Thursday Night Links

• In the fifteenth century, everything changed. The human mind discovered a means of perpetuating itself which was not only more lasting and resistant than architecture but also simpler and easier. Architecture was dethroned. The lead characters of Gutenberg succeeded the stone characters of Orpheus. The book was to kill the building. The invention of the printing-press is the greatest event in history. It was the mother of revolutions. It was the total renewal of man's mode of expression, the human mind sloughing off one form to put on another, a complete and definitive change of skin by that symbolic serpent which, ever since Adam, has represented the intelligence. In its printed form, thought is more imperishable than ever; it is volatile, elusive, indestructible. It mingles with the air. In the days of architecture, thought had turned into a mountain and taken powerful hold of a century and of a place. Now it turned into a flock of birds and was scattered on the four winds occupying every point of air and space simultaneously. [Victor Hugo]
• The mainstreaming of FLNG technology represents a major development in hydrocarbon extraction technology—one that vastly expands resource viability worldwide and even pushes the phony concept of peak cheap oil further into the distant future than it already was, not that it was ever really on the horizon. If one plays forward the pace of development by a decade, the potential for change in global molecular flows is substantial. Let’s indulge in some informed speculation and ponder the consequences before they become common knowledge. [Doomberg]
• Recently, a handful of REITs have sold themselves, with the premiums to their share prices ranging from ~25% to ~40%. Historically, over the long run, you have generally seen premiums of at least 20% to a company’s recently traded share price. As you have seen from our previously published portfolio appraisals, the private market would value our assets at a much higher per share price than we are currently trading. All these factors, absent our value gap being closed by or before we complete our portfolio transformation, lead me to the conclusion that if we can’t get it done, then we need to give you a better choice. So, you have my word, that we will do everything in our power to close this value gap within 24 months or less. If someone comes knocking sooner, and they can rapidly close the value gap (increasing your net worth sooner), then let’s dance. However, for all those shops out there reading this thinking we are distressed or desperate, please don’t waste your time because we won’t waste ours. [Modiv Industrial, Inc.]
• See, one of the benefits of having been in the business for almost a quarter of a century directly, and before that I was an investment banker, and my clients were airlines, so I had more time doing that too, so I’ve had a good look at this industry, and here’s the great thing about it, is that in the long run, travel always grows slightly better than GDP. We’re talking global now. Okay? Now, there’s going to be some volatility. And when you have something like a pandemic, or the great recession of 2008, and 2009, and things there, or even earlier, the dot-com implosion recessions, the early part of this century, you always have these issues of, will it come back? And it always does. And that’s the great thing. So, I know there are going to be some soft times, there are going to be some great times. Like when we came out of the pandemic, there was that revenge travel surge, which is fantastic. But the truth is, I know that that couldn’t possibly last because in the end, we’re going to end up in a long-term run where travel goes slightly better than GDP. [Glenn Fogel]
• Mr. Trump told Mr. Huang that when he spoke with Mr. Xi about the island, China’s leader would breathe heavily, said one of these people who was briefed on the conversation. The president didn’t like it. He urged Mr. Huang to make chips in America. [NY Times]
• The rewrite man is a concession to the simple fact that many very good reporters can’t write; when they try to, the consequences can be disastrous. There’s a certain psychological sense to this. Writing well is basically a solitary, introspective activity; it is often time-consuming, and it usually is built on wide reading, another solitary activity. Reporting is fundamentally social and generally its products demand a quick turnaround. (The contradiction between these two, a brother in the trade once suggested to me, is why journalists run to alcoholism—they tend to be basically antisocial people who spend much of their time talking to people.) [The Lamp]
• Mexico could be at a crossroads, in the similar way, to how the Colombian government killed Pablo Escobar in 1994 and violence started to dramatically decrease from that point onward. And, with the election of Uribe, a forceful anti-narcos president in 2002, that set the stage for the final Colombian military offensives that crushed the remaining organized narco forces. FARC began peace talks with the Colombian government in 2012 and the definitive peace treaty was reached in 2016. Medellin went from the world’s single most dangerous city in 1994 to one of the world’s fastest-growing tourism destinations by the late 2010s. I don’t pretend to have a timeline for when Mexico can deescalate with the cartels in the same way that Peru crushed the Shining Path terrorists or Colombia neutralized the FARC. That said, Sheinbaum is making the right moves, and she has the mandate of the people to keep using overwhelming force rather than standing down or trying to coexist. From a long-term Mexico perspective, you should be more bullish today than you were last week. This has been an impressive show of force and discipline by the Mexican government and military to take down the country’s most wanted man and his immediate replacement in short order at modest cost of life -- and then getting CJNG to stop the retaliation attacks within 48 hours. [Ian Bezek]
• What's important to remember, is that the most resilient technology businesses aren't selling a product. They're selling convenience, trust, reliability, and business process knowledge. Maybe 20% of a software company's value is in the code itself. The other 80% is a customer service business – constant maintenance, security patches, compliance updates, new integrations, new features. Most businesses don't want the responsibility for any of this. They're not buying code. They're buying headache-free, all-in-one solutions to their problems. Software business also have immense “economies of scale”. As they sell more licenses, the incremental cost per license decreases (sometimes to zero). So instead of millions of businesses each vibe-coding the same product independently, isn't it more efficient for a single company to centralize production and maintenance, then sell it to all of them? By aggregating these customers' software budgets, they can also attract the best talent and invest in the best technology – something no individual customer could justify on their own. [Fred Liu]

