Alex Silver pitches BWX Technologies at Sohn 2026

Hi. I am Alex Silver, and I am your little booth thing. I am also the CIO of ANM Capital Management, which Charlie Penner and I co-founded in 2024. We manage $350 million and are actively engaged investors in higher-quality businesses.

The opportunity that I am going to discuss with you today lives at the intersection of multiple sustainable secular growth trends. The first is addressing the increased energy needs across the country, data centers, and beyond. The second is increased defense spending. The third is the overlap of those two, which is energy security.

1. BWXT Anchors Nuclear Growth

That company is BWX Technologies. BWXT is a $20 million market-cap company that is best known for making the reactors that power U.S. Navy submarines and aircraft carriers. They have an incredible track record, having built over 400 nuclear cores for the Navy over time without a single safety incident.

The business itself can be divided into 2 segments. The larger of the segments, government operations, accounts for about 75% of the company’s revenue. That differentiates BWXT from other competitors in the nuclear power space, like Oklo and NuScale, in that it gives BWXT a business to build upon.

The other 25% of revenue is commercial operations. That exposes BWXT to the significant upside in the commercial nuclear power opportunity. Currently, BWXT serves this market as a service provider for fuel components and other services.

2. The Government Business Moat

Let’s first dive into the government services operations. BWXT has been supplying the U.S. Navy with nuclear operations since the 1950s, when it was part of Babcock & Wilcox, which itself has a legacy that goes back to the 1860s. In fact, B&W designed and supplied components and services for the first U.S. nuclear submarine, the USS Nautilus, which was launched in 1954. It was an equipment and service provider for the Manhattan Project.

Today, BWX Technologies is the only company to possess NRC Category I licenses. These are some serious nuclear chops.

We like this business for some pretty obvious reasons. The government business provides durable, long-term, and growing contracts that obviously benefit from increased defense spending and, ultimately, from spending on space projects.

The barriers to entry are about as high as you could find for a business. In addition to its 60-plus-year track record, it has a highly specialized manufacturing footprint with the only certified large nuclear-component manufacturing capacity in North America. It has a highly skilled workforce—95% have government security clearances—and it has sole-source contracts. Some serious moats, folks.

3. Commercial Nuclear Drives Expansion

Importantly, the government business also gives BWXT a springboard for developing its portfolio of commercial nuclear opportunities. So, let’s move over to the commercial space.

We’re going to make a quick stop in the medical business. This business provides radioisotopes and pharmaceuticals that are used in medical diagnostics and treatments. This is a small but high-growth, high-margin, and high-quality business.

We’re going to focus now most of our time on the core of the commercial operations business, which is commercial nuclear power. Currently, BWXT is the pick-and-shovel supplier to the companies building their own reactors in the commercial nuclear industry.

Instead of picks and shovels, they make things like that 90-foot-tall, 500-metric-ton pressure vessel that houses a nuclear core. Assets don’t get much heavier or have lower obsolescence than that.

The same high barriers to entry exist for this business as for the other ones. Importantly, BWXT is producing revenue today, unlike some of its peers whose revenue is entirely in the future.

Commercial nuclear is a growth market, especially if we’re going to meet the demands expected in the future from AI and other aspects of society. It also enjoys rare bipartisan support, including recent executive action that shortened the timelines for NRC certification of reactors, which reduces both the timeline to approval and the cost of getting there.

4. SMRs Could Meet Future Demand

Speaking of the nuclear market, let’s talk about its structure. First, there are traditional reactors. Think about a gigawatt or so in power. Those provide enough power for a city of 800,000 to 1 million people.

Then there are small modular reactors, or SMRs. Those are about 300 MW or less, and on the larger end can power a large data center. Unlike traditional reactors, SMRs are made in a factory and are modular, so they can be stacked to meet demand as needed. They also have economies of scale in manufacturing.

If we look at SMRs, we can split them into 2 categories: Gen 3 and Gen 4. Gen 4 reactors typically rely on unproven technology and systems, versus Gen 3 reactors, which use technology already in traditional reactors today.

Gen 3 reactors can be further split into boiling-water reactors and pressurized-water reactors. In a boiling-water reactor, the heat from the rods heats the water, which turns into steam and spins the turbines. In a pressurized-water reactor, the pressure keeps the water from boiling, and that water then goes through a steam generator, which produces steam.

