MLD Market Update January 2026 - Allocator’s Perspective - Canoe Financial - Energy Markets

Welcome to MLD Wealth, Money Matters, a podcast dedicated to sharing insights on the market and economy, hosted by Chad Larson, top-ranking portfolio manager at CG Wealth Management and Founder of MLD Wealth Management. In this podcast, Chad shares concise, clear and authentic views on the market, helping gain greater clarity in the current state of the investment landscape facing investors. Hey, guys. Welcome back to MLD Money Matters, where we break down the forces shaping market portfolios and the future of investing. I'm your host, Chad Larson, so thanks for joining us first off. Today's episode is an important one. At MLD, our investment process has always been grounded in identifying structural themes early, long before they become consensus. And over the years, that discipline has guided our positioning across things like gold during periods of monetary instability, defense and rising geopolitical risk, health care through demographic and invasion cycles, and more recently private credit as traditional capital markets retrenched. With these themes having common is timing. They matter not because of headlines, but because the underlying fundamentals were quietly shifting. Today, we believe energy represents the next major structural theme, one that is still widely misunderstood, significantly under-owned and mispriced. Over the last decade, energy has been treated as a sunset sector, and yet beneath the surface, a powerful realignment is underway, accelerating global power demand, disciplined capital allocation, surging data center and AI driven electricity needs, and a wave of consolidation that is reshaping the industry from the ground up. Recent geopolitical elements only reinforce this reality, whether it's rising global conflict, supply chain fragmentation, or the renewed focus on energy security. Events such as the recent escalation involving Venezuela remind investors that energy is not just an economic input, but a strategic asset. In this environment, passive exposure and surface level analysis falls short. Understanding energy today requires deep industry knowledge, local relationships, and active management. To help us unpack this, we're joined by one of the most respected voices in the energy space. Dave Zabanka, Senior Portfolio Manager, and Managing Director at Canoe Financial. Dave and his team sit at the center of Canada's energy ecosystem with deeper relationships across producers, private equity, and the company's driving the next stage of the energy cycle. He's been articulating a 15-year energy cycle long before it entered the mainstream narrative, combining rigorous data with on-the-ground insights that few can replicate. Today, we'll discuss why energy demand is accelerating faster than supply, why markets continue to misprice the sector, how artificial intelligence is driving power demand, what consolidation means for long-term returns, and most importantly, how investors should think about positioning for the next decade ahead. This is a timely conversation for investors looking to cut through the noise and understand what's really changing and need to surface. So with that, let's dive in. So first update, thank you so much for the viewers. I've been trying to get Dave on the podcast for months. This is the first time we're able to connect schedules, and so the funny thing about that is we're teed up on the back of the US's involvement, and I'm not going to call it an invasion, but with operation, absolute resolve with Nicholas Maduro being captured by President Trump. We will tie into that, but I don't want to distract the conversation on this one thing. These are written in article, which I'll share recently, but it's shock and volatility for the short-term, and that's normal. But I wanted to really have Dave on to talk about the energy supercycle and then establish that macro thesis. So with over to you, Dave, and let's dive into it right away. Yeah, so you said a lot there, and we'll talk about a bunch of the various things that you talked about. Yeah, and I didn't tell you up the question, I apologize, so you've said before that we're five years into a 15-year energy cycle. What is the market still getting wrong about global energy demand? Yeah, so I mean, you referenced the word supercycle, just to kind of be clear, like I don't think we're in a supercycle. I think we're in a commodity cycle. I actually think we're in a supercycle for power as a kind of sidebar, which we'll talk about later, but like I think we're in an energy profitability supercycle because the capital's reluctant, the capital's hesitant. Yeah, but are we going to need oil? This is all slowly changing as we think about where we are today versus kind of say three years ago. People are getting smarter on these topics. But the one thing I would say to you is like investing in energy is a very investible theme, right? And just to kind of talk through some of those high-level points, like the world uses 300 million barrels a day of energy equivalent. This has been growing at a pace of five million barrels a day of energy equivalent growth each and every year for the last 20 years. But we actually see this inflecting to six to nine million barrels a day of energy equivalent growth as you think about just kind of the developed world versus the developing world. And like they're using three barrels per person per year of oil. Well, in North America, we use 22 barrels per person per year, like there's barely like seven billion people in the developing world, one billion people in the developed world. So you have stuff like that. There's a hundred million people a year moving from rural centers to urban centers between now and 2030. You have this energy demand tied to AI that simply wasn't in the cards here two, three years ago. So there's these structural shifts happening beneath the surface. And that touches power, that touches oil, that touches natural gas, that touches uranium, like your energy manager is excited about how you see this big structural path, but kind of still the lack of embracement to the sector. I think that's the big T up, right? As I just think about a 50,000-foot view for the sector. Yeah, you know, I should maybe set the table a little bit to viewers, listeners, readers alike. You know, I