Stunning charts of how investment in industrial machinery & equipment collapsed a decade ago in Canada but stayed on track in the US. “According to the latest national accounts data, real investment in industrial machinery & equipment [in Canada] fell in Q2 to its lowest level on record (data back to 1981). As today’s Hot Chart shows, the divergence with the U.S. is nothing short of appalling,” wrote Stéfane Marion and Matthieu Arseneau, at Economics and Strategy, National Bank of Canada, in a note sent to ...

Summary of Key Points Core Viewpoint - John W. Rogers Jr. of Ariel Appreciation Fund has made significant reductions in his equity holdings, indicating a strategic shift in response to valuation concerns and macroeconomic factors affecting various sectors. Group 1: Notable Reductions - **Northern Trust Corp (NTRS)**: A reduction of 47.22% with 158,349 shares sold, reflecting potential concerns over fee compression and macro headwinds in wealth management [1]. - **JM Smucker Co (SJM)**: A decrease of 35.16% with 68,878 shares cut, possibly due to input cost inflation and changing consumer preferences [2]. - **Charles Schwab Corp (SCHW)**: A reduction of 33.48% with 112,370 shares sold, linked to rate-related margin pressures and lower trading activity post-peak retail trading enthusiasm [3]. - **Kennametal Inc (KMT)**: A decrease of 30.91% with 267,930 shares trimmed, suggesting caution towards slowing manufacturing demand despite operational improvements [4]. - **CBRE Group Inc – A (CBRE)**: A reduction of 18.12% with 25,409 shares cut, reflecting concerns in the commercial real estate sector due to remote work trends and higher financing costs [5]. Group 2: Strategic Implications - The reductions across these holdings suggest a tightening of the portfolio around higher-conviction names, as the company responds to a shifting macro environment and potential valuation concerns [5].

Demand Outlook - The company has achieved five consecutive quarters of aftermarket bookings exceeding $600 million, indicating strong demand and resilience in this segment [1][2] - The aftermarket revenue franchise accounts for over 50% of the company's business, highlighting its significance and differentiation in the market [1] Market Focus - The company has experienced robust bookings in recent quarters, consistently reaching $600 million or more, which reflects a strong and resilient performance [2] - There is a shift in the company's focus towards the energy and oil and gas markets, which is seen as a misunderstood aspect of its operations compared to a decade ago [2]

Core Viewpoint - Carlisle Companies Incorporated (CSL) has announced a new share buyback program, authorizing the repurchase of up to 7.5 million shares to enhance shareholder returns [1][8]. Summary by Sections Share Buyback Program - The new buyback program adds to the existing plan, which has approximately 1.2 million shares remaining for repurchase as of August 2025 [2][8]. - The buybacks can be executed in the open market, through privately negotiated transactions, or block trades, with no expiration date set for the new program [2][8]. Financial Performance - In the first half of 2025, Carlisle repurchased shares worth $700 million, maintaining stability year over year [3]. - The company paid dividends totaling $88.3 million during the same period, reflecting an 8.1% increase year over year [3]. - In August 2025, Carlisle raised its dividend by 10% to $1.10 per share [3]. Market Position and Challenges - Carlisle has a market capitalization of $16.1 billion and currently holds a Zacks Rank of 4 (Sell) [4]. - The Weatherproofing Technologies segment is facing challenges due to weakness in the residential construction market, with a 2% year-over-year revenue decline in Q2 2025 [4]. - Over the past three months, the company's shares have decreased by 0.9%, contrasting with the industry's growth of 0.8% [5]. - The Zacks Consensus Estimate for CSL's 2025 earnings is $20.76 per share, which is a 6.6% decrease from the figure reported 60 days ago [5].