Kayne Anderson Energy Infrastructure Fund, Inc. (KYN) - 2025 Letter

From the Kayne Anderson Energy Infrastructure Fund, Inc. (KYN) - 2025 Letter:

We have made this point consistently in our stockholder letters, but it bears repeating – energy infrastructure plays an essential role in the global economy. These “must run” assets enable society’s modern way of life. These businesses generate material (and growing) levels of free cash flow and are an attractive way for investors to gain exposure to listed real assets. Further, equity investments in energy infrastructure companies provide holders exposure to some of the most consequential (and durable) trends in the global economy, pay attractive dividends and provide an important hedge against higher-than-expected levels of inflation. Putsimply, the case for owning listed energy infrastructure is robust. One of the most important points we want to convey in this letter: We believe KYN has the potential to generate low-to-mid-teens annual returns over the next five years. Given recent developments in the energy infrastructure sector, our confidence in this scenario has increased over the last year. Our expectations are underpinned by improving demand growth trends, increased project backlogs and growing earnings and free cash flows for the Company’s portfolio investments.

[While subject to numerous assumptions, the primary considerations incorporated into these target returns are estimated dividend yields from portfolio holdings of 4% to 6%, estimated annual growth in dividends and cash flows of 5% to 7%, and estimated annual “excess” free cash flow of 0% to 3% for KYN’s portfolio investments. After incorporating the impacts of fees, expenses and leverage, Kayne Anderson views KYN as having the potential to generate 10% to 15% annual returns on a net basis for investors.]