think one of the misnomers, you know, maybe less in Canada, definitely not so much in Alberta, but really like what, you know, when we talk about energy, so many people just default to oil. It definitely dominates a lot of the conversation. But, you know, within the portfolios, there's four drivers, you know, that, you know, and it's the sub-sector approach that energy is much more than just oil and gas, and it isn't as homogeneous as you think, you know, and I'm glad you touched on that. So I really want viewers to stick a step back. You know, well, maybe dive into a little bit of uranium and stuff backwards as we get through it. So, you know, we talk, we're going to talk a bit about data-centered power demand because this is maybe a little bit of a, a bump off the conversation that we kind of plan to have, and maybe just a reason for me to speak, which is common throughout these podcasts. You know, I've been doing this for 22 years, and you know, for the, as far back as I can remember, we talked about that migratory pattern shift of people going from into the middle class and using more energy. It's quite funny from a behavioral finance or from a perspective of how people think is that the longer a theme is around, the more they start to discount it. When, in fact, like you said, this has been 20 years we've seen growing energy demand. In fact, does that not make it more investible? And I think we lose sight of that. Someone's a new shiny thing comes along. So after as a service or, you know, AI and everyone kind of runs like a locus, but for 20 years, this has been building. You know, do you want to talk a little bit about data center power demand? You know, I'm hearing demand is set to quadruple, you know, over the next decade. You know, how does that structurally change the investment energy investment landscape? Yeah. So let me see a couple of things on that and then tie it into the bigger side of things. And so, like just on data center demand, just to kind of just paint perspective for people. So they understand how when I said this just simply wasn't in the cards and what that means. Between now and 2030, when you just look at the US, like there's going to be 40 to 60 gigawatts of incremental power demand from data centers, just from data centers. And to put this into perspective, one gigawatt powers roughly a one million person city. And so in the US today, there are 11 cities over a million people. And we're going to pop up 40 to 60 new million person cities between now and 2030. Like this is staggering, right? This amount of step change is staggering. And guys like me are just like I actually physically don't know where you're going to get the power from because of how I just laid that out on how hard this is going to be. And so that's where I said, like I think we're in a power super cycle because I don't know where you're going to get. And when you're in a super cycle, what does that mean? It means you structurally own things tied to that. And by dips along the way. And yeah, you trim some of these goofy rallies. You buy some dips, but you structurally own it for multiple years on that thematic. And I know you do chat within your portfolios because you've been on some of this. So inflecting this kind of mortar the macro on what you talked about. On how there's been kind of people embracing AI, but not these other areas and stuff like that. Look, our view at canoe is how you've made money the last 20 years call it, 10 years, 20 years. Like that was a different regime than what we're going into. And interest rates have been coming down as you peaked in the 80s and you've been coming down and you've been in kind of periods of deflation. And there hasn't been these big roaring inflations like the 70s and stuff. The world's got along. It's been globalization. Like when you look for what are the structural pillars that you want to have that are multi-year themes for a modesty cycle. That involves periods of populism, de-globalization. You want to see stuff like what is it deficits, energy security. Like these are the themes that we have right in front of our faces. And when you look at those bigger structural themes, that's not what the world's looked like the last 15 years. And that's what it looks like today and going for it. I don't see this deficits, all of a sudden getting under control and all these governments are running balanced budgets. Not going to happen. So when you have those pillars like I described, you want to own hard assets and commodities. And this is going to become a 60/40 portfolio that's been the theme. It's going to be 60/30/10 or some version of that. And that 10% is going to be commodities. So I fit in the middle of that as an energy guy. And I would tell you that when you look at what's the world been grabbing on to the last 12 months or whatever, gold, copper, silver, these commodities are very highly correlated as you look at longer term charts. They all move together. We're in a currency debatement cycle. And when I look at energy and think about how the cycle ends, well, the cycle ends when energy is outperforming other sectors for multiple years. And the capital is coming in and the weightings are going up within the S&P 500. And you saw that in kind of 2012 to 2014. And the capital is coming in. The private equity guys are back and grow, grow, grow, everyone's blowing their brains out. Yeah. And you kind of think about again, how to commodity cycles and shortages, price spikes, governments taking care of their own people because they're worried that their prices are going up too high. Like the world's dividing chat and all these things are starting. But all those things about how cycles end that I laid out, that is not where we are today in the energy sector. In the energy sector today, there's reluctancy, hesitancy. It's only 3% of the S&P 500 is awaiting. It's underperforming other sectors for multiple years. There's no spending cycle happening in energy right now. Well, there is when it ends and investors embrace the spend. So the balance sheets are pretty good. Like, I feel like we're just waiting and bumping along. But I think this macro is already shifting before our eyes. But there's no, it's not like energy is going to the moon, but these other commodities are giving you triggers and 2020 gold lead. Then copper came in behind. Then energy was the