YouSaid · the spoken record

Adam Rodman

lines on the record: 58
first: 2023-03-27
most recent: 2023-03-27
sittings or episodes: 1
sources: podcast

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“Even though I didn't know what exactly I wanted to do, I did think that I wanted to run my own business at some point. But in anticipation of that, I was so conservative with everything that I did through my life. Ask Arthur or some of my friends. Sometimes I wouldn't go out to dinner because I thought that I should be reading an annual and saving money and doing whatever. I heard it a lot. People told me time is precious. Live a little bit. And I think I probably didn't live in that in retrospect. If I could have relaxed a little bit. Now, I think there are probably some benefits to that, but life is long. Everything hasn't happened by the time you're 25. If I could have figured that out a little earlier, I probably would have had some positive effects. But I have no regrets.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Honesty is the best policy in our investment process. The thesis creep is a real thing. We're exclusively dedicated on a small quarter of the energy markets that happen to be volatile. We all have Very large percentage of our net worths in the fund. How do you prevent yourself from wanting this to work versus it working on its own merit? It's a very, very fair question. And so keeping ourselves honest, being honest to ourselves, being honest to each other is definitely something that we emphasize a lot. I can't say that we always do it perfectly, but it's at the center of the way that I grew up in a very open and honest household. I think not just me, but everybody that works at Sagro has tried to bring the same ethos.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“I can get a little excited about things. The team does a good job temporarily back, but I think I'm usually more excited at the beginning. And then my pessimism and skepticism comes in later. But it means that I probably do more upfront work than I should. If I could be more discriminating, the good news is that I think Arthur is the opposite. Since we co-run investments, I think it takes him longer to get excited. But then on the tail end, he's coming up to being excited right as I'm shutting it down. And then we have to battle it out for whether it makes up the portfolio or not.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our positions don't make you want to puke, we're not doing our job. So I think I'm off the flame for the things that people can't see any case in, but that we have hope for.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're tight knit. Arthur and I were randomly assigned freshman year roommates and we pretty much been best buddies said best men in each other's weddings. But we proved to be a good yin and yang. We've got a real symbiotic relationship that pushes us in a productive way where we have opened and free dialogue. We know each other's weaknesses. While that's not like a mentor or somebody that's driven us, it's a daily reminder of why we should try and be our best. And I think to a larger extent, we do it for each other because we know each other's families and we know what our ambitions are. We don't want to let each other down.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“My dad is one of them. He's a physician, has nothing to do with markets, but I'll tell you when I launch Segra, I did a lot of emerging markets and commodity and said, Corinne has vertical where I was in. And one of the things that I pitched my early LPs on was Egypt. You're going to shake your head. And in 2013, I managed by some stroke of the universe to put a sizable position on an Egyptian bonds about three days before the Arab spring. First big position in the fund. And I tell you, I'm pretty sure that I had this close to having a heart attack. I was really shaken. My parents happened to be visiting, and I just remember my dad taught me, always got to keep your legs moving. He's like, you're a running back. He's like, just keep your legs moving. Keep your legs moving. Maybe it's a little silly. But I swear, I think about that on difficult days or when the market side properly, just to keep your legs moving, you can stay out. So definitely my dad. And then I talked a lot about Foreign Day and there were wonderful guys there, but I've got a really fantastic.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“My biggest investment pet peeve is this person said so. Don't know if that articulated it, but with all humility, I think real differentiated research is pretty rare. I think there's still a lot of groupthink in markets. And I understand why there was a very real possibility that I ended up in a business that looks a lot like mine. I could be at a hedge fund where I think consensus or being at least even on the fringes of the herd is critical to staying in business. But we have tried not being tied in by those restraints because we don't care about anybody's view really except ours unless they're a true expert, unless it's the industry telling us something, unless it's fundamental to our thesis that's changing things, the chatter can really get in the way of a good investment runner.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Recently relocated to Florida, which is where I grew up, and I grew up surfing. And I think the job can be pretty stressful. It's volatile. Sometimes it cannot make sense. And I think the exercise in general, but the water in particular is a pretty good center of activity and centering force. Surfing was my ashen growing up and it's being revisited.