Title: The New Way to Play the AI Power Boom (PWRX Analysis) Show: Dividend Stockpile (YouTube) Guest: Parag Sanghani — SVP & senior portfolio manager, Westwood (Houston energy team), Westwood Salient ETFs Date: 2026-09-17 URL: https://youtu.be/mwjZ3e9rEF0 Length: 19:21 Note: YouTube auto-transcript pasted by Stephen. Fillers (um/uh, stutters) removed; ASR garbles fixed (Barack Sanani / Prague / Bar = Parag Sanghani; Antaro = Antero; Chemico = Cameco; Affluence = Fluence; Oaklow = Oklo; Bolero = Valero; "wei" = WEEI; Publix = publics; gawatts = gigawatts). Wording otherwise verbatim. Speaker turns marked ">>"; the host (Dividend Stockpile) speaks first — the host's personal views are the host's, not Sanghani's.
00:00 Hey everybody, welcome back to Dividend Stockpile. So today I'm joined again by Parag Sanghani, senior vice president and senior portfolio manager over at Westwood ETFs and we're going to be discussing their brand new ETF PWRX, the Westwood Salient Enhanced Power and Infrastructure ETF. Now this ETF invests in companies positioned to benefit from the accelerating power demands driven by AI, onshoring of manufacturing, electrification and commercialization of the next-gen technology and so it's also going to produce income through options
00:34 writing and dividends. So Parag, welcome back to the channel. >> Yeah, thanks for having me. >> Absolutely. We appreciate you coming back on. Had you on the channel a little while back talking about some of your other ETFs, but this new one, PWRX, is going to come out on the 17th of September. So, brand new.
00:52 Hasn't even launched as of the date we're talking today, but really excited to see what this one's all about. So, I guess as a high level, what was the overall thesis behind PWRX and what are you guys looking to accomplish here? >> Yeah, it's a great question. We are energy investors here in the Houston team and what we were looking at in the energy industry for a very long time was very slow growth in power demand.
01:21 If we look from the year 2000 to 2020, so for an entire generation, power demand grew at 0.1% per year, essentially nothing. Now we're growing at 5% a year. So, we've had an industry that was asleep for a generation, waking up, and actually accelerating now that we need a lot more energy for data centers, for factories that we're building here in the United States.
01:46 And so what that's resulting in is a huge investment cycle. We think over a trillion dollars are going to be spent over the next decade in building out the fuel that we need for power generation. So think natural gas, nuclear, copper wire lines, etc. We're going to need a lot more transportation pipelines that bring the natural gas to the power generators.
02:14 Then we're going to need more power plants. So we're going to see power plants being built at utility scale. We're also going to see smaller power plants that are going to be built just for the data centers. And so we're going to see a lot of infrastructure there. And then finally, technology is evolving in power generation.
02:30 So we're seeing a lot of new technology particularly in nuclear and battery storage and we think that there's a lot of opportunity in capturing the buildout that's happening over the next decade. So we're really excited about the opportunity and we are thinking of investing in power as a full value chain opportunity, not just one component or another.
02:52 >> Yeah, I'm really excited about the electrification of the economy going forward. To your point, energy needs hadn't grown because of efficiencies and things like that, but now with all this data center and all this AI it's really about to explode, if you will. And so, I'm personally invested in a lot of electrification themes.
03:10 I have a couple different ETFs and a couple different individual companies in that space because I too believe that it's a huge growth engine over the next couple decades at least. So, I'm right there with you and I love the fact that you guys are coming out with this as an income ETF as well. So, in addition to investing in those themes, you guys are able to produce income, which of course we love here on the channel.