place to be. Then no one liked gold kind of 12 months ago. Now everyone likes gold. Now it's like copper. It's one big trade. That's what I think we're at. That's a perfect tee up into this segment too that we're going to talk about. Because it's quite interesting is being early is a dangerous being late is so what's the right word without sounding rude. It's so typical of retail investors. When I look at our waiting, me as an allocator overseeing, as a fiduciary of overseeing clients' capital is you've got to lace up your boots. You've got to get there. You've got to get invested to be interested, et cetera. As our clients now, may they be a tactical waiting into the position capital with you in one of your core funds. We look to build that as more and more signals develop because with segment two, we're going to talk about energy evaluation discount, contrasting fundamentals with current market sentiment. You started to touch into that about energy being one of the lowest weightings in public markets and decades. Maybe why are the public markets so complacent towards energy despite exceptional fundamentals? Yeah, I would tell you to lay it out, like in 2021-2022 when commodities were just going and inflation was ripping and like the macro was shifting for the first time in like decades, right? And so that created pain in other sectors when that happened. And I would say for the last three years, we've been going sideways as other sectors have been outperforming. Why has there been reluctancy, hesitancy, all these things like people kind of say, like, yeah, your funds did really well last year. You're kind of up 25% round numbers, up 25 the year before. Like, we've been outperforming this sector. The sector has been outperforming. Yeah, the sector, like to be clear, if you've been overweight energy massively last two, three years, just indexes, other sectors have been the place to be. So, oh, it's engulfed all the heavy lifting for us last year. Yeah. And it's about sector allocation. The, you know, back on that theme, and I just need to be concise on it, you know, like the complacency, you know, and energies, but at the sector level stock performance standpoint energy, you know, it's been, you know, flat and we look at some of the dispersion doing, you know, some names have done really well, some have done terrible, you know, but the median and you guys have outperformed. And so we'll get into your process later about how you approach, you know, being, uh, being selective within the subsectors, you know, we won't get into, you know, one of the things we're limited to, I'll, I'll, I'll tee you up and poke you for a couple like key takeaways near the end, but, you know, energy at the business line level is delivering more shareable, but cash than any other sectors, you know, why, it would, you know, it's a obvious one wire and investors rewarding that yet, and if energy is becoming that growth sector again, as your valuation charts, you know, suggest, you know, how do we, how do we look at that as weightings? Like, what is the historical weighting now to the S&P? And then from simple math, the weighting is gone down, not because there's the companies are smaller, but because of the valuations and the return profile, you know, we just look at the magnificent seven, you know, to begin with, like, they've done so well, it kind of dwarfs everything. If you got one eight foot tall person on your team, everyone else on the basketball team starts to look pretty short. Is that kind of what you're seeing in that rebalance that will come? And then how does that happen? I don't want to scare people, and Dave and I have talked about this at length, is two things are going to happen and maybe a combination there of both. Either there's a correction that the upper echelon either the eight foot tall basketball player, you know, breaks his knee, you know, or, you know, maybe the short guy starts to grow and hits a growth spurt. Yeah. You kind of laid out a lot of wire in my head, Zad. And so, again, like, when you think about these commodity cycles, just again, like for investors, go pull up a 10-year chart of the Bloomberg commodity index. Like, it peaked in Russia, Ukraine. It was going down for multiple, like, 18 months, two years. It's been kind of going sideways. And now you're starting to see these random gold silver coppers, whatever move up. And so, again, like I told you, these commodities, when you kind of have this influx of commodities and they're pushing higher, that is not good for multiples in other sectors. Yeah, but oil won't play. Well, 100 years of history tells you it well. As you look at money supply and how oil's correlated with that and these bigger macro themes of debatement and we're in a currency debatement cycle. And so, like, when we look at oil prices today, you're damn near close on oil prices relative to the cost of getting it out of the ground. And when you look at that standard deviation, it's not to say it can't go a little lower. It just isn't going to go that much lower, that much, that long, I don't think, for where we're at in the cycle. And so, to kind of tee this up, there's three stages of an energy cycle, disbelief, optimism, euphoria. Those are the three stages. We're still in disbelief. And that's where you kind of teed it up perfect of like, well, when are we going to get out of this disbelief? I don't know. Like, we've been going sideways for two, three years here. Is it another six months? Is it? But I actually think we're closer today on moving out of this disbelief stage to optimism because of our points of entry, right? When you think about Russian vades, Ukraine in 2022, oil was a hundred and dollars. Today is 58, right? Natal gas was nine. Now it's three. Inflation was 9%. It's been coming down. Interest rates have been up. All we've heard from the US administration in the last 24 months here has been Powell's got a cut. We got a cut. Powell's got a cut. Cut, cut, cut, cut. The energy sector does not traditionally do well in an interest rate cutting cycle. It's when you start removing the cuts. It's when the commodities surprise when everyone's been looking down. It's when you look at the exon Chevron earnings that have already retraced 50% from 2022. The average retracement when you go through these mini checkbacks in the bigger commodity cycle is 50% and it takes