A new position: my asymmetric bet on edge data center energy

I recently started this position to get more exposure to the energy sector, particularly around the AI scale out. I landed on this business because it is very under the radar, fundamentally strong, and has a potential AI data center deal in the making that is not yet reflected in the stock.

Introduction

Over the past month, I have been looking to increase my exposure to the energy sector. Why? It is quickly becoming a major constraint, as energy demand is outpacing supply by large margins. The grid simply cannot keep up.

But many energy companies have already re rated accordingly, and I do not want to invest in the obvious names like Bloom Energy, which is trading at a very high multiple. I would rather invest in under the radar businesses with smaller market caps that have more room to run and have not seen the same re rating yet.

That is how I ended up investing in this business:

Perfectly positioned to land a data center deal soon
Accelerating revenue growth
Improving margins
Free cash flow positive
Positive net income
Healthy balance sheet
Attractive valuation

The asymmetry between the bear case and bull case is meaningful, with downside protection on the low end and multibagger potential on the high end. Since I initiated a position, the stock is already up +38% but I believe it's still extremely early and I'll continue to build my position from here.

It is a very under the radar business that creates on site power solutions and is well positioned for small to mid sized data centers, with a potential 100 MW deal in the pipeline.

Let’s dive in.

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