Evaluating Energy Investments Based on Returns

26 days ago

Speaker

"Now, here is energy thesis. Yes, demand for energy will grow, will keep on growing. However, the question when it comes to investing is what price are you paying because the growth will always be unlinear and then you have to ask not about the trend you are nailing or not about the return on invested capital in those trends. That is the key you have to understand. Bircher hataway has energy burkshire hataway energy and they are investing only when the return is above 8 10%. They are not making investments when it is lower."

The speaker outlines a thesis for energy investments, emphasizing that while energy demand will continue to grow, investors must carefully consider the price they pay and ensure a sufficient return on invested capital (above 8-10%) before committing capital. This macro perspective highlights the importance of return metrics in capital allocation decisions within the energy sector.

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