two years. We're at 60% and we've been going sideways for 30 months. So all of these things are leading me towards of like, we're getting closer to the next leg of commodities go up when everyone's looking down. OPEC's been bringing down spare capacity. The world's becoming a more unstable place. This is probably a good influx into Venezuela like the world's barrel counting looking at all these things. The biggest takeaway for investors is if you think China and Russia are fine with what just happened over the weekend, you're wrong. The right or wrong. Geopolitical event like China invades Taiwan like it's coming you guys and and then people will gravitate to, well, who has the commodities and how are they going to get them? And this is not a Canadian crude is out. Venezuela crude is in. This is a US sales not going to be producing where it is 10, 20 years from now. The US is doing a smart thing to align itself with more sources of heavy oil, right? And I think Canada's it's a Canada and Venezuela thing, not a just Venezuela thing. And that quote the people need to figure out like again, another data point for you 18 months ago, Mexico was exporting 1.2 million barrels a day of heavy. Today, they're only exporting 700 like a lot of that heavy went to the US. They're missing this heavy barrel and they're trying to source it to be energy security tied for Americans, right? And so this is where the puck's going. I think it's all going to align. I think we're getting closer to moving out of this disbelief stage to optimism. And when that happens, those those transitions in the market tend to kind of be violent. So yeah, to finish off what I was saying. I think we're going to be moving from some version of a growth market to value or growth to commodities or however that's looking. And these transitions sometimes are quite messy and our commodities, the driver of that like our oil price is spiking while everyone's bearish in short positions or at 30-year highs. If it is, you should be overweight today, right? Or is it a more there's a bit of a global slowdown or something and and we kind of go down a bit, but the pains and other sectors because commodities really don't go down that much and they start going up and the back of the curve is actually rising because deficits are so big. I'm not going to be the macro expert, but I think energy's not the risky area of the market of what I'm talking about. Yeah, yeah. No, I agree with you. Let's jump into segment three, you know, and you know, we're going to talk about consolidation and and near all agopalase and you may be explained, you know, why industry structure is better, you know, than last cycle. You know, what does today's industry structure with fewer companies controlling more resources mean for, you know, long-term investor returns and how permanent is the newfound discipline around catbacks, dad and production growth, you know, living here in Western Canada, you know, I always, we've joked, we'll leave the name to side is you know, I look at some CEOs running, you know, large energy companies here in Canada and so yeah, they still have PTSD or they went, they went through their last downturn and balance sheet seeming dark, robust, you know, companies are free cash flowing and share buybacks, you know, is the consolidation theme priced into the market yet or is the best still yet ahead? We've seen some landmark transactions recently. How many people are left, you know, and what does that mean for the sector? Yeah, so again, another good tee up and just a kind of, again, if you looked at a Northeast BC land map kind of in 2014, it's like a colorful rainbow, there's so many companies, you look at that. I think I own land up there at one point. Yeah, fair enough, everyone own land up there. There's a junior. But like again, that was the structure of the energy sector, too many companies, too many energy portfolio managers. As soon as the price goes up a little bit, they all react to price, they're all raising equity, they all bring the MPV for to press on the gas pedal. A Northeast BC land map today is controlled by five companies, right? Termaline as an example controls 50% of the liquids in Northeast BC, 50% of the condensate butane and probane, like that is crazy. So you look at CNRL leading into COVID 1.1 million barrels a day, today they're 1.6. Termaline was 300,000 barrels a day pre COVID, today they're 650, 700,000 barrels. White cap was 70,000 barrels, today they're 370,000 barrels. You look at the ARC 7G transaction. You go south of the border, Chevron buys Hess, Exxon buys Pioneer, like there's all this consolidation happening and what is happening right before our eyes, oligopolys are forming. And when oligopolys form, it's good for profits, right? If you sit down with the CFO of EQT and you talk to that guy, second largest gas producer in North America, hey, like do you think the winner is going to be good and gas could go up? Yeah, it could. Will you drill in anticipation of why would I, why would I do that? Like if I get a price signal with the curve and the curve moves up and I can make a good return for my investors, I will give the market growth if that's what they're calling for. But until I get my price signal, why would I do that? Instead of blowing your brains out in this. He's going to voucher all forces and I would just say two companies on average are spending 40 to 60% of cash low on cap X. This used to be a way higher percentage. So when the commodities go down, they tweak the cap X down a bit. When the commodities go up, they tweak it up a bit. But when the commodities go way up, they just hand a bunch more money back to shareholders. Yeah. So does that mean balance sheets have low debt and equity or insurance is rare in, you know, I think one of the things you mentioned to me is like the, you know, you talked about these land maps. We can kind of solidate it. You know, this scarcity premiums emerging and top to your assets is that what you would expect. And it's almost kind of like duck duck goose, like who's next? You just nailed it, man. Like the theme for investors on what I just said is scarcity of quality resource. That's the theme. If you lay out that theme on what I just said, like Murray Edwards has like the sector has been handing back money, doing shareholder returns, buybacks, dividends, all this stuff the