Munro Partners’ James Tsinidis initially faced strong scepticism from Chief Investment Officer Nick Griffin five years ago when proposing an investment in US electrical contractor Quanta Services. Griffin’s past experience with engineering contractors failing due to fixed-price deals made him wary. Quanta Services is an American electrical contractor providing infrastructure solutions for electric power, pipeline, industrial, and communications industries. Tsinidis’ contrarian conviction, however, stemmed from a perceived shift: an outdated US grid, surging clean power demand, and a critical shortage of skilled trades, which he believed would give Quanta unprecedented pricing power.
This shift indeed empowered Quanta to secure more favourable contracts, maintaining healthy profits even if jobs ran over budget. The bet paid off significantly, with Quanta shares soaring fivefold since Munro’s initial investment. Today, Quanta Services remains a key holding in the $381 million, ASX-listed Munro Climate Change Leaders Fund. While the fund navigated less successful ventures, such as Chinese battery giant CATL where local price wars eroded profits, it has found ballast in European electrical heavyweights like ABB and Schneider Electric, capitalising on burgeoning data centre demand for essential electrical gear.
Tsinidis remains optimistic about the data centre sector, noting robust earnings and “clean” backlogs from these heavyweights, alleviating concerns about speculative demand. Amid broader market anxieties regarding future data centre funding, Tsinidis has strategically doubled down on Nvidia. The energy-efficient chips from this technology giant now constitute nearly 7 per cent of the fund, viewed as a stable anchor due to its substantial cash flows and share-buyback programme, particularly after a recent share price slide. This readiness to capitalise on market dislocations and Munro’s rigorous risk management, including a non-negotiable stop-loss rule, underpins the fund’s approach to navigating market volatility.
