Last week, I shared the first- and third-place winning presentations – on food-delivery service DoorDash (DASH) and energy-drink maker Celsius (CELH), respectively – from the recent 19th annual Pershing Square Challenge.
Today, I'd like to share the 95-slide presentation by Columbia Business School students Cameron Degan, Karl Eshwer, and Greer Lafontant, which won second place (and $30,000). They made an excellent pitch for oilfield services and industrial technology company Baker Hughes (BKR).
Please keep in mind that I'm not recommending the stock. If that were the case, I would share it first, along with our full analysis, with Stansberry's Investment Advisory subscribers. (You can become one by clicking here.)
Rather, I want to share what I learned about an interesting company and industry...
The students started by outlining the three reasons they think Baker Hughes will perform well above consensus expectations over the next two years. This would lead to a 63% jump in the stock in their base-case scenario:
The company has historically been a low-margin, cyclical oilfield services ("OFSE") business. But the students show that recent growth has been driven by expanded capability in industrial energy technology ("IET"), which diversifies the business and insulates it from cyclicality in the energy sector:
They highlight five drivers of IET's growth, including the shift toward liquified natural gas ("LNG") and the AI data-center boom:
As a result, Baker's IET business has a substantial backlog of contracted, multiyear demand:
As Baker installs equipment that it has sold, it benefits from 10-plus years of durable revenue from its servicing contracts:
The students are optimistic about the numerous acquisitions Baker has made in recent years, which contribute to revenue diversification:
They also outlined the risks the company faces and why they think it will overcome them:
The students concluded their presentation by outlining the bear-case, base-case, and bull-case scenarios for the stock. They think the latter two are the most likely outcomes:
I applaud the students for their excellent work and thank them for allowing me to share it with my readers.
As I did with DoorDash and Celsius, tomorrow I'll look at Baker Hughes using my standard framework by analyzing its financials and valuation. So stay tuned!
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.
P.P.S. Susan and I spent a lovely weekend in Venice. We saw the magnificent, 1,000-year-old Saint Mark's Basilica, the Murano glassworks, and stilt walkers:
