Among the themes and subthemes that are a focus of the Global Equity team at Artisan Partners, energy is one that has a meaningful effect on both investment portfolios and the world at large. II asked Mark Yockey for a few examples of companies and subthemes he and his team like in the energy space.

• Gas Turbines/Siemens Energy (Germany): “Siemens Energy recently announced they’re getting out of coal. We thought they would, and that’s a positive thing. The stock is trading on, we think, three or four times earnings, if you look out a year or two. They compete with GE in the gas turbine business. Natural gas is a way better fossil fuel than coal or oil. We think natural gas will play a big part in cleaning up the planet over the next 20 years, especially in places like China and India.
• Windmills/Gamesa (Spain): “Through Siemens Energy, we are invested in Gamesa, which is one of the two leading windmill producers in the world. That business is quite strong and should remain so because it’s a non-polluting renewable source of energy. It’s not going to produce all the energy in the world, but it’s going to produce five or 10% of the energy going forward.”
• Industrial Gas/Linde (Germany/U.S.)/Air Liquide (France): “There are three major industrial gas stocks in the world. We own two of them. Oxygen and hydrogen are essential for many things, but the potential for using hydrogen as an energy source, especially for trucks, is outstanding. Batteries are unlikely to work in big trucks because the battery would have to be enormous, and that creates a weight issue. We think they’re going to solve the safety issues around hydrogen on trucks, and that’s going to be the solution for getting trucks off the road that are blowing diesel fumes all over the place. Linde is best in class, in our minds. They were just telling investors recently that they think their margins can go up from where they are now. That’s music to our ears, because that means that profitability going forward is probably better than what people think it will be at this point.”
• HVAC/Midea (China)/Carrier (U.S.)/Johnson Controls (U.S./Ireland): “One sub-theme of energy in both funds is that we think much of the world will want to upgrade their HVAC systems to significantly more energy efficient models. Somewhere near 20% of the energy consumed in the world is to make the air inside buildings hotter or colder. So, we think that’s going to be a 10-year cycle. Midea, Carrier, and Johnson Controls have long-term business models, and they’re going to help clean up the earth.”
• Not energy, but…E-Commerce/Reliance (India): “We own stock in a company called Reliance in India, which historically is known as an oil refiner. But they actually have the biggest cell phone network in India, the biggest e-commerce platform in India, and they’re the biggest retailer in India. We think they’re really just getting started on all they can accomplish in India. The prices for cell phone service are extremely cheap, and the market for e-commerce in India is underdeveloped. We think over the next three or four years, Reliance could double. Facebook recently invested $5 billion in Reliance. We think that the partnership potential for companies like Facebook and some of the other e-commerce companies in the U.S. is very significant if they partner with Reliance.”