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Relatively easy to break that down. When we model out demand, I think especially in our base case, we feel pretty good about it. There shouldn't be a lot of variability barring some exogenous risk to the nuclear markets broad rule. But doesn't mean the sector couldn't get cheaper. It doesn't mean that they couldn't trade cheaper for whatever reason. What we do really to monitor that is more the rate of change in demand and supply, which we think is a sentiment driver and potentially causes the big multiple related because it's really that shock and that bite in the market that we think actually causes big premiums on key assets when we realize that this is a sustained supply problem, which is really the core of our thesis when it comes to the commodity.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably is just that there is a discount or multiple contraction in our sector that we can't predict. Essentially that it gets cheaper for some reason that we can't figure out today. Because I won't get into the nitty gritty of how we model this industry, but we take a back to it. What's so great about modeling the nuclear industry oiling asks is tricky. There's so many different end uses. refining process is complicated. It's produced all over the world. It's consumed all over the world. Nuclear fuel is much simpler. The operating reactors and those that are under construction that have licenses are very, very well defined. You know about them five, if not 10 years in advance. You know about decommissionings because of the impact on the grid multiple years in advance. So your demand forecasting is extremely accurate. On the supply side, 50 or 60 producing assets, many of which are held between two or three companies.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just to rattle off a few things. Obviously, we always say there's the potential for a left tail event, an accident, which I think would be a very difficult thing for the industry to swallow. A lot of good reasons, obviously, why we don't think that's going to happen. We can't price or hedge that. It's something that you have to be comfortable with. There is the possibility of a rapid shift in policy, and in particular how we view fossil fuel investments. We are climate change believers, solution skeptics. And we think that that is the right environment, the right recipe for continued suppression of investment in fossil fuels and continued creativity on other things, but it is very possible that our view on climate and the climate trajectory changes, and that could delay investment, probably not just in nuclear, but in a lot of the things that are forward-looking today. What I would say is that the biggest risk”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“They need to do their best reaching ESG standard. And even small non-producing companies are putting together and are urging and the urging of other investors real internal work on how they do best practices, ESG, et cetera, so that they dovetail with utilities who are ordering themselves to the same standard. Those standards need to be met. And they probably all won't succeed, but it's putting them in a better position than I think some other legacy mining or energy businesses to achieve it.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Big piece of the process. We are not activists, but we are extremely hands-on. Finding is a historically bad business. We're very conscious of that. We agree, frankly, with the labeling of mining and energy industries. So we need to keep our management teams honest. And we do our best to marshal them with our capital. And we've been very selective about the companies who were backing. One positive for uranium mining specifically is that because of frankly these wild capital cycles where famously there were probably some 450 uranium miners or so in the last cycle, we launched our fund that was down to 30 or so. The rest had gone away. But a new crop, their assets that have been purchased or consolidated or some are new discoveries, the management teams were taking these companies over realized that to get capital, to get contracts from”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today, than a year ago versus two years ago, we are as bullish as we've been since we launched when we told people we'd be 100% wrong. And that's the first time in many years. And that's because pricing in this market is wrong, we think. And we think we know why, which is, I guess, is the real cheap.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Cement companies in Pakistan, when they were trading it two or three times, EBITDA, we were early in buying Middle East financials when they were trading at huge discounts. Irish real estate when the REIT market started there and they were coming out of NAMA Air stuff. We were thinking about the business between running a more diversified strategy or focusing on energy. We mapped out all of our top picks. We pulled them out and we said, how do we rank the macro or the industry? And how do we rank the securities? And what do we think our five-year returns look like on anything that we know really well today? It was so wildly skewed in nuclear versus other investments that we couldn't ignore, at least not when we had the business option to do so. And so we continue to run those exercises. And the good news is in a weird way, mostly because the demand outlook is so much better.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are usually focused on asymmetry position by position, portfolio level. It's really deep fundamental securities analysis, all value driven where we think the tails are mispriced and skewed. We've done a lot of funny things like oversetris life.