last two, three years. I remember the name escapes me, you'll probably know it better. And you know, no foul if you don't, there used to be like a physical energy magazine that he used to get early in my career. And it would just list off like the production and the debt and the cash flow per share of the, you know, large caps, the integrated, the mid cap, the small caps. And I remember over years, like it used to be pages and pages long, you know, and then you could just see like those pages and pages shrinking. Like it's pretty bad when a, when a generalist, not a specialist like myself can almost name, you know, 70% of the productive capacity in Canada, you know, off of memory. And again, I'm a generalist, not a specialist. Is that, does that, you know, with, with that maybe we, you know, maybe we kind of jumped into the next part of the segment, which is public versus privates. You know, I know within your strategies, you have the ability to have a sleeve, you know, of privates, but, you know, contrast the behavior of sophisticated institutional capital, you know, with public investors. And, you know, some of those, those key points, you know, from, from some of the memos we shared back and forth, you know, private equities pouring tens of billions in energy quietly, well, public investors sit on the sidelines. So what does that tell you? What are the private investors seeing that the public markets are missing? And does this set up a potentially explosive rotation in energy when sentiment shifts again? Because the smart money gobbling this up. Yeah. So I mean, we've talked about the macro. We can see the commodity cycle brewing. When did this exactly happen? I don't know. You don't know. We're looking for signs. Don't get too bearish given where we are. Like these are all the things that we've talked about. But we, I just kind of outlaid a big theme that investors should focus on is scarcity of resource. So this is happening in front of our eyes. The public markets have been complacent on energy to call it out because they've been making money in other areas of the portfolio. Right. So there's no need to go buy some energy stocks and go overweight as other things are still working. That's going to have its day in the sun. But the fundamental set up here is already happening. And the multiples are starting to expand for certain assets and companies in this digestive phase that we've been in because of the pools of capital showing up. The companies are in good stead. Hostile bids are going on with the Strathcona Megs. You're watching the corporates in Sonobius' come in and up their bid multiple times because they can. They're feeling that there's not another five megs behind. Now the private equity guys are there. They're ain't just a couple, man. There's the most private equity money I've seen here in 10 plus years. Trying to put capital to work. They see this power theme. They see how Alberta can fit into that. They see the sticks on the map. The screen better than their US sticks on the map with shale. Right. They see the long life reserves in the oil sands. All of this stuff. You've watched the pension capital that completely exited Canadian energy and energy period in 2020, 2021. Now the pension guys are back. They're watching CPP, do US, US, um, LNG deals in the Gulf coast, right? On natural gas. So these things are starting to come back. Um, you watch Saudi Arabia come in here in the summer and by 20% of north of Petronos is northeast BC assets become a 5% owner in LNG, Canada. You watch total energy come into buy into an indigenous LNG facility on the west coast. You watch these Canadian energy companies go to Europe and on the back of the conference, the national bank conference in Europe. Multiple buy orders come into the sector. Then you watch a bunch of these producers go to the Middle East. As the Middle East guys are bidding them JVs for their land in our backyard. So everything I'm describing is like, why the multiples are expanding in the sector. I go and do a bunch of presentations and everyone's like, when's Carney going to build a pipeline? What about Venezuela? They're getting sidetracked from what I'm talking about. Like, here's your resource. Yeah, probably. I feel like I'm in bull market land when I talk about the privates like I just did. I do not feel that way. But those two things are going to align at some point, right? And when you have the thing that hasn't been present is those pools of capital that I just described and I'm telling you they're putting money to work. So if you, let's just use Athabasca's example, Meg gets hostile bid. Who's next? Boom, Athabasca goes on a ripper. On kind of what's happening with Ben as well and stuff and these heavy guys coming in. Athabasca is down 20%. If you take this too low, your boy Watchers is going to hostile bid that guy. Like just be open to the cycle and the big picture and what's happening. Not so focused on the day-to-day headlines from the market, right? Yeah, yeah. That's a good point. And I'd say like back in the day, one of the things that washed out of the market, this is a bit of an ad-lib that I never thought of. So this is my on-the-fly and I might be wrong. And please disagree with me. I think one of the best things that came out of the marketplace, there is volatility energy. I'm not saying this isn't for grandma. It is volatility. Investing in general has volatility within that. And I'm so glad doing wrong living through it was terrible when they oiled in the trust market blew up and none of these became really sustainable businesses through the government rules and etc. But being their size appropriately within the portfolio, not just looking on them to solve the cash flow needs of your investor on a month-to-month basis. You have to have a short-term view, but medium-term and long-term conviction on that. And so that's my complement to myself is that rotationally and allocating based on size to portfolio and for risk tolerance is liquidity makes them a sense. Let's talk about, you will jump into the next segment. Here, we called it sub-sector positioning and where canoe is finding alpha and I really want to compliment you and your group and your firm. When we look at a very sideways market, you guys have not just outperformed. You've performed into enviable returns. And so it's important that people understand