Hotter Planet: Cooling and Cover
Scott Gartenberg@sgart25
+1.0%
since Oct 9
The idea
I believe a warming planet means more spending on both cooling and disaster protection, so this basket owns both sides of that trade. On cooling, it holds home AC distributors and makers alongside data center cooling names riding AI demand. On protection, it owns insurance brokers who take a cut of every premium, a flood insurer, a disaster-risk modeler, flood-car salvage auctions, and two specialty insurers that reprice after bad storm years. It keeps some cash, avoids betting big on any single name, and is built to hold for years since this plays out slowly.
What it owns
- Artificial intelligence data centers generate intense heat and require specialized cooling infrastructure, creating a fast-growing source of equipment demand alongside climate-driven building cooling. · Trane TechnologiesIt manufactures chillers and HVAC systems for buildings and data centers, capturing growth from both climate warming and the intensive cooling needs of artificial intelligence facilities., Vertiv HoldingsIt is a leader in cooling and power infrastructure for data centers, where artificial intelligence applications generate significant thermal loads requiring specialized equipment., Johnson Controls InternationalIt manufactures large chillers that cool data centers and commercial buildings, benefiting from both artificial intelligence facility expansion and warming urban temperatures., Comfort Systems USAIt installs mechanical and cooling systems inside data centers and large buildings, earning revenue as artificial intelligence facility construction and buildout accelerates., Modine ManufacturingIt has shifted toward becoming a data center cooling specialist, making its growth trajectory dependent on continued artificial intelligence facility spending.28%
- Insurance brokers and agents earn commissions on premiums without bearing claim costs, so rising disaster-driven insurance prices directly lift their revenue. · Aon plcIt earns commissions on insurance premiums without paying claims, so elevated disaster-driven premium growth directly increases its fee revenue., Arthur J. Gallagher & Co.It earns commissions on property insurance premiums for mid-sized businesses, so higher disaster-driven premiums lift its revenue without underwriting risk., Ryan Specialty HoldingsIt places hard-to-insure property risks that mainstream insurers avoid after major disasters, earning fees as more business flows into the specialty insurance market., Brown & Brown, Inc.It specializes in property insurance placement in coastal states prone to hurricanes and floods, where rising premiums directly increase its commission revenue.20%
- Rising temperatures increase demand for air conditioning systems and accelerate replacement cycles in residential and light commercial buildings. · Watsco, Inc.It is the largest U.S. distributor of air conditioning equipment to contractors and benefits directly from rising replacement demand as hotter summers wear out existing systems., Lennox InternationalIt manufactures residential and light commercial air conditioning systems almost entirely for North America, where rising heat drives both new installations and replacements., Carrier GlobalIt is a leading global air conditioning and heat pump manufacturer, so rising temperatures worldwide drive demand for its cooling and climate control products., AAON, Inc.It manufactures energy-efficient rooftop cooling units for commercial buildings and data centers, benefiting from both rising temperatures and tightening efficiency standards.20%
- These companies profit from severe weather through salvage auctions, flood insurance, risk modeling, and catastrophe analytics that insurers increasingly depend on. · Verisk AnalyticsIt provides catastrophe modeling and risk analytics that insurers rely on to price flood and storm exposure, with demand growing as disaster frequency rises., Copart, Inc.It auctions salvage vehicles for insurers, and severe weather events spike the volume of flood-damaged and storm-damaged cars flowing through its facilities., Neptune Insurance HoldingsIt is the largest private U.S. flood insurance provider, so increasing flood events and migration away from the government flood program expand its policy base.15%
- Disciplined insurers that cover hard-to-place risks raise prices significantly after major storm years while maintaining underwriting discipline. · Kinsale Capital GroupIt writes specialty insurance policies that standard carriers reject and raises prices quickly after major storm years while staying selective about risk acceptance., RLI Corp.It is a specialty insurer that carefully limits catastrophe exposure and increases prices after major disasters, staying profitable through active storm seasons.9%
- Cash8%