Monday Morning Links

• What is the use of machines? The world is full of machines: railways, telegraphs, telephones, motors, flying-machines, talking-machines, adding-machines, typewriters — no end to them. Why are they made? To save time, space, trouble, money. They are often a nuisance to everybody around, they spoil one's eyes and ears, offend the senses, make life dangerous; worst of all, the better the machine, the less it uses our intelligence. It is quite possible to argue that they do more harm than good: but suppose they are all good, suppose time, space, money, labour is saved, what then? The question then comes, How am I to use the time, space, money, and labour which has been saved? In making more machines? In sloth, eating, drinking, self-indulgence? In quarrelling with my neighbour, and destroying what I cannot understand? Here is the question which the world has not faced. So much time has been saved, that thousands of people who used to be working all day now have leisure; and they do not know what to do with it. They are often ignorant, violent, intolerant, and they are so many, that the few wiser who ought to guide them are forced to follow. To what end? [W.H.D. Rouse]
• As U.S. oil prices dropped below $60 a barrel in recent months, the industry shed rigs by the dozens and laid off crews that frack wells. Yet, the country’s wells last year gushed a record 13.6 million barrels of crude on average each day—100,000 barrels more than the Energy Information Administration, the federal forecaster, had anticipated before President Trump’s inauguration. The disconnect between slackening activity and the increasing yield has mystified even oil chieftains. “I’ve been wrong,” said Kaes Van’t Hof, chief executive of Permian producer Diamondback Energy. “I thought we’d be down by now.” [WSJ]
• Pardee Resources Company (the "Company") announced today that Greenbrier Minerals ("Greenbrier"), a coal operator on one of the Company's properties located in Logan County, West Virginia, issued a Worker Adjustment Retraining Notification ("WARN") Notice on Friday, February 13, 2026. The WARN Notice indicates that Greenbrier, through various subsidiary companies, intends to idle seven coal mines, including several located on the Company's Logan County property, and begin laying off 530 employees around mid-April. Greenbrier claims the layoffs are due to "the current adverse market conditions". This action is likely to have a material negative impact on the Company's 2026 operating results as these mines were expected to generate between $4-5 million in revenues for the full year. While Pardee intends to work diligently to replace this production on its properties going forward, there can be no guarantee that it will be successful in doing so. [Pardee Resources Company]
• Despite a mixed construction environment, Eagle’s portfolio of businesses continued to perform well during the quarter, generating revenue of $556 million, EPS of $3.22 and gross margins of 28.9%. While the residential construction market was challenged, federal, state, and local spending on public infrastructure projects and private non-residential construction remained elevated, supporting strong demand for our Heavy construction products. Our Cement sales volume was up 9% and our organic Aggregates sales volume increased 34%. [Eagle Materials Inc.]
• It should be remembered we can deport foreigners on a plane faster than they can have kids, and our long-term goal is to salami slice Democrat coalition by starting with Somalians and moving down the tribal list to reverse Hart-Celler Act (1965) with 150 million deportations. We will start by targeting all foreigners on welfare, which is an easy rhetorical argument. It makes zero sense for America to bring in worthless foreign savages who can't speak English, then give them scarce resources of free housing, welfare, food stamps, and medicine. At every stage of the process, our goal is to exhaust Democrats and force Leftists into publicly destroying their own credibility by taking ownership of indefensible positions, such as when Democrats protect Mexican pedophiles and cartel sicarios from deportations. Our goal during this process is to build cohesion among smart young white Christian men, and strengthen our position by deporting 20 million foreigners on welfare. At that point, Democrats will be massively weakened, and our wins will build self-reinforcing momentum. Our priority should always be to fracture Democrat politics by attacking the weakest and most vulnerable group in their coalition, such as transgender mass shooters. It's a win-win: either Democrats abandon their footsoldiers, or Democrats tarnish their national public brand. [Fugitive Caesar]
• Many compare India and China’s energy systems as they stand today. From this perspective, China is ahead in most new energy metrics, from solar capacity to electrification. But the comparison has limits. China is at a later stage of development. China’s GDP in purchasing power terms is over double that of India; its electricity consumption is five times greater; its manufacturing output, in monetary terms, is nearly an order of magnitude larger. It is more reasonable to compare the two countries at equivalent levels of development. When we do so, a different story emerges. India is generating more solar electricity, burning far fewer fossil fuels and electrifying transport faster than China did at an equivalent GDP per capita. [Ember] 
• We show that any cross-national measure of human material wellbeing that is (i)
  basics (not luxuries), (ii) general (uses indicators from multiple domains), and (iii) plausible
  (uses any defensible choices for weights) will have a statistical relationship with country GDP
  per capita with four features. First, the relationship will be strong, with nearly all cross-national
  variation in basics associated with variation in GDPPC. Second, the relationship will be non-
  linear, with a stronger elasticity of basics to at lower than higher levels of GDPPC. Third,
  GDPPC is empirically sufficient: no country has high levels of GDPPC and low levels of basics.
  Fourth, GDPPC is empirically necessary: no country has high levels of the basics at (very) low
  levels of GDPPC. [Lant Pritchett] 
• While Western OEMs have generally moved toward outsourcing, this is not true across the board for Chinese automakers, some of which retain much higher levels of in-house production. BYD and Leapmotor, in particular, have roots in electronics manufacturing and operate with high degrees of vertical integration. Leapmotor reportedly produces 60–70% of its components in-house. Our bill-of-materials analysis indicates that BYD manufactures around 80% of Tier 1 components and roughly 36% of Tier 2 components internally—more than twice Tesla’s in-house share of Tier 1 components (37%). A UBS study similarly estimates that 75% of BYD’s Seal is produced in-house, compared with 46% for Tesla’s Model 3 and 35% for Volkswagen’s ID.3. For BYD, vertical integration is the single most important factor behind the company’s price advantage. [Rhodium Group]