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bipartisan support issue the first time in probably 40 years or so. And what that means practically, if you're like building your reactors, is that the US for the first time via Westinghouse and some other companies are going head to head with the Koreans who have built on time and on budget in certain cases, the Chinese who are building scalable, inexpensive reactors built on the Westinghouse design. And there's a backstop of political support, which is getting all the reactors built in growth markets.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so one thing that you already asked is critical. Putting nuclear in a taxonomy or other framework that gives it the same financing, I won't call it subsidies, but the same financing platform as other generation sources is actually a remarkably important piece of getting them to be on an economic scale of their competitors very deep in the layers of how we've gotten wind and solar scaled and certainly carbon capture or some of the other technologies that we have lingering around are a huge amount of subsidized lending. And it is very encouraging to see how nuclear is improving its position vis- ⁇-vis that. The second way, and this goes back more to history, is to actually have the political backing of some of the bigger nuclear exporting countries. So in the US, most may not be aware, but nuclear isn't.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“When you have that large upfront CapEx need and this perception that you've got issues, how does the industry solve that chicken and egg problem to bring capital into the space when there's this left tail concerned?”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our United States comp, and we need to get rid of that so that the question isn't why is this plant not vocal? It should be, well, how did new scales SMR? How was that built? Or how is X energy built? Or if Westinghouse returns as a leaner, meaner, reorganized company, how are there AP1000 exports going? Because they've got a lot of orders in Europe mostly, but it's building back up. And if we see those in the market, I think the average investor or energy analyst is not going to be able to forward to what is probably the biggest new build failure in the West as our most recent data point.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Popular sentiment has shifted very radically. But ultimately, I think in Western markets, what we need is a better comp because three years ago when we would talk about our funds or frankly just our views on energy, most investors would say to us, but isn't nuclear dangerous? The truth of the matter is in a few short years, nuclear is dangerous does not come up much with anybody who we speak to. But there is head skepticism that nuclear can be economic or that nuclear can be scaled. And especially in general energy research, which is heavily skewed against nuclear because it is so efficient, capacity factors are through the roof. Once it's there, it's a monster. They use the Vogel plan by Southern companies as the comp in the West. And it's been a disaster. It's big. It's over budget. It's over timeline. But it's.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Know what's interesting is that you're starting to see it in the pouring. And I hate to be this blunt about it, but the generation who experienced Three Mile Island and China Syndrome, the movie, I guess to a certain extent, then also Chernobyl, they're getting older. Younger generations don't have experience of that kind. And frankly, the marketing and negative PR has really toned down. We have green parties, so-called environmental activist groups aren't taking aim at nuclear in the way that they did. Certainly my parents' generation, maybe even in my teens. And I think all that we're showing up, again, in Bowling, which is that young people are very supportive of nuclear. You're seeing it in every country where the failed energy policy is actually starting to bite, either because electricity prices are through the roof or because there's energy rationing. If those countries have shut nuclear and had that as a concept.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“60 years can fit on a football field 10 feet high. It's de minimis. When we ask people debate energy people, they usually think the wage profile is hundreds, if not thousands of times that size in magnitude.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think most people really understand. They think of the Simpsons and the highlighter green fuel rod and somebody walking out of a nuclear power plant with three heads. And they think that that's really what it is. The truth of the matter is that nuclear waste because of the energy density of what we're talking about is extraordinarily minimal relative to what's been produced. In your lifetime, for all the electricity used and power-limited used, I think half a coke can is about how much uranium waste you'd have left over, whereas you probably have your whole yard stacked up five stories of coal. So waste is the most misunderstood and maligned part of the nuclear thesis. Nuclear waste goes into concrete caskets, which are stored on site of the utility or in repositories. There has never been an accident of nuclear waste in the history. In the United States, all the nuclear waste we've ever accumulated over the last”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“But nonetheless, there are very good reasons for the accidents that have happened through history. Both existing plants and certainly advanced nuclear are dead set on reducing the highly low probability tail event even further. Advanced designs have walk away passive safety features, in some cases have cores that can't melt down or use fuel that cannot melt down. They have lower waste profiles, proliferation risk is reduced. The industry in short has understood for the last two or three decades that if they want to survive and evolve, whether it's mathematically justified or not, they need to do these things better. And so they are doing these things better.