03:32 Now, with all that, you mentioned that you're not investing directly in the AI companies, but all the companies that provide the power and the infrastructure and the related needs for these types of things. Why did you guys decide to go that route as opposed to investing in the companies that are actually building out the AI and the data centers and things like that? >> You know, when we looked at the landscape and the opportunity to capture the AI buildout that's happening, we recognized that one, investors in general have a lot of exposure to these companies just
04:02 through the broad indices. So, owning an S&P portfolio, there's nearly 40% in technology there. You already own the businesses that are building the AI. What's not well-owned is the energy companies that are supplying the fuel: three, three and a half percent weight in the S&P. The utilities that are providing the power, even lower than 3% weight.
04:26 And so when we looked at the opportunity set, we're seeing a secular growth cycle for an industry that has 1,300 gigawatts of power installed, growing 5% a year. That's going from essentially zero. And that's creating a lot of opportunity for component manufacturers, a lot of opportunity for the actual power producers, the transportation, etc.
04:53 And we recognize that that compounded growth opportunity over the next several years is really exciting and it's a good diversifier in a portfolio given that we already all own so much of the hyperscalers. >> I've always said, AI needs electricity or power. And so investing in the companies who are producing or delivering that power is going to be a huge winner over the AI race going forward.
05:20 Now, when I first did this introduction and you kind of talked about your thesis behind the ETF, you mentioned a couple different themes you guys are investing in. Of course, AI, the onshoring of manufacturing, electrification obviously, and then the new technology. Is there one of those themes that you feel is going to be the biggest driver of growth for this ETF or do you think it's a combination of all of the above? >> You know, it's definitely going to be a combination of all of the above.
05:45 But when we look at just growth specifically, what's really interesting is the evolution and efficiency gains that we're seeing in power generation is compounding very rapidly. And those companies tend to grow a little bit faster than the industry as a whole. So if you think of companies that are providing some of the newest power generation equipment like turbines, those turbines are significantly more efficient today than they were 10, 15, 20 years ago.
06:17 And as the industry moves to build more of these facilities, what we're finding is those businesses tend to grow a little bit faster than the industry as a whole. So that's currently where the greatest opportunity is on growth. And then conversely, the greatest income generation actually comes from the slower growth parts of the industry, the fuel providers, the transportation companies, and in quite a few.
06:42 >> Yeah, it certainly makes sense. I love the fact that you guys are approaching in a couple different directions. So, you're able to capitalize on all the different growth areas that are out there. So at the beginning of the conversation, you had mentioned that Westwood is an energy investor. So, that's your guys' main focus in your history.
06:57 How does that energy specialization influence or help you find opportunities for this new ETF? >> Yeah, so Westwood is a value investing shop. We have about $18 billion spread across several different strategies. The energy team manages about three and a half billion in publics and that's where we have much more connection to the power generation industry and really the buildout that's occurring.
07:27 Being energy investors, necessarily, to be a good investor as an energy analyst, you have to know where the production's coming from and who's using it. And if you don't know that information, you're going to have a mismatch in supply and demand. You're going to have a mismatch in which fuel is needed where it's needed.
07:46 And so we spent a lot of our time already understanding what utilities are doing, understanding what producers are doing and the connectivity around that. We also spent a lot of time understanding how the infrastructure is being built out because we are first and foremost energy investors. It's focused on infrastructure.
08:05 And so that combination, when we looked at this buildout that's happening in AI, we recognized that the landscape is changing. A lot of the data centers are being built in Texas, Ohio. Historically, prior to this cycle, most of the data centers were in Virginia. We're building a lot more data centers in Virginia, but the landscape is changing and that necessarily means different demand and different power needs for different regions.
08:32 So when we looked at that, we recognized that we already had the talent on the team. We already had the investment know-how and we recognized that this was a great opportunity: going from a zero growth industry to a mid-single-digit growth industry was going to create a lot of opportunity for investors. >> And you had mentioned earlier that you invest across the whole value chain of the infrastructure, the energy production, everything that goes with it, the technology behind it. Can you talk through some of the
08:59 different parts of that value chain again and then maybe some of the companies that you could potentially hold in each of those different areas? >> Yeah, sure. So, the strategy hasn't gone live at the time of this conversation. So, I'll mention a few names that could potentially fit in the portfolio.