Friday Morning Links

• This paper extends a simple economic model of the regulated firm to include a wider range of both management objectives and of regulatory constraint. The authors find that these generalizations in the assumptions are able to effect profound alterations in the conclusions. For example, if a firm is constrained to a fair return on invested capital, we find that the profit-maximizing firm would have an incentive to overcapitalize (the Averch-Johnson result), while the sales or output maximizing firm would have an incentive to undercapitalize. [John C Malone]
• Below, in bullet point format, is a list of the ticker symbols across the midstream and MLP universe that have disappeared since the August 2014 peak. In total, 73 names have been removed from the universe (or become irrelevant due to size). In addition, a further 9 tickers that were created after the peak are gone too (names like DM, PTXP, RMP). [MLPguy]
• The U.S. produces plenty of gas, but bottlenecks abound, said Kevin Greiner, CEO of Gas South, which supplies natural gas to about 500,000 customers in the eastern U.S., including curtailed manufacturers. “We just don’t have enough pipe capacity to get the gas from where it’s being produced to where it’s needed,” he said. [WSJ] 
• The argument for the paleo V8 runs thusly: In the past two decades, emission and fuel-economy requirements forced pickup manufacturers to downsize engines and increase complexity, using turbocharging, variable cam phasing, direct fuel injection and other means to squeeze more efficient power out of fewer cc’s. But as a generation of buyers can attest, these hard-revving little gassers suffered a host of maintenance, reliability and durability issues. The last decade has been particularly hard on Ford buyers, who have endured a string of recalls affecting the “EcoBoost” 2.0-liter, 2.7-liter and 3.0-liter engines, 10-speed automatic transmissions and other mission-critical components. Let me take a moment here to say, recalls suck. [WSJ]
• Those who have lived in software land don’t realize they’re about to have a hard lesson in hardware. It’s actually very difficult to build power plants. You don’t just need power plants, you need all of the electrical equipment. You need the electrical transformers to run the AI transformers. Now, the utility industry is a very slow industry. They pretty much impedance matchto the government, to the Public Utility Commissions. They impedance match literally and figuratively. They’re very slow, because their past has been very slow. So trying to get them to move fast is... Have you ever tried to do an interconnect agreement with a utility at scale, with a lot of power? [Elon Musk]
• Our aggregates business once again delivered record profitability and meaningful margin expansion, reflecting strong strategic and commercial discipline and a consistent focus on what we can control. Our highly complementary Specialties business also achieved record revenues and gross profit, underscoring its differentiated value and strategic importance within our portfolio. Notably, we delivered these results despite single-family housing and nonresidential square footage starts, the two macro indicators most highly correlated with aggregates demand, remaining approximately 20% below their post-COVID peaks. [Martin Marietta Materials, Inc.] 
• When I can combine two of my passions, cycling and visiting French villages, I’m about as happy as I can be. At some point around 2003 or 2004, on one of my first cycling trips to France, I picked up a big, coffee-table book called Vu du Ciel: Villages – Des Alpes-Maritimes et du Var (you can find it in many bookstores in France and on amazon.fr). It features 73 villages from the Alpes-Maritimes department and 59 from the Var department. There are beautiful aerial photographs of each village along with a short, one paragraph description. Some of these villages I was already quite familiar with (Eze, La Turbie, Peillon, Peille, Gourdon, etc.) but many more were new to me. I made a goal to cycle to each and every one of the 73 villages in the Alpes-Maritimes section. It took me nine years (I was only able to cycle in France about three to five weeks each year), trying to reach as many as I could every summer when I was here, and in 2013 I finished. I can’t begin to tell you the sense of accomplishment and satisfaction when I rolled into that village (Tende). [Steve and Carole in Venice]
• I think if I had to do this all over again, coming out of COVID or I'll say post-COVID, I would not have -- when they went on allocation, I'd have told them to keep their trucks. That's what I'll tell them next time. They keep their trucks and when they jack prices, they can keep their trucks because I can sweat out 2, 3, 4 years, and I think my customer will support me. I think I was over eager to buy trucks because we had such a nice balance in '16. I wanted to get back to that balance quickly. And I didn't stand firm enough when they came through with massive price increases. I just don't know it's unsupportable. Now they had all this talk, and we all saw it and I think everybody is a little guilty of this saying that, as Mary Barra did, she had something, I don't know, after 2037 or something, GM will not make an internal combustion engine. Well, if you're on my end of the deal, that's a frightening thought because the other ones don't run, you see. So you can see how I fell into the trap and think well hell, if she's not going to build any, but then my friends at Ford didn't make quite as broad a statement, but practically speaking, they were running their investment as if they were no longer willing to make it. [U-Haul Holding Company]