Before going deeper on this path, I want to address a debate about SMRs up front. Some argue that it’s going to be too late for SMRs to meet the current wave of energy demand. We at ANNM have an entirely different view.

With on-site power options like fuel cells and reciprocating engines that are available today, they can’t possibly meet the long-term energy demands that are forecasted. So, we believe the bogey is to deliver power on a time frame competitive with large gas-turbine-fired plants, which now take about 4 to 5 years based on the backlog of parts.

While some players like Oklo and NuScale could struggle to be competitive in this time frame, we believe it’s possible for other SMRs to be competitive on a time-to-power basis.

In the boiling-water SMR category, GE Hitachi’s BWRX-300, a 300 MW reactor—hence the 300—is already under construction today. In fact, it’s one of the SMRs that BWXT is working on, and it has an estimated delivery period of 4 to 5 years.

However, there are only so many SMRs that GE Hitachi can make, and not all buyers are going to want boiling-water reactors. Some will prefer pressurized-water reactors in the SMR space. That’s because, in the traditional reactor space, pressurized-water reactors are actually more common and well-known, so they should be cheaper to construct.

If you go onto the U.S. submarines I referenced earlier, all the BWXT reactors on them are pressurized-water reactors. Despite all of this, at this very moment, there is no clear leader in the SMR pressurized-water-reactor category, which is where things really begin to get interesting.

5. BWXT Revives Its mPower Design

About a decade ago, BWXT developed a pressurized-water reactor called mPower, which was way ahead of its time in terms of customer interest but was favorably viewed by regulators, including the NRC, at the time. The design was very attractive and significantly advanced and, based on our diligence, could still be competitive on a time-to-power basis.

If the company were to develop this SMR, BWXT could also leverage its existing capabilities and credibility in the SMR space. In fact, if you want to see an SMR that is operating outside of the tiny ones floating on a barge, supposedly in Russia or China, you’d have to find a Navy submarine, board it, and there you will see a pressurized-water-reactor SMR built by, you guessed it, BWXT.

Of course, BWXT should only do this if it believes customer interest exists to de-risk the project, but we believe it can do so and could even begin commercial discussions today based on the existing mPower design, as it is updated.

6. Multiple Paths Create Value

This leaves BWXT with several attractive paths to create value from here. The first option is to stay only as the pick-and-shovel supplier, continue to supply large reactors and boiling-water SMRs with parts and services, and wait for another company to take the lead in the pressurized-water-reactor space.

Another option would be for BWXT to develop mPower either on its own or through a joint venture and thus capture more revenue for each reactor than just being a supplier of components and services. Importantly, we don’t believe this would cannibalize existing sales to a significant degree, given that there are different buyers for pressurized-water reactors and boiling-water reactors in the traditional space and the SMR space.

The company itself and its investor materials say the SMR space will be $300 billion by 2040 alone. Furthermore, based on the company’s recent quarterly conference calls and the CEO’s comments, we think that we agree with what they say, and they agree with our perspective.

I quote the CEO’s words: “If we’re going to decarbonize the grid, meet the energy needs of AI, meet the energy needs of electrification, we’re talking about hundreds and hundreds of reactors globally. Large reactors. Translate that into thousands if it’s small reactors. We are very bullish on this opportunity.”

7. The Valuation Offers 100% Upside

So, what does all of this mean for the stock? Today, BWXT is about $200, and we believe there are multiple paths to create significant upside from here.

If the company continues to act only as a merchant supplier to other SMR companies, including announced opportunities not fully in consensus numbers, and the base business continues to grow as it is, there’s about $95, or 45%, upside in the next few years.

Layering on the probability-adjusted pick-and-shovel wins for known projects that are not yet awarded adds another $50, or 25%. Should BWXT choose to develop Empower on its own or through a joint venture, in addition to being a supplier to others, we see additional upside in the range of $80, or 40%.

Altogether, that’s over 100% upside from current levels. Of course, the downside is protected here by the company’s government business, which, I remind you, is contracted, growing, and sole-sourced.

That differentiates BWXT from its other nuclear competitors, which face far more binary futures. So, that's BWXT. Thanks very much.