Edgewood Management LLC - Large Cap Growth Composite on Linde PLC
Thesis
Edgewood views Linde as a high-quality operator in an attractive industrial-gas oligopoly characterized by long-term take-or-pay contracts, regional density advantages, and pricing power. Its disciplined underwriting of new projects has generated return on capital excluding intangibles above 30% in recent years. Edgewood believes space and advanced electronics are underappreciated growth drivers, with Linde supplying gas for more than 60% of U.S. rocket launches and serving as a leading supplier to major semiconductor manufacturers. Rising launch cadence and much greater gas requirements for next-generation rockets could materially expand the space opportunity. The industrial-gas business also benefits from high replacement costs and limited transportation distances, which reinforce local competitive advantages. Management has multiple levers including pricing, productivity, buybacks, and bolt-on acquisitions that Edgewood believes can support double-digit earnings growth through the cycle.
“High-quality operator in an attractive industry: utility-like oligopoly, with long-term take-or-pay contracts, density monopolies, and pricing power.”