Friday Night Links

• Bottom line: the slow-moving, minimally invasive Anglo-Saxon schemes of regulation and litigation assume fair play, that people mean well, deserve due process, and are entirely unsuited for the vast majority of the world’s population, who do not share these cultural values. Such systems require a “guilt culture” like ours, where individuals, as part of their self-image, desire to behave according to abstract notions of right and wrong and align their behavior, however imperfectly and often tempted, to those notions, and feel bad when they fall short. In much of the world, the only effective regulation to make scammers behave is swift, violent, and unilateral punishment, no trials, no judges, no juries. Our system is only well-suited to a free people with at least the contents of cultural Christianity, where outliers are rare enough that enforcement’s necessity is rare. It will fail against the human default of “shame cultures” where public reputation is all that matters, and besides which, cultures where cheating foreigners, especially, from their perspective, gullible, foolish ones like us who believe in people following the law voluntarily as a matter of personal morality, is seen as smart, not wrong. [The Tom File] 
• This attitude is a variant of the philosophical notion that all truth can be arrived at by pure thought and is unfounded and harmful. One wonders what state space travel would be in if the Goddards and yon Brauns had spent their time trying to find the universal laws of rocket construction before trying to build space ships. Al needs a stronger experimental base. Like other branches of endeavor (notably physic, aeronautics and meteorology), we should realize our desperate need for more computing, and do things about it. [Hans Moravec]
• I don’t think we appreciate how much modern liberalism will be associated with the brief period of time where broadcast media was dominant, and small groups of people could send one-way communications to large groups who could not yet compare notes about what they were receiving. [Harry Bergeron]
• In exchange for deleting the cost, complexity, and schedule risk of a gas powerplant comes the sizable land demands of a solar array. To a rough approximation, 15 acres of solar are required per MW of DC AI load. For reference, the USA has about 150 million acres of unpopulated desert west of the Mississippi, enough for 10 TW of AI development. 10 TW is much more than total global electricity generation today. There is plenty. On the other hand, while fracked gas is relatively abundant (for now) the turbines that convert it into power are hard to make, hard to ramp, and largely already spoken for. If AI seeks growth beyond the production ramp of turbines, it is clear which way the wind is blowing. [Casey Handmer]
• If you look at the history of vitamins, they were all discovered between 1910 and 1948. Casimir Funk invented the idea and called them “vital amines.” The thing is they ain’t all amines: Vitamin C isn’t, nor is B5 or B7 (I think they’re amides; I never took organic chemistry, sorry not sorry). We’ll stick with the “your body needs it” definition. Vitamins were originally discovered to prevent disease, but also to optimize health. I don’t think there is any acute disease associated with Vitamin-D deficiency (which most indoors people have), though it makes you pretty unhealthy if you don’t have enough of it. Or, conversely, helps you to remain pretty healthy if you have a good amount of it. The fact that there exists such powerful vitamins without acute deficiency syndrome rather indicates that there may be many such cases. Here are a few inexpert suggestions for consideration by people who get paid to think about such things. These are all well-known substances with well-documented effects; I’m not suggesting anything esoteric. Some of ‘em I take myself, because spending a few bucks at the supplement shop is cheaper than massive medical intervention later in life, and there’s no obvious downsides other than purity/adulterant concerns (which are ubiquitous with anything you put in your mouth anyway). [Scott Locklin] 
• When bureaucracies were created, they were innovative and productive organizations. I know it’s hard to believe, but USDA, the FDA and the EPA were once as innovative and productive as early years NASA. Now ... not so much. People have been complaining about PFUAs and stuff like fire retardants to the EPA for decades. But the squirreley numskulls who warm the chairs there are too busy doing the crap they’ve been doing since Nixon created them by fiat in 1970. Optimized for old battles. Most of which are already won. [Scott Locklin] 
• Smil takes us through a couple of historical examples of Inventions; ones which helped but later turned into problems (leaded gasoline, CFCs, DDT), ones which were supposed to set the world on fire but didn’t (airships, supersonic flight, fission reactors) and ones which sound amazing but we just plain can’t figure out how to do (nitrogen fixing wheat, fusion reactors, hyperloop). Smil, because he actually studies the history of real technologies and how they work makes some disapproving sounds at the AI hypewagon spinning up at the time he wrote this (2023) and reiterates that the idea of continual progress is a total myth. There was a time of enormous technological progress which actually changes how people live: it’s mostly been over for decades. People still act as if we’re still being given marvels like refrigeration and gas turbines, when all we get is twitter (founded 2006) and radiophones with longer battery life that you can use to call a taxi without talking to anybody. [Scott Locklin]
• Organic growth capital investments, net of proceeds from asset sales, are expected to be in the range of $1.9 billion to $2.3 billion in 2026, which includes estimated growth capital expenditures of approximately $2.5 to $2.9 billionless approximately $600 million of proceeds from asset sales. Sustaining capital expenditures are expected to be approximately $580 million in 2026. [Enterprise Products Partners L.P.]