09:17 So, I'll just go section by section, just moving down the value chain. First and foremost, fuel. Fuel comes in predominantly two sources: it's natural gas and it's nuclear. And so within that, if you think of some of the larger natural gas producers here in the United States, you've got EQT up in the Marcellus.
09:41 You also have Antero as another good example. And so that's kind of on the natural gas side, what would make sense in a portfolio like this. On the nuclear side, you've got Cameco as a producer of nuclear fuel. You also have other companies that help process that fuel that would make sense in the portfolio. From the transportation standpoint, we're looking at natural gas pipeline companies there.
10:04 You're looking at companies like a Williams for example that has very large natural gas distribution systems. In addition to that, we're also looking at potentially some of the distribution of the power. So, the wire line producers, the companies that are actually mining for the copper that's used to build these wire lines. We've got tens of thousands of miles of actual electricity power lines here in the United States that are getting very old.
10:35 And so, not only are we building new capacity, but we're going to actually have to replace a lot of this old capacity as it ages out. And so, there's just a lot of opportunity there. And so that's kind of the transportation side. On the power generation side, you've got really three big categories. The big regulated utilities.
10:55 Think NextEra would be a great example of what would be an appropriate investment in that category. Another one would be behind-the-meter solutions. So companies that are providing power exclusively to a single data center or a single factory. You've seen companies like a Bloom Energy doing fuel cells to do that.
11:17 You've also seen more traditional companies like a Solaris that's using turbines, natural gas turbines, to generate that power. So those are good examples for that category. And then finally, if you look at the energy tech and kind of the evolution that we're seeing, particularly in the nuclear and the battery space, you've got companies like Fluence that's building out grid-level batteries.
11:42 You've got companies like an Oklo or an SMR that are building out some of these new nuclear reactors and new kinds of technologies so that we're operating more efficiently on a go-forward basis. So there's just a tremendous universe of companies and industries that are helping the power value chain grow and deliver what it needs to in order for our AI economy to grow.
12:07 And there's just a wonderful opportunity to capture this growth that doesn't show up in a lot of these other broad index-based portfolios. >> I love the diversification, all the different avenues you guys can go and invest in. All of them tie back to this build out of the AI and the power generation that's needed as well as the onshoring of manufacturing, all the things we talked about at the beginning.
12:30 But there's so many industries and so many different sectors that are going to be benefiting from this buildout. So, it's great that you guys are able to capture so many different parts of that supply chain. So let's move over to the option side of it because in addition to investing in these areas that we talked about, you're also going to be generating potential monthly income.
12:49 Can you talk about what the option strategy is going to look like, maybe the days to expiration, what type of options you're going to be writing, as well as how far out of the money and all those little nuances when it comes to the option strategy. >> Yeah, absolutely. So the reason we're launching PowerX is because of the long-term growth that we see in the industry.
13:10 So first and foremost what we don't want to do is cap that growth with options. So what we looked at was we said that ultimately we like income on the team and we wanted to generate some income from this portfolio. The underlying portfolio we estimate can generate about a one to one and a half percent natural distribution yield.
13:32 Then if we write options on half the portfolio, typically one month out, and then if you look at the percentage out of the money it's typically in that 10% range, we're able to generate about a 5% total distribution paid monthly out of the ETF. Now, of course, we need to still implement the portfolio and launch.
13:54 So, we can't promise that that's the number. But what we're looking at is we do think that we can achieve that 5% distribution rate. And in our experience, a lot of that distribution will be a combination of return of capital, qualified dividend income and some ordinary income. So the distribution itself tends to be relatively, or historically we've seen with our other strategies, the distribution itself tends to be relatively tax efficient, but it's hard to tell beforehand what that number is really going to look like.
