Fund managers focusing on water infrastructure note that with cities growing around the world, and with the potential effects of climate change, the need for building, updating and maintaining water sources is a growing, long-term trend. Three fund managers offer selected picks of water infrastructure and technology companies with promise in this sector: Simon Gottelier, co-manager of Impax Asset Management Group PLC’s Water Strategy fund; Scott Rickards, founder and chief executive officer of Waterfund LLC; and Jason Gibbs, vice-president and portfolio manager at Dynamic mutual funds.
Simon Gottelier, Impax
Xylem Inc. (XYL-NYSE)
A leading global water technology provider, enabling customers to transport, treat, test and efficiently use water in public utility, residential and commercial building services, and industrial and agricultural settings. Mr. Gottelier likes Xylem as a water infrastructure play, even though it is sensitive to ups and downs of the economy.
Valmont Industries Inc. (VMI-NYSE)
Valmont Industries is one of the world’s leading providers of engineered products and services for infrastructure, and irrigation equipment for agriculture. “One area we have been a little contrarian is we think irrigation companies are quite interesting. Valuations have become attractive.”
Danaher Corp. (DHR-NYSE)
Danaher is a science and technology leader that designs, manufactures and markets innovative products and services to professional, medical, industrial and commercial customers. “A very large company with particular expertise in high-tech water treatment and UV disinfection. It is acquisitive, extremely well-managed and well-capitalized.”
Scott Rickards, Waterfund
Water Asset Management LLC
“This New York-based hedge fund is the best vehicle for capturing a mix of water rights and a select basket of infrastructure assets, primarily in the western U.S.”
Oasys Water (private company)
“Companies that are active in water treatment for hydraulic fracturing are also very attractive. Oasys is very active in Texas, where oil and gas companies have a higher cost tolerance than other wholesale water companies.”
Jason Gibbs, Dynamic
American Water (AWK-NYSE)
Mr. Gibbs says American Water fits his “defensive water theme” in that they operate local regulated utilities and have a large capital spending program ahead of them that should result in increased earnings and dividends over time.”