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Simple answer is to put the problems that we've had in the context of the power generator from nuclear. And you realize just how safe and reliable it is. That's not to say that nuclear couldn't or shouldn't be held to a higher standard because when things go wrong, it's viewed as a tail risk analogy that everybody uses is being scared of driving a car versus flying in an airplane despite the safety dynamics at play. And I think it's a pretty good one.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Growth assumption until the very last minute. And that has kept capital restrained from the fuel cycle. Prices need to be higher to incentivize that capital. And so we miss the window in our opinion, although we should have been developing new wines. That expresses itself in the market slowly and then all at once. Demand is inelastic. And as long as a pound needed is supplied, we don't expose the deficits. There's not opportunistic capital really front running this like you would see in other markets. But then it goes. And it's very hard to respond because the discovery to permanent can be 10 years. And even high quality development assets, the best ones that we see out there are probably four years out from.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“The public markets want information that's going to move securities on demand. I think it's the timing of how supply and demand work in this market that honestly has frustrated some investors who are investing in the uranium fuel cycle. And also it's probably the biggest knowledge barrier, even for smart institutional investors in understanding the way this market's going to continue to unfold over the coming years. The capital cycle is front and center to this conundrum for investors because nuclear fuel starts its process two, three, four years before it finds its way into a reactor. The price signals needed to incentivize new CapEx often don't align with demand because of that timing element in the market. So we like to say that CapEx should happen four or five years before the eventual demand. And what ended up happening is that nuclear was really excluded from any.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's probably about 100, 120. It's pretty small. We like that because it's almost a sixth cent for us, especially being dedicated for almost five years looking at the set. And we do look at the private market. It's not only because they're very influential to our modeling of fuel market to demand curve over the medium and then long term, but also so that we understand what's coming down the pipe. And we do think, especially if the market and the world continues to integrate nuclear more into the transition, there are companies that should be public today than are private.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Technology companies. We have industrials that service the nuclear industry as a full business model or part of their business model. How many”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“The private markets were always more expensive than public markets. If you go back to 2018, energy, metals, and mining were at their lows, that was acutely felt in the uranium market. So that led us to taking a private equity public markets approach. Now, if you're talking about the opportunity set today, which is growing into advanced nuclear new generation, new fuels, new ways to enrich, we don't choose public or private markets. We're in a nice position now where we go where the quality and the value coincide. Our platform gives us the flexibility in theory to do both. The public markets are mostly dominated by fuel cycle plays. And a fuel cycle plays uranium miners are vast majority of the opportunity set. There are some enrichment plays as well when you have like a diversified player like a capture. Additionally, there are a few new”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oranges for the same glass of orange juice, you pop them on the squeezer, you get the fat pitch of juice out, and you move on to the next. And that's why enrichment today is so interesting, because again, Russia, which has been a very large percentage of the market, is being carved out. It's quickly and overnight turned the enrichment market somewhat upside down. And what the market hasn't fully digested yet, because this market moves in slow motion, is that on a go forward basis, you probably aren't going to get supply for the richers. And it's very likely that you actually have demand for the richers, which is a process that's known as going from underfeeding to overfeeding. How have you thought about”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“In your reactor. There's two ways that you can get your orange juice. You can get it from your oranges. In this analogy, your oranges are uranium, or you can get it from your juice squeezer. In this case, your juice squeezers your enrichment service. If you have an excess of squeezing capacity, an excess of enrichment capacity, you maybe take one orange and you squeeze it and you squeeze it and let it run on the squeezer until the last drop is out of the orange because if that orange isn't on the squeezer, If it's not in the centrifuge, it's got nothing else to do. But when you originally ordered your package, you had three oranges to make your glass of orange juice. So you've got two extra now. Those two have gotten sold back to the uranium market for a long period of time, which has actually been a secondary source of supply that comes out of mines. When the international market tightens and you have a deficit of enrichment services, the opposite actually becomes true, which is that you buy more.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's actually a little bit complicated here. Enrichment has been a pretty concentrated market. 