14:25 >> Absolutely. Yeah. Something we have to wait until the end of the fiscal year where we get our statements and see what the tax breakdown is. But it's really nice to know that you guys are going to be trying to be as tax efficient as you can with those distributions. And I love the fact that you're only doing 50% of the portfolio.
14:41 And that allows a lot of the upside to be captured, as well as that 10% approximately out of the money is going to allow those names that you are overwriting to run a little bit before they could potentially get capped out. So I think it's a really good conservative strategy, but also still provides that income that a lot of investors in the space are looking for.
14:57 So I think it's a really good combination. And I think I mentioned it earlier, but what is the payment frequency? >> The payment frequency will be monthly. Along with the rest of our enhanced income series, we do focus on that monthly payment. >> Okay. I guess with that, can you talk about some of your other ETFs and how this all fits into that bigger picture? >> Absolutely.
15:21 So if we look at the energy platform, we have a broad energy-focused oil and gas ETF called WEEI and that one is, think large cap companies like an Exxon for a producer, or I should say integrated companies since they own everything. But if you look at producers alone, a Diamondback in West Texas is in that portfolio. And then if you think of the midstream part of the industry, the transporters moving the volumes around.
15:53 Williams is a good example that's in that portfolio. And then further downstream we have companies that refine the oil. Those are companies like Valero or MPC, the Marathon Petroleum. >> Awesome. Yeah, it's really nice to have different avenues that you can invest in, or invest in all of them, but knowing that Westwood is so focused on this energy space is really comforting when it comes to feeling confident in your guys' approach and your guys' ability to really find the best companies for each of these
16:24 strategies. So, everyone definitely go check out all of Westwood's ETFs. There's definitely something that can fit and it really is right in line with what we as income investors are looking for. There's some pretty good yields. So when we're coming back to the PowerX ETF that we've been chatting about today, obviously we talked about some of the potential upside of the industry and the demand that's going to be there, but if someone is investing today and they're looking 5 years out to see what this industry is
16:48 going to look like, what would you remind people of, like what's the goal or what's the outcome of this buildout that you guys are seeing right now? >> Yeah, I think that's an excellent question. I think this really speaks to the short-term nature of markets today and investor mentality today.
17:09 A lot of times investors will talk about, oh, I'm in for the long haul. I'm going to own it for two or three years. And I say, no, no, that's not the long haul. That's short-term. When we see a secular buildout, a secular buildout is measured not in years, but in decades. And we think that's really the opportunity today, is that 10 years from now, we still think there's going to be tremendous need for all of this new infrastructure given just how quickly the global economy is growing.
17:40 And so when we're looking at owning PowerX, we're not thinking what does this look like three years forward or five years forward. We're thinking 10 years from now, the industry is going to spend over a trillion dollars of capital across these four big verticals of fuel, transportation, power generation, and energy technology.
18:01 And we want to make sure that we're along for the compounding that we expect over that time period. And that's where investors historically have made the most money, is when they've compounded their investments through many, many years and decades of time. >> Absolutely. Well said and that's definitely the mindset we all need to have.
18:21 Think in decades, not in months or years like a lot of people do. So it really is nice to hear that the portfolio managers and the company behind these ETFs is thinking long term like that as well. So that should be aligned with what investors are looking to do. So really happy to hear that. All right, so we're talking about PWRX, the Westwood Salient Enhanced Power and Infrastructure ETF, going to be launching on September 17th, 2026.
18:45 Where can people get more information on this ETF? >> Sure. You can go to the Westwood website. You can Google that with just Westwood ETFs. >> Okay, perfect. I'll put that up on the screen and in the description. Everyone definitely go check it out. Parag, really appreciate your time talking about your brand new ETF, PWRX.
19:04 Best of luck with this ETF and hopefully we'll be able to chat again real soon. >> Yep, absolutely. Thank you for having me. >> Thanks for watching. While you're here, check out this next video to learn more about dividends, income investing, and option selling. And while you're here, make sure you subscribe, click the like button. It really does help.