that there are sub-sectors and just indexing here is not going to matter. I'll say this to myself and how we've allocated is that we try it at the most as a steward of capital. We try to allocate very significantly to indices where there's thematic tail winds, where it's like all boats are rising and a rising tide keeps my liquidity high and my costs low. But I also am very well versed in the phrase that you pay peanuts, you get monkeys. And I'm happy to pay for performance when not just when people are performing, but where we see the macro and the mic are starting to set up where activity is going to and alpha is created. So maybe you can highlight some of your differentiated processes and insights. So which sub-sectors do you see your mispriced right now? How does your sub-sector framework create opportunities that passive funds miss? Why are midcaps are intermediaries quietly outperforming and can continue to. And you guys have delivered strong returns even when all prices are flat. What drove that? I feel like you asked me 50 questions. I did. That was four with two. So yeah, that was a schmorg. You don't have to hit on all of them. I think it's-- I can't wait to see them. People say, yeah, like energy. And you look at it and say, you know, I won't point to a lot of names and well, you know, I will. You look at, you know, you know, Canadian energy service at CEO at the top performing energy name like way, way, way on the on the far right of the axis. And there's others that did terrible and then a bunch in the middle. You know, so that you're playing that divergence and that opportunity set. So that's where activity managers activity matters. Yeah, so let me lay this out. 2021, 2022. You're in the climate wall of worry stage. You throw a dart at a dart board by any energy stock. We're all smart. It's all good. Now the last three years, you're in the digestive phase, we're in the disbelief, haven't gone to optimism yet as I kind of laid out big picture. But when you-- it's when you're in this sideways market, which you don't know how long you can stay there for, but like, you don't want to be coming out of the digestive phase down 35% to your point. And that's when the manager matters. When we went underweight oil in 2024, massive call, everyone was bullish. Middle East bombs going off, talked oil was 70, 80, going to 90, 100. And we were like not seeing the right things. Sold art oils, got onto this power natural gas theme, big subsector call. That's why we all performed in 2024. You flip it to 2025, not so much of a subsector call, more of a intermediates and stock call, when CES was down 40% last year in the middle of the summer. And there's quants blowing it out, and some big institutional shareholders blowing it out. Well, we became the third, fourth largest shareholder, right? As we mow down the stock, and then it closed up 30 on the year. We were on this clear water oil theme. We nailed it. We own spur, headwater, tamarack, frustrated, frustrated, frustrated, boom, headwater's up 40. Tamaracks up 60 to exit the year, right? So your manager has been finding alpha on these themes. And you said like, what subsectors do you like today? To kind of call it out, since kind of December, stocks peaked, check back here, then you get a choppy start to the year. Like there's actually quite a bit of stuff down, right? Like natural gas, stocks are down. Natural gas, the commodities come in. People have forgotten about this power theme. You watch the oil side of things like Canadian heavy oil stocks are getting sold here. It's just like are you sure this scarcity of resource that I described you shouldn't start taking advantage of that? They don't let this belief, right? Yeah. On the service side, it's just like services have been the worst performing subsector of energy for the last two years. Are you sure there's not some opportunity there? Royalties like those stocks were flat last year. These are big weights within our fund. If you look at where other royalties and other sectors are valued, they're way higher. Like so, my theme for you is are you sure you shouldn't have a few more intermediates in the portfolio versus large caps? If we inflect out of this disbelief stage to optimism, you'll want, you'll want max risk, right? That doesn't mean we need to position for max risk. I just told you we own a bunch of royalties. Like that's the opposite end of the spectrum where we think we can make risk adjusted solid returns with some of that barbelled with the CES or headwater or TamRAC. So, but all I'm saying is a lot of people when I hear them talk and they're like, first off, a lot of people are underrepresented in energy in their books. Even on the institutional side, like we looked at a B of A report here three days ago, sorry, lights just shut up here. Do that too. The energy weight in the S&P is 3%. Well, the average institutional ownership of energy is 2%. Like they're underweight to underweight. When I go to retail land outside of Calgary, I would say 50% of my conversations are, hey, where are you on energy? We don't own it. Like these are the good snippets that I hear. I'm like, it doesn't mean it's the bottom. It doesn't mean it's inflecting tomorrow. But these are things that I like to hear as people are kind of underrepresented and they're sure as heck for the ones that do own it and you go, what are you on? They're like, Ambridge, Trap, CNQ, Suncorp. And I'm telling you why have we been out performing the last three, four months? Our midcaps are at the baskets. Our CES is our clear water. Like, I think that's going to continue as we're in this kind of choppy sideways market as that scarcity of resource theme that we talked about is going to be aligned and well. Yeah. Yeah. We'll jump into it. I'll save the kind of the self-pragory of what we did with gold. You look at it. It's like commodity large caps, midcaps, small caps. And I will tell you, and I've told my clients and many other advisors too, is that what's really sent us over the pack is like, understand what you don't know. And when you go down, it's not the latter of quality within market cap, wait, you want a specialist, you want a specialist navigating those because it will matter at the base and level, at the execution level, at the management level. If you're going to proxy sector, proxy to sector, you don't need to do that. You