A Note on Framing
This is not a performance letter. It is a positioning letter — a document intended to explain where GZC is allocated and why, as we close 2024 and begin what I believe will be one of the more consequential investment years of this cycle.
I write this before publishing the formal Q4 2024 Investor Letter, which will follow in January. This document is forward-looking: what we see, what we own, and why.
The Theme That Defined 2024
The AI infrastructure buildout has been the most important capital cycle of 2024 — not because of the performance of AI software companies, which was substantial, but because of what began to emerge in the physical infrastructure layer underneath them.
Hyperscaler capital expenditure commitments in 2024 exceeded almost every projection made at the beginning of the year. The buildout of GPU clusters, data center facilities, power delivery infrastructure, and cooling systems represents a multi-year, non-discretionary procurement cycle that is only in its early stages.
Our Bottleneck-to-Ticker (BTT) framework identified this cycle not through AI software company analysis but through the supply chain: who manufactures the transformers, the high-bandwidth memory, the cooling systems, the optical transceivers, and the power distribution units that these data centers require at scale? The answers to those questions led us to positions we expect to hold through the mid-point of this decade.
Technology Pool: What We Own and Why
Our Technology pool is concentrated in companies that sit at identifiable supply chain bottlenecks in the AI infrastructure buildout. We look for companies where:
The demand is non-discretionary — the data center cannot operate without this component.
The supply is concentrated — few manufacturers can produce at the required specification and scale.
The procurement visibility is multi-year — customers have committed to purchase in advance, creating backlog that translates directly to revenue certainty.
We do not own AI software companies as a category. Not because the returns have been poor — in 2024 they have been extraordinary — but because the BTT framework does not identify software as a supply chain bottleneck. Software can be duplicated. The physical infrastructure that runs it cannot.
Commodities Pool: The Energy Dimension
The Commodities pool entered 2024 with a thesis that has only strengthened: AI infrastructure requires power, and the grid is not ready. The buildout of AI data centers is simultaneously an energy story. Every large GPU cluster is a significant power load. Every power load requires grid infrastructure that is already strained.
We hold positions in energy companies that benefit from sustained power demand — oil and gas operators with disciplined capital structures, uranium producers supplying the nuclear renaissance, and companies in the power generation and distribution chain that are positioned for the grid modernization cycle the AI buildout demands.
The Commodities pool is not a commodity ETF. It is a concentrated set of positions selected through the same BTT framework as the Technology pool: where are the supply constraints, who controls them, and what is the duration of the forced-spend cycle?
What We Are Watching Into 2025
Three developments will determine how the Technology pool evolves in early 2025:
Hyperscaler capex guidance: The Q4 2024 earnings cycle, which begins in January, will provide updated capital expenditure commitments from the major hyperscalers. The magnitude and duration of these commitments is the most important forward signal for the supply chain companies we hold.
Power delivery lead times: The transformer and switchgear market has been tightening throughout 2024. How procurement lead times evolve in early 2025 will tell us whether the supply constraint is still widening or beginning to resolve.
HBM supply dynamics: High-bandwidth memory availability has been a gating factor on GPU cluster deployment. Understanding the trajectory of HBM production capacity relative to demand will inform position sizing in our memory-adjacent holdings.
How We Think About This Letter
I write to clients once per quarter in the formal investor letter cadence. These interim notes are less formal — they are me thinking through what we own and why, written with the discipline of having to explain it clearly enough that someone else can follow the logic.
If the logic is clear, the position is well-founded. If I cannot explain the supply chain constraint, the pricing power, and the demand duration in plain language, the position is not well-founded enough to hold with conviction.
Every holding in the GZC portfolio, across both pools, meets this standard as of the date of this letter. Entering 2025, we are concentrated in companies that sit at verified supply chain bottlenecks in the most significant capital cycle of this decade. That is where we intend to remain.