Financial Data and Key Metrics Changes - Baker Hughes has nearly doubled EBITDA over the past five years, with a margin expansion of almost 600 basis points [6][8] - The company is targeting total margins of 20% by 2028, an increase of nearly 300 basis points from the 2025 implied guidance [17][19] - IET segment is expected to account for 48% of total revenues in 2025, with IET margins projected to be above 18% [6][10] Business Line Data and Key Metrics Changes - OFSE revenue is generated over 70% internationally, with offshore contributing approximately 40% of segment revenue [4] - IET margins have expanded despite a less favorable mix, with gas technology equipment margins up more than 9 percentage points since the start of Horizon One [10][11] - The deployment of the Baker Hughes Business System has driven more than a 13 percentage point improvement in SSPS margin since 2022 [11] Market Data and Key Metrics Changes - The company sees positive tailwinds in LNG, gas infrastructure, and distributed power solutions, contributing to the confidence in achieving $40 billion of IET orders over the next three years [18][25] - The demand for data centers is increasing, which is expected to drive growth in distributed power generation [25] Company Strategy and Development Direction - The Free Horizon Strategy aims to transform Baker Hughes into a differentiated energy and industrial technology company, focusing on sustained growth and durable earnings [2][3] - Horizon Two (2026-2028) will focus on scaling profitability and deepening the industrial footprint, with a goal of achieving 20% IET margins by 2026 [8][17] - The Chart Industries acquisition is expected to accelerate strategic progress and broaden exposure across core structural growth markets [15][20] Management's Comments on Operating Environment and Future Outlook - Management emphasizes the importance of AI and digital technologies in driving efficiency and enhancing customer outcomes [8][22] - The company is confident in the growth of natural gas in the energy mix and sees significant opportunities from the Chart acquisition [23] Other Important Information - Baker Hughes has generated over $2.5 billion in cash proceeds from strategic actions since the merger in 2017 [16] - The company aims to raise at least $1 billion from non-core asset sales to achieve leverage targets [19] Q&A Session Summary Question: Understanding the $40 billion IET orders over the next three years - Management highlighted that several end markets, including LNG and data centers, are expected to see growth, providing confidence in the $40 billion target [25] Question: Capacity increase in GTE with the same footprint - Management explained that the increase is due to the application of the Baker Hughes Business System, which allows for greater efficiency without significant CapEx [27] Question: Efficiency expectations from the Chart acquisition - Management confirmed that improving margin outlook at Chart is a key driver for the acquisition, leveraging the Baker Hughes Business System for operational consistency [28]

Market Overview - The three major stock indices in China collectively declined, with the Shanghai Composite Index closing at 3858.13 points, down 0.45%, the Shenzhen Component Index at 12553.84 points, down 2.14%, and the ChiNext Index at 2872.22 points, down 2.85% [1][2] - The total trading volume in the Shanghai and Shenzhen markets reached 2.87 trillion yuan, with over 4000 stocks declining and more than 1200 stocks rising [1] Sector Performance - The computing hardware sector experienced significant declines, while sectors such as consumer electronics, semiconductor chips, military industry, and digital currency also faced downturns [5] - Conversely, bank stocks showed resilience, with the banking sector rising by 1.68%, and other sectors like precious metals, PEEK materials, automotive parts, and electricity showing positive performance [6] Individual Stock Movements - The "three barrels of oil" in A-shares saw fluctuations, with China Petroleum rising over 4%, China Petrochemical nearly 2%, and China National Offshore Oil Corporation up 1.7% [7] - Notable individual stock movements included a significant drop for Zhongji Xuchuang, which fell over 5% with a trading volume exceeding 31 billion yuan, and Jianye Holdings, which experienced a dramatic trading session [7] Capital Flow - Main capital flows indicated a net inflow into the banking and public utility sectors, while electronic and computer sectors saw net outflows [8] - Specific stocks that attracted net inflows included Julun Intelligent, Pacific, and Industrial and Commercial Bank of China, with net inflows of 1.187 billion yuan, 1.075 billion yuan, and 1.005 billion yuan respectively [8] - On the other hand, stocks like Xinyisheng, Dongfang Wealth, and Northern Rare Earth faced significant sell-offs, with net outflows of 3.142 billion yuan, 2.891 billion yuan, and 2.604 billion yuan respectively [9]

Group 1 - The article presents Analog Devices (NASDAQ: ADI) as a structural compounder, indicating that its growth potential extends beyond a mere cyclical rebound [1] - The stock was noted at approximately $230.75 at the time of the previous analysis, suggesting a positive outlook for the company's performance [1] Group 2 - The author has over 13 years of diverse financial analysis experience across various sectors, which adds credibility to the insights provided [1] - The background includes roles in treasury management for Ford and Caterpillar, as well as managing investor relations and strategic finance for a listed IT company with a market cap of around $2.5 billion [1] - The expertise in market analysis, valuation models, and investment strategy is highlighted, emphasizing the ability to connect company strategies with industry-specific knowledge [1]