don't need me to do that. We'll execute and take that thematic in to see approach, but where you see the value add is within that. But let's talk about oil, oil, all the time. And you definitely touch on natural gas, but you know, segment six, natural gas, uranium and power markets. We definitely teed up a lot of that. You know, we're going to talk a little bit. We've talked about AI, but maybe we'll talk a little bit about OPEC, maybe a little bit about uranium and maybe pipeline capacity. But why is natural gas so undervalued relative to its importance to the power grid? And do you see a natural gas renaissance within the data center boom? Yeah, so I mean, let's just start 50,000 feet on power. When you think about power and what's happening globally, again, let me just kind of educate some people on China. You rewind the clock 20 years ago. China was importing four million barrels of day oil. Today, they're importing 14 million barrels of day oil, but they don't produce a lot of oil within China. They're getting this oil from Iran, from Russia, from Venezuela, from all these countries. And when you think about where China is at that three barrels per person per year, like they actually don't want to go to five, six, seven barrels per person per year to be even more beholden to these irons and Saudis and stuff like that on now, we need to import 30 million barrels of day oil. What is the barrels per person used in North America? One into 22 barrels per person per year. Yeah, so I think that's good context. Like they're not even wanting to go to three to five to six. And there's a big gap to where we are in the developed world. The developed world on average to be clear is 13, but like in North America, we're 22. So, but to your point, they don't want to go to five or six across billions of people because they're very beholden on energy security, which is that other theme that we talked about. So, what is China done the last 10 plus years as they're building out China? Well, they're actually doing it very smart. They're like, we need to push this power agenda. We need to electrify a lot of stuff. When you think about electricity, wind, solar, coal, LNG uranium, like they're building all that out. They're building out more LNG storage. They're building out the strategic petroleum reserve. Everyone freaks out on oil inventories that built in 2025. 40% of the oil inventories that built went to the China strategic petroleum reserve. Well, they kind of look smart after what just happened on the weekend with Venezuela. So, China is smart. They're electrifying everything, but they're not doing it on only ESG or only uranium or like they're actually spreading it out in a diversified way. Their grid is 20 years old on average. The North American grid is 40. The European grid is 50. We're very unstable. And so, as I teaped this power of thematic, then I laid out the 40 to 60 gigawatts of growth earlier of that means 40 to 60 new cities in the US. When there's only 11 cities over a million people, this is crazy. And so, I think when we put it all in a mixer, we are in a power super cycle. And like I kind of laid out, you want to own stuff through super cycles. You structurally own that. And I think there's places to be an energy specific to natural gas. When you think about this data center growth, it's got to be 99.99% reliability. The only things that get you there are cool uranium natural gas. That's it. It's not going to be cool. It's going to be some uranium. But the average nuclear facility, when you go like the permits are ready to go on stream, let's start tomorrow, takes eight years to build. Yeah. Like even if we bring some of this forward, like we're talking seven years, six years, like we're talking 2034, like we're in a AI arms race globally, like we need this power yesterday. Natural gas is the molecule. And it's going to be needed. And it's getting built. And the oligopolys are forming. Like this is all teeing up for that avenue to be re-rated higher and the multiples higher and the recognizing of like these LNG facilities, yes or any built, but they don't just last 10 years. They're 50 plus years. Yeah. Where's the resource going to come from? The market's still talking about free cash deals, not identifying the resource, but those countries of the Middle East and Taiwan and China, like they are going to come to get resource. The super majors are all inflecting back. BP, like the woman that just took over BP is from woodside in Exxon. Like you don't think BP is going to come back to natural gas as their hydrocarbon? They are. And totals are already doing it. And she'll do the same thing. And all of a sudden, the world will need more natural gas resource as we re-rated higher. So I think we're on the right theme there, but I wanted to tee up that electrification because it's important. Yeah. Okay. It's just the interest of your time. There were a couple segments left. This one, I don't want to, you know, I'm an internal optimist. But you know, let's talk about risks and what could change this thesis. You know, I just want to let's show a little bit of balance. And you know, like you definitely have tempered. You know, I remember prior to to to allocating to you guys, you're very caught. You're like, I'm not telling you it's the bottom. I'm like, listen, I'm a big boy. You know, and we talk about the old 63 or 60 40 becoming a 60 30 10. And we're far debased off of a 60 40. We've got a lot of exposure to alternative assets. And I'm blessed with clients. So, you know, they have, you know, effectively grown up and sophisticated their portfolios and allowed us to to to prudently allocate them the way, you know, high net worth and ultra high net worth investors should more in line with pensions and endowments. But, you know, we we we we take a toehold and we build. But I do see, and I was talking with a great client of mine yesterday. You know, it was like two or three percent position waiting that, you know, we've, you know, tactically kind of got our our shoes on, you know, with you guys. I said, you know, I can expect to see much like it's happened with gold. You know, we're portfolio weightings can be the increased upwards of 10. And it's just we'll do that thematically programmatically in a disciplined basis. But what are the biggest risks to the bullish energy thesis? And, you know, where