ProFrac: Debt Will Become An Issue If Demand Continues To Deteriorate

Group 1 - Deteriorating onshore activity levels in the US are negatively impacting ProFrac's business, with guidance indicating a worsening situation in the fourth quarter and little expectation for near-term improvement [1] - Narweena, an asset manager led by Richard Durant, focuses on identifying market dislocations due to poor understanding of long-term business prospects, aiming for excess risk-adjusted returns through secular growth opportunities in markets with barriers to entry [1] - The research process at Narweena emphasizes company and industry fundamentals to uncover unique insights, with a high risk appetite and long-term investment horizon targeting deeply undervalued stocks, particularly in smaller cap markets [1] Group 2 - An aging population with low growth and stagnating productivity is expected to create a different investment opportunity set compared to the past, with many industries facing stagnation or secular decline, potentially improving business performance due to reduced competition [1] - Conversely, some businesses may encounter rising costs and diseconomies of scale, while economies are increasingly dominated by asset-light businesses, leading to a declining need for infrastructure investments over time [1] - A large pool of capital is pursuing a limited set of investment opportunities, resulting in rising asset prices and compressing risk premia over time [1]