45, 47% of it has been run by Russia's ROSAM 10x. And you hadn't seen them direct sanction yet, mostly in our opinion, because to do so overnight really crippled the Western nuclear fuel markets. But that doesn't mean that on a go forward basis, we won't be incrementally, significantly reducing our exposure to those sources of enrichment until we're at zero. So that market is tightening and tightening and tightening. Enrichment has been an overcapacity for a very long period. Overcapacity of enrichment services actually leads to excess uranium. Imagine your utility and you want your nuclear fuel. You order a glass of orange juice. Your glass of orange juice is essentially your enriched uranium fuel. That's what you want.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Views of what global generation is going to look like. And very quickly do lifetime extensions in the West, China's build policy, advanced the Russian war went into tight supply. And prices have gone up and down. Traversion is hard to play on a pure play basis. Companies like Camco would be a publicly traded company that has conversion services in Mericliver, nuclear fuel offerings.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Conversion is probably a little easier to explain because it's more concentrated market. Conversion was in oversupply as a service in the post-Fukushima years. Utilities thought that they would be shutting upwards of a third of our generation a decade forward, which is a lot. Fuel costs are relatively small percentage of operating a plant. People who don't know nuclear economics that well maybe assume that like coal or gas plant feedstock is 80% of running, it's flipped on its head for a nuclear reactor. It's all upfront CapEx, a little bit of OpEx and fuel costs fully baked for maybe 15 or 17% uranium is three to five percent. So it's very, very, very small and you run very long forward contracts and very high inventories as part of your operations, which means that this is not a just-in-time market. And conversion would be a great example of a market that was expected to be an oversupply for a long time based on some very”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Can scale up to get a real blocking position in the market, which will, in our opinion, remain in structural deficit for many years regardless of capital. But if you are a size deposit in the right jurisdiction, the right cost profile, we think that will maybe be seen by the market as a strategic asset. And currently they're not.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so especially in the geopolitical climate that I just outlined, reliable Western sources of uranium becomes incredibly important. Russia does not do much direct Ethereum. They may be 5% global supplier or so. But Kazakhstan, fully independent neighboring country, former satellite, is 40%. So there is definitely concern in fuel markets over time. That becomes a regional block. And at the same time, because Kazakh material in particular has been very inexpensive and ramped significantly through the nuclear bear market that we had, that those low-cost pounds in the market disincentivized development in the West. So to answer your question, we've been hyper-focused on trying to find very high quality strategic resources that are in the West that we hope”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, let's walk through each one. So start with mining. It's not hard to draw corollaries to mining in gold or energy. There's always ESG concerns. How do you think about where you want to play on the mining part of the value chain?”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Starts with uranium mining. You take U308 or yellow cake out of the ground, you convert it into UF6 gas. You enrich it to the enrichment level required by your reactor. And then you fabricate into fuel rots, which go into your reactor core. And generally, that's your process. There are many miners, and we do a lot of mining investing. Conversion is actually a bottleneck in the market. Enrichment, those are the centrifusion. Sometimes they have a negative connotation. Enrichment has been dominated by two or three sources globally, one of which is Russia state-owned company Ros Adam. And the current tensions between Russia and Ukraine have created a real bifurcation in that market, which will have ripple effects for many, many, many years. They're close to 50% of the market. And over time, they'll be cut out of Western markets, in our opinion, which will create a very big deficit in that market.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Lurking in the shadows, but very quickly coming into the light is advanced nuclear, which probably up until the last six or nine months really hasn't been on anybody's radar, but we think is extraordinarily interesting, which is that there are off-the-shelf technologies that have been running in national labs or test reactors for a long time that are better, smaller, more scalable, have ancillary applications other than electricity. And they're coming by the end of the decade. And we think that's fantastic and will help solidify the idea that nuclear can be a big help in the transition.