Risk Management: Telure maintains a skeptical view of the technology sector, noting that while they missed out on the recent 12% surge in the NASDAQ, they prioritize the protection of capital against the volatility inherent in asset-light tech stocks.

Synthesis and Conclusion

The core takeaway from the discussion is a strategic pivot toward energy infrastructure. As AI and industrial reshoring drive an unprecedented surge in power demand, the market is beginning to favor companies that control the physical means of energy production and distribution. Telure concludes that while tech stocks remain vulnerable to valuation compression and AI-related obsolescence, the "hard asset" sector—specifically nuclear energy—offers a more stable, defensible, and essential investment thesis for the current economic environment.