Monday Morning Links

• Shell’s faster-moving scenarios envision annual solar installations exceeding a terawatt globally by the early 2030s — roughly the equivalent of adding today’s entire US power system every year. At that scale, accelerating, market-driven electrification becomes difficult to stop regardless of politics. Physics reinforces the trend, according to Shell: “Electricity is increasingly the most efficient way of delivering energy services, and electrification continues to expand across transport, buildings and industry.” Electric motors waste far less energy than internal-combustion engines. Electrifying industrial processes avoids many of the energy losses inherent in combustion. As Shell calculates, electricity’s share of final energy — the energy actually used by homes, vehicles, and factories — rose by two percentage points per decade for most of the past century, but is now climbing at more than twice that pace. [Faster, Please!]
• Herman Kahn, gregarious and rotund, is presented as the model “conservative futurist” in my 2023 book. President Ronald Reagan eulogized him in 1983 as “a futurist who welcomed the future.” [Faster, Please!] 
• Consider two statements by the Japanese prime minister and the US President over the past few months. Each leader called time on the prioritization of finance over operating competence. When Mr. Trump exhorted defense contractors to cap executive pay and put production before buybacks and dividends, he was asking them to act more like the Japanese conglomerates who are already doing these things (and who are often better at making and maintaining US weapons systems than their US counterparts). Consider RTX compared to Japan’s three “heavies,” all of which supply key components to RTX (and have had to share in multi-billion dollar cost to repair RTX’s mistakes in its civilian engine business). Between 2010 and 2024, RTX spent $40bln on buybacks against $26bln on capex and $39bln in depreciation while paying its CEOs (including Greg Hayes, who trained as an accountant) over $300mm in compensation. The three heavies spent $180mm (total) on buybacks and $40bln on capex while spending far less than the $5mm/year CEO salary cap proposed by Mr. Trump (all numbers from Capital IQ). It is no wonder that Mr. Hayes’ successor (a lawyer) needs Japan’s help in dealing with its multi-year Patriot missile backlog…help Japan’s heavies (all led by experienced engineers) can fortunately provide, while introducing a slew of new products from nuclear power plants to energy efficient turbines to advanced frigates and submarines in the bargain. [Japan Optimist]
• Most notably, if men and women have very different views or experiences of travel, this could influence how easily men and women pair up. If women see travel as an important form of identity-formation, a high-status activity, and a valuable form of leisure, but men disagree, then women and men might find themselves at odds over what activities they enjoy together, or that they have fundamentally divergent experiences of the world. Men who are unwilling to travel might even inadvertently broadcast to women that they have low social status. As it turns out, voluminous survey data suggest women really do value international travel more than men, and that women make up a disproportionate share of those traveling internationally for leisure. For whatever reason, international leisure travel is a disproportionately feminine activity, and one that women tend to see as part of their identity formation and growth. [Institute for Family Studies]
• Buzzi generated 40% of its revenue and 52% of its EBITDA in the United States in 2024. The company has doubled its U.S. revenue organically over the past 10 years, and its American assets generate margins consistently above other U.S. players. Yet Buzzi’s U.S. peers trade at 12x 2025E EBITDA. In Europe, Heidelberg and Holcim trade at 9x-11x 2025E EBITDA. By contrast, Buzzi trades at just 6.8x 2025E EBITDA, and that excludes €1.2 billion of value from its high-margin Mexican business and other minority-owned assets. If Buzzi was valued in line with its comps, the stock would be worth twice as much. [Kerrisdale Capital]
• The Natural Gas Pipelines business segment’s financial performance was a record for the fourth quarter. Growth in the fourth quarter of 2025 relative to the fourth quarter of 2024 was due primarily to higher contributions from our Texas Intrastate system, KinderHawk and Outrigger Energy assets,” said KMI President Tom Martin. “Natural gas transport volumes were up 9% compared to the fourth quarter of 2024 primarily due to LNG deliveries on Tennessee Gas Pipeline. Natural gas gathering volumes were up 19% from the fourth quarter of 2024 across all assets, with our KinderHawk system making the largest contribution. [Kinder Morgan]

