Praxair (PX, Financial) is an industrial gas supplier of Oxygen, Argon, Hydrogen and Helium in North and South America, Asia and Europe. These gases are integral to many industrial processes yet are often a tiny fraction of overall production costs. As a result, the industry is consolidated with only four global rational participants, which translates into pricing power for Praxair. Roughly a quarter of the company’s industrial gas production is under “take or pay” arrangements, providing coverage of fixed costs in downturns. Praxair management has proven to be excellent operators and capital allocators. The recent industrial sector downturn provided an opportunity for purchase. Prior to purchase, the company had been on our “On-Deck” list for several years.
From Weitz Funds' Partners III Opportunity Fund third quarter 2015 commentary.
