Investing icon, Steve Eisman, is bullish on a specific segment of the share market. After doing my homework, I think the American investor is onto something. However, I've 'Aussiefied' the idea, with three ASX shares to buy if Eisman is right again.
The Big Short film is almost a rite of passage for anyone fascinated by the world of investing. Steve Eisman — now managing director at Neuberger Berman — is one investor who successfully shorted the United States housing market.
This time, Eisman is buying in an industry that rarely gets attention.
Big Short's Eisman eyes 'turbocharged' theme
Speaking on the Bloomberg Odd Lots podcast, Eisman discussed where he sees an opportunity to make money in the current market.
Eisman described the investing landscape, asserting: "There are three, I think, great stories of our time right now, and those are: AI and everything having to do with it; infrastructure, and crypto. I believe in the first two, and I don't believe in the third."
The conservation then focused on infrastructure, where the famed investor outlined four themes for boosting the industry over a decade, these being:
- Onshoring i.e. local manufacturing: A consequence of the pandemic supply chain disruptions
- Data centres: Increased electricity and cooling demand from more powerful GPUs
- Grid improvement: Growing pressure on utility network from electrification
- Greenification: The shift towards more renewable energy
As Eisman puts it, these factors are then 'turbocharged' by the prolonged infrastructure policy drought, which is now being remedied by roughly US$1.2 trillion in government spending across the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA).
In the podcast, Eisman says he's widdled his list for infrastructure investments down to about 80 — only 30 of which are 'very, very interesting'. Two companies mentioned but not held by Eisman include Eaton Corporation PLC (NYSE: ETN) and CRH PLC (NYSE: CRH).
Which ASX shares to buy
Don't worry, I don't have a list of 30 companies. Instead, I think three locally-listed businesses could capitalise on increased infrastructure development. Let's hit this rapid-fire style — the company and my reason.
James Hardie Industries Plc (ASX: JHX)
The Dublin-headquartered building materials company has a local manufacturing presence in the United States, which could put it on the front foot as customers reduce their reliance on foreign suppliers. Furthermore, developed countries are contending with a housing shortage, generating a sizeable need for building materials.
Monadelphous Group Ltd (ASX: MND)
Monadelphous is a $1.3 billion construction engineering company featured in the S&P/ASX 200 Index (ASX: XJO). The company is well known for its contracted construction and maintenance work within the mining sector. However, Monadelphous is expanding into renewable developments, such as Tilt Renewable's Latrobe Valley Battery Energy Storage System.
IPD Group Ltd (ASX: IPG)
A small-cap ASX share to buy, in my view, is IPD Group. This business is a central source for a wide range of electrical products. In its first half FY24 presentation, the company noted that 44% of its revenue came from commercial construction, 14% from infrastructure/industrial applications, and 5% from data centres.