Long Weekend Links

• One way to think about computation before computers is through the work of Herbert Simon, the only person to win both the Turing Award and the Nobel Prize in economics. He explained that firms, like computers, are information processing systems. Firms have hierarchy, limited cognitive power, and bounded rationality. Firms also have learning curves, where unit costs fall predictably with cumulative production. In a way, humans organized themselves to be better information processors long before computers. We might extrapolate the trend before Moore’s Law to 400 years ago, with the invention of the joint stock corporation. [Zhengdong Wang]
• A feature shared by all living organisms whose behavior is complex enough to place them near human in intelligence is a hundred billion neuron nervous system. Imaging vision requires a billion neurons, while a million is associated with fast and interesting, but stereotyped, behavior as in a bee. A thousand is adequate for slow moving animals with minimal sensory input, such as slugs and worms. A hundred runs most sessile animals. The portions of nervous systems for which tentative wiring diagrams have been obtained, including much of the brain of the large neuroned sea slug, Aplysia. the flight controller of the locust and the early stages of some vertebrate visual systemsTreveal that the neurons are configured into efficient, clever, assemblies. This should not be too surprising, as unnecessary redundancy means unnecessary metabolic load, a distinct selective disadvantage. [Hans Moravec]
• If you’re trapped by a problem, in your research, or in business, or on a military campaign, and you can’t figure out any way to free yourself, try turning the tables on yourself and prove that it’s impossible for you to win. Note that this is not the same as avoiding impossible problems in stage 1 (the site survey), we are assuming here that we’ve chosen a solvable problem, but we’re going to pretend it’s impossible anyway. Why? Because we might learn something from how and where our impossibility proof eventually fails. There will be some crux. Some moment it can’t connect and all turns to ash. Study that moment, it may be the key to your original problem. The adversarial equivalent of this is putting yourself in the enemy general’s shoes. What is the move you can make that there’s no way for him to plan for or respond to? That’s your move. Example: It’s your move in a chess game and you’re in a horrible position. You can feel the net tightening around you, and you don’t know how to escape. So you turn the situation around, and think about how your opponent can force a checkmate. All of the paths to checkmate hinge on attacking one particular square. You return to your side of the board and see that there’s a method of defending that square which blocks every checkmate and lets you escape the trap. [Mr. and Mrs. Psmith’s Bookshelf]
• I believe that Chinese technological success is now the rule rather than the exception. There are two fields in which China is substantially behind the west: semiconductors and aviation. The chip sector is gingerly attempting to expand under the weight of US restrictions; meanwhile, China’s answer to Airbus and Boeing is on a very long runway. I grant that these are two critical technologies, but China has attained technological leadership almost everywhere else. And I believe its technological momentum will continue rolling onwards to engulf more of their western competitors over the next decade. The electric vehicle industry is the sharp tip of the spear of China’s global success. Chinese EVs have greater functionalities than western models while selling at lower price points. A rule of thumb is that it takes five years from an American, German, or Japanese automaker to dream up a new car design and launch that model on the roads; in China, it’s closer to 18 months. The Chinese market is full of demanding customers as well as fast-iterating automotive suppliers. It also has a more productive workforce. According to Tesla’s corporate disclosures, a worker at a Gigafactory in China produces an average of 47 vehicles a year; a worker at a Gigafactory in California produces an average of 20. China’s automotive success is biting into Germany more than anywhere else. I keep a scrapbook filled with mournful remarks that German executives offer to newspapers. “Most of what German Mittelstand firms do these days, Chinese companies can do just as well,” said a consultant to the Financial Times. “In my sector they look at the price-point of the market leader and sell for roughly half of that,” the boss of a medical devicemaker told the Economist. It’s never hard to find parades of gloomy Germans. Now more than ever it looks like their core competences are threatened by Chinese firms. [Dan Wang]
• Also, when you look at these cars and there’s no one driving, I actually think it’s a little bit deceiving because there are very elaborate teleoperation centers of people kind of in a loop with these cars. I don’t have the full extent of it, but there’s more human-in-the-loop than you might expect. There are people somewhere out there beaming in from the sky. I don’t know if they’re fully in the loop with the driving. Some of the time they are, but they’re certainly involved and there are people. In some sense, we haven’t actually removed the person, we’ve moved them to somewhere where you can’t see them. [Andrej Karpathy]