Core Insights - Graco Inc. is experiencing growth in its Industrial and Expansion Markets segments, with core sales in the Industrial segment increasing by 2% year over year in the first half of 2025, driven by higher demand for powder finishing and lubrication products [1][8]. - The Expansion Markets segment saw a 4% year-over-year increase in core sales, supported by solid momentum in the semiconductor business and favorable pricing actions [1][8]. Acquisitions and Growth Strategy - Graco is focused on enhancing its capabilities through acquisitions, including the purchase of Color Service S.r.l. in July 2025, which will improve its powder handling portfolio [2]. - The acquisition of Corob S.p.A. in November 2024 and PCT System in August 2024 has strengthened Graco's offerings in the Contractor segment and semiconductor market, contributing 6% to sales in Q2 2025 [3]. Shareholder Returns - The company has demonstrated a commitment to shareholders by paying out $92.2 million in dividends in the first half of 2025, a 7.2% increase year over year, and repurchasing shares worth $361 million [4]. - In December 2024, Graco raised its quarterly dividend by 7.8% to 27.5 cents per share [4]. Segment Performance Challenges - The Contractor segment is facing challenges due to high housing costs and a decline in construction projects in North America, leading to a 3% year-over-year decline in core sales in the first half of 2025 [6]. - Reduced demand in the home center channel, attributed to lower foot traffic and decreased consumer activity, is also a concern for this segment [6]. Cost and Expense Trends - Graco has experienced rising costs, with general and administrative expenses increasing by 7.3% year over year and cost of sales rising by 9.3% in the first half of 2025 [9]. - The cost of sales as a percentage of net sales increased by 170 basis points year over year [9]. Stock Performance - Graco's shares have gained 2.8% over the past month, outperforming the industry growth of 0.7% [5].

Core Insights - The article highlights the author's extensive experience in financial analysis across various sectors, including Auto, Industrials, and IT, emphasizing a strong background in equity research and strategic finance [1] Group 1: Company Experience - The author has over 13 years of diverse financial analysis experience, having worked in treasury roles at Ford and Caterpillar [1] - The author managed investor relations and strategic finance for a listed IT company with a market capitalization of approximately USD 2.5 billion [1] - The author's early career included roles as an equity research analyst, building expertise in market analysis, valuation models, and investment strategy [1] Group 2: Industry Knowledge - The author connects company strategy with industry-specific knowledge to understand business growth drivers [1]

Summary of Key Points from the Conference Call Industry Overview - The global data center investment is booming, creating significant opportunities for internal combustion engine (ICE) manufacturers such as Weichai, Cummins (CMI), Caterpillar (CAT), and Rolls-Royce [2][12] - The diesel generator market for data centers in China is rapidly expanding, driven by increasing demand from large-scale data centers and the influence of AI computing power [2][9] Market Dynamics - The global diesel generator market for data centers is projected to reach $3 billion in 2024, with a growth rate of 15-25% [12] - The total addressable market (TAM) for backup generators is estimated at approximately $23 billion, and for turbines for prime power generation, it is around $39 billion between 2023 and 2028 [2][12] - A compound annual growth rate (CAGR) of approximately 17% for data center power demand is forecasted during this period [12] Key Insights from Experts - High-power diesel generators are essential to meet carbon emission efficiency standards, with domestic brands like Weichai and Yuchai playing a crucial role in the competitive landscape [2][9] - The demand for diesel generators is driven by AI computing power and policy changes aimed at improving carbon emission efficiency [9] - The Chinese government plans to invest RMB 500 billion in AIDC construction over the next three years, necessitating the expansion of diesel generators as essential backup power sources [9] Growth Projections - The Chinese data center diesel generator market is expected to grow significantly, with a projected size of RMB 8.3 billion in 2025, up from RMB 5.5 billion in 2024, representing a 49% year-over-year growth [3] - The CAGR from 2024 to 2028 for the diesel generator market in China is projected to be 27% [3] Competitive Landscape - Currently, foreign brands dominate China's AIDC generator market, holding approximately 65% market share in 2024, with key players including Cummins, Caterpillar, and MTU [9] - Domestic brands are expected to increase their market share from 20% in 2024 to 30% in 2025, with Weichai aiming to sell 1,000-1,200 AIDC units in 2025 [9][10] - Weichai's proactive expansion of its annual capacity to 2,000 units positions it to capitalize on growing demand [9] Investment Ratings - J.P. Morgan maintains an Overweight (OW) rating on Weichai Power and Caterpillar, while Cummins is rated Neutral due to balanced risk-reward [3] - The stock of Weichai Power is included in the Positive Catalyst Watch (PCW) list [3] Conclusion - The data center power generation market is poised for robust growth, driven by technological advancements and increasing demand for reliable power solutions, particularly in China [2][12] - Domestic brands are expected to gain market share as they capitalize on supply shortages from foreign manufacturers and government investments in infrastructure [9][10]