could we be too optimistic or pessimistic? And what data points are you looking for? You know, what what wakes you up in the middle of the night when you look at your Bloomberg? Oh boy. Yeah. And so again, let me tee this up on. I feel like the macro shifting. I feel like the pillars of the stooler in place for commodities. I feel like the setup is for like don't get too bearish on the lagging commodities as everyone's now bullish certain other ones. So, that's kind of the 50,000 foot view. But the thing that you don't know is like energies all the way down to 3% of the S&P 500 is awaiting. Doesn't mean it can't go to two and a half. Like you can kind of always press these things lower than you think. So I'm a big believer of moving back to the normalization of the mean and over time, like the macro shifts and other sectors that are very underrepresented portfolios have their day in the sun. I think that's us. But on these big transitions were commodities structurally move higher and it puts pressure on growth sectors and then then the rotation can be very sloppy, right? Out of growth into the kind of areas that have lagged for multiple years. So our commodities, the driver of the pain or do we have this bigger kind of broader market check back and global growth slowing in some version of that that kind of gets everyone a little spooked and everyone's racing for the trees on cash or some version of that. Those are kind of very valid things that could happen that I just don't really know. And so I want to be represented today. I want to have some cash just in case the shaking of the trees happens. But I kind of want to be there as I look at these 100 year charts, 50 year charts of price of oil versus S&P 500. Earnings of the energy sector relative to earnings of the S&P like all these 100 year charts are like at the lows, telling you to have something. So what would be a red flag for me? If we broke the lows of the 100 year, like we're in an AI deflation or some version of that that I did not predict. Turns out it's all not real. Yeah. And I need to reassess my world. That is not my base case. But I'm cognizant of where we are and I could be wrong. But I'm not in that camp. I'm in the hard assets, commodities, currency debatement, like I'm in that camp. And so those are the things I watch. Those are the things that I think we need to continue to respect. And like I just laid out, I ain't telling anyone today's the day. I'm telling you, I think the world is looking a lot different today than it did. And you should structurally build positions in an energy sector or commodities for what we think the world looks like. Fair enough. Well, you pretty much like T. E.O. crushed, you know, the next segment. And so like just, you know, to not nauseam, you know, what we've done here over, we've been at it for a little bit. You know, those key points, like I'll just, we don't even need to hammer them all, you know, we're likely moving from an underway to an overweight status over the next coming years and energy being ahead against deficits and inflation, de-globalization, geopolitical risk, like all of those things, like really make sense. You know, I kind of, you know, with, with the risk of just burning and making CO2, you know, the key themes are there. Value dislocation, the power, super cycle, and consolidation, private market conviction. That's to me, you know, as a takeaway. And I didn't know that. And you know, every day I'm learning, you know, I definitely, I don't know what I don't know when it's wise around myself with smart people all the time. And maybe that makes me smart too. But understanding that, you know, for the private equity guys, this is a bull market. It's kind of like the bond market or kind of like the, there's ours, there are more sophisticated parts of the capital markets. And hearing that is really interesting. I think, oh, wrap things up here. You know, and I wanted that this brings us to kind of the end of today's, you know, episode, you know, so a huge thank you to Dave Zabanka for sharing his expertise and giving us a clear lens into one of the most important under-appreciated themes in global markets that we feel. You know, the big takeaway is we're again, we're in the early innings of a long structural shift and how the world consumes and values energy and power demand is surging industry discipline is stronger than ever. Private capital is positioning aggressively and public markets are still underway, still skeptical in that disbelief part of the market that Dave discussed and still mispricing what may be one of the most compelling long-term investment setups in the over the next decade. So as investors, the goal is not to predict the future. It's to recognize when the present is changing. And today that energy landscape is changing faster and more obvious than many realize. So if you found this conversation helpful, you know, follow the show, share the episodes. They tune, you know, for more invites insights as we continue to break down the key forces, shaping markets and portfolios. I'm Chad Larsen, you know, thank you for listening again. Dave, thank you so much for being here today. Yeah, thanks a lot for having me. The comments expressed in this podcast are the results of work done by MLD wealth management. They may differ from the opinion of Canacorn Genuity Corp and should not be considered as representative of Canacorn Genuity Corp beliefs, opinions or recommendations. All views expressed in this podcast are provided for informational purposes only and do not constitute an offer or solicitation to buy or sell any securities. The statements expressed air in are not intended to provide tax legal or financial advice in under no circumstances should be construed as solicitation to act as a securities broker or dealer in any jurisdiction. All views are intended for general circulation only and do not have any regard to the specific investment objectives, financial situation or general needs of any particular person, organization or institution. Please do not hesitate to contact us. Should you want to know more about the information contained in this video or have any related questions? Canacorn Genuity wealth management in Canada is a division of Canacorn Genuity Corp member Canadian investor production fund and the investment industry regulatory organization of Canada.