• The mineral deposit at the quarry is layers of limestone that originated from a combination of depositional and erosional processes associated with sea-level fluctuation during the late Pleistocene era. The geology is composed of three major sedimentary formations as discussed in Section 6.3. The total thickness of the combination of the Miami Limestone layers varies from 70 to 85 feet. The current quarry excavation extends over an area of approximately 3,045 acres and will expand over the life of the mine (LOM) to 4,655 acres. The quarry currently averages an annual production of approximately 10 million tons of limestone to feed both the aggregate plant and the cement plant. [Titan America SA]
• The transaction includes modern and high-quality assets such as an integrated cement plant, operating one of the most efficient cement kilns in Pennsylvania’s Lehigh Valley, with a clinker production capacity of 990,000 short tons per year. Thanks to its attractive location, the plant is well-positioned to serve a 6.2 million short ton per year addressable market across Pennsylvania, Maryland, Delaware, and Ohio, with strong exposure to large-scale infrastructure and technology investments and extensive transportation modernization programs. The acquisition is expected to accelerate top-line growth, enhance geographic diversification and improve operating margins through the realization of integration synergies, including substantial operational and commercial benefits from integration with the existing assets—Essex Cement in New Jersey and Roanoke Cement in Virginia—as well as Titan America’s fly ash processing and marketing facilities operated with Separation Technologies, a Titan subsidiary across Pennsylvania and Ohio. [Titan America SA]
• Amrize has entered into an agreement to acquire PB Materials Holdings, Inc., the leading aggregates business with a complementary ready-mix concrete network in the high growth West Texas region. Part of Amrize’s profitable growth strategy, this acquisition will strengthen the company’s aggregates business, adding over 50 years of aggregates reserves in West Texas to serve long term demand. PB Materials will add 26 operational sites into Amrize’s network, extending its operations throughout Texas and the Southern region as infrastructure, energy projects, data centers and commercial investments drive construction growth. [AMRZ]
• The Texas-Arizona-California corridor becomes the undisputed tech mecca, triggering a land grab unlike anything since the railroad era. Water rights, housing developments, commercial real estate, data centers, AI infrastructure - everything gets bid up to absurd levels by everyone from sovereign funds to family offices to retail FOMO. The border states that were flyover country a decade ago become more expensive than coastal tier-one cities. Arizona water rights trade like Bitcoin in 2021. Someone will get very rich. Most will arrive too late and overpay. [Mojo]
• If breakevens reduce by only 30 percent over the next five years, approximately 60,000 locations currently classified as Tier 2 ($40 to $50 per barrel of oil equivalent [BOE] breakeven) could achieve the same breakevens as today’s Tier 1—less than $40/BOE, in the absence of inflationary pressures. This could increase the overall Tier 1 count by 150 percent. A range of innovations, such as horseshoe wells and other next-generation designs, frac efficiency gains such as trimulfrac, and other novel breakthroughs yet to be developed, could all contribute to this movement, alongside the cost efficiencies coming from expanded scale. [McKinsey & Company]
• Tech giants are sick of waiting around for electricity. But locking in future power means taking on more upfront risk. The race to build up more AI data centers has created a strain on the existing power grid while also bottlenecking the ambitious plans of the world’s largest tech companies. AI systems consume far more energy than more typical servers and other computing gear, but new energy generation facilities don’t exactly go up overnight. As a result, companies better known for driving advertising clicks and social network likes are now diving into the power business. In a landmark deal, Google-parent Alphabet last month agreed to buy renewable energy developer Intersect Power for $4.75 billion, plus the assumption of debt. [WSJ]
• I’m writing this because we’ve obviously been differentiating into castes in the USA - much like all good things (height, attractiveness, reaction time, life satisfaction, etc) end up being positively correlated with “g,” there is a cluster of people who are the exception to the “80% of Americans are overweight or obese” rule because they exercise and watch what they eat, AND have good careers and are educated and are more conscientious and have better time preference and own real estate, and so on. [Performative Bafflement]