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“The answer to that is that it's a little bit of a gray area currently. But if you went back 12 months ago, it was definitely not considered in consensus circles to be anywhere near an energy transition or ESG or impact investment. Amazing what an energy crisis and deeper failures of renewables policy and expectations for battery technology, how quickly you can pivot back to things that work and that are clean. I think that 12 months ago was nowhere to be seen. Some of the benefits of nuclear for the energy transition or ESG see it come to the fore. But like with the green taxonomy, even the inflation deduction act and the level of subsidy playing field that nuclear is now on with a clean generating sources, all of these are gigantic leaps in the right direction for it to be probably more in the fair way of what the average investor thinks as an energy transition. And then the only other point to make is that”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“And if we just got a few of the assumptions right, we would have a very, very different demean profile. And the capital cycle was too delayed. And that was a nuts and bolts.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“How bad can it be in us and we still make money? Where does a deficit ran your market or enrichment markets conversion, the different pieces of the fuel cycle? Where are the different pinch points if it's just not as bad as everybody thinks? And the thesis that we ended up underwriting is that there's so much negative news price stand here. And we think that is driven such a impediment to the capital required, even just for a very, very conservative case for nuclear generation going forward that we thought prices would get pinched. And that was mostly around the Iranian price, $18 or $19 when we launched the fund. It's around $50 now. It's still not a balancing price in the market. We still think there's quite a bit to go. But that was it, which is the market thought it was really bad. We couldn't see 30% of Western generation being wiped off. The market was very skeptical of China's build plan, very skeptical of India's build plan and Russia, which were the sources of growth globally.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's an absolute necessity if we have any reasonable shot and you don't have to believe me because solid academic research has come around as well. We believed that nuclear had to grow. But what was interesting about the market and what was being priced in the market, this was a time when we were planning to shut 30% of nuclear generation in the Western world. We just thought that actually was impossible. And so we almost had a melting ice cube thesis to Newkelet. The world is extraordinarily bearish. It's politically easy to be negative nuclear power. We are almost peak renewable sentiment. You're at this part in the curve of will renewables are easy and grids where everybody could talk about it and adopt it and it would be easy. But nuclear is that workhorse behind wouldn't stop mostly at the supply side of nuclear investments, like the fuel cycle and the commodity side. We said, well, if it's just not as bad as everybody thinks.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's critical. It surprises most to hear that there is not one credible academic institution that sees us on a path to net zero without nuclear grid. It's just the one pillar or vertical of energy investing where nobody will be able to.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's dive in to the case for nuclear. And I suppose there's two things to deconstruct. One is the fundamental case for nuclear energy and then the markets and extracting value from it. So why don't we start with that former? What's the fundamental thesis you put forth for why investing in nuclear?”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“And certainly to our goals to decarbonize to the extent that Paris Accord laid out. So we started really digging in. One of our bigger LPs at the time said, hey, love your general hedge fund, but you guys are sitting in Dallas and you're 30 years old. And I think you guys are at $35 million in AUM or something like that. It's a tough business. You're probably going to have families. I think what you're doing in nuclear is actually really different. How about I match my investment in the main fund and you can do something, it's like it can be long short, it can be energy, but he's like, just give me exposure to that and what your views are on the energy markets. And I think you'll have a lot of success. That limited partner was right because we ran the two strategies concurrently for a while and we were tapped in our capacity for the nuclear related fund. And we very quickly felt a very different marketing process than for our general fund. And I guess the rest is history.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“We always rant concentrated. We tried to almost be like 10 to 12 longs that mattered and about the same number of shorts that mattered. And our nets really just came down to sizing. One of our long-running ideas, probably from 2015 or 2016, was that energy markets broadly were misunderstood. And we did what we do, which is try and dismantle what consensus had. This consensus idea that we're going to decarbonize, for instance, that felt very real to us even six years ago when we kind of combed through it, we looked at battery markets, battery metals way back. And so we knew that market well. I covered uranium in the fuel cycle before. My partner, Origer, had been covered utilities at JP Morgan. And so we're piecing together this knowledge base and nuclear just stood out like a sore thumb in terms of how investors misunderstood effectively that market in general and how it worked, but also just kind of how critical it was to our energy infrastructure.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because we weren't doing our job. It wasn't always the best opening. Some people took it the wrong way, but we meant we were really, really trying to scrape global markets for things that we didn't think anybody else was hearing. And when there was a real value bend to the security in which we wanted to invest.”
2023-03-27 · Capital Allocators · Adam Rodman – The Case for Nuclear (Climate Solutions EP.4, Capital Allocators EP.304) · IDENTIFIED FROM THE TRANSCRIPT · source