Short-term supply chain issues create Vertiv opportunity
The guest argued that Vertiv's 2022 margin contraction was a temporary, contract-timing issue that did not impair its long-term data center growth potential.
The argument
In mid-to-late 2022, supply chain inflation hit Vertiv's long-lead-time contracts, causing a margin miss that cut the stock in half. The guest's firm recognized that the underlying earnings power remained intact and that margins would normalize once legacy contracts cleared, creating a mispricing.
The thesis, stress-tested
✓ What validates it
- ✓Operating margin normalization in subsequent quarters
- ✓Acceleration of data center equipment demand
▸ Risks discussed
- ▸Delays in working through legacy, low-margin contracts
- ▸Persistent supply chain inflation
Hear it yourself
"I think one good example of this would be Vertiv, which is in the data center equipment space in 2022. We had known Vertiv from a prior investment that we had in the company."
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