YouSaid · the spoken record

Bob Robotti

lines on the record: 112
first: 2024-06-23
most recent: 2024-06-23
sittings or episodes: 1
sources: podcast

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“William, it's been great to have a conversation and just chat. It's been a very relaxed environment. Thank you so much. And I enjoyed it. And I hope people weren't too bored by the conversation.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Well, that's the way it likes. All these things, one change would have been a different course in life. And had I married a different person. And one of the things is that we couldn't have children. So the fact that we didn't have children, that's expensive. So to be able to not make money for 10 years' time and to have children, well, that's a very different economic equation. So therefore, my ability to have kind of persisted would have been very difficult, if not impossible. Each one of those things is a random thing that all comes together that kind of makes the outcome where you end up. And there are other outcomes that probably would have been a good outcome too, but they would have been different outcomes for sure.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“But again, the good fortune that I happen to fall into that job because I did get to see that I thought I was going to get the opportunity at the time it was those things were kind of like that was really random and good fortune. That's all that was. I could have been someplace else. I could have worked hard at Bucknell and got a B or got a job for a big Accounting Firm and be on a very different path today than where I was. Another critical piece of the success has been the fact that my wife and I married, you know, she had a reasonably good job and I didn't make money in the business first 10 years at all. And so therefore, but we didn't spend money. So therefore, we had a very modest life that we lived in terms of how much we spent. And so therefore I could work for a year, 10 years, and not really make much money at it. Most people don't have that capability and capacity. And so therefore, there are so many things that have happened in my life that have been good fortune.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“For the money, I do it for the enjoyment of it and the fun of it and the process of I lose money in the meantime. Of course, I have other people's money that I'm losing too. And then that is difficult. But I've been fortunate they stay with me. So therefore, at the end of the day, there's a mark-to-market, but there's not a loss in it. So it's worked out well. And so I think the ability to tolerate disappointments with the idea like, well, wait a second, what's the idea is the concept in the investment thesis still there and still correct. And if I'm right now, the fact that I was wrong, it's even better. So those psychological things, I think, have been critical in terms of being able to stay with investments and things that over time have worked out extremely well because we bought them for a fraction of what those things were.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“So the successes we've had have been the ability to, the behavioral advantage of being able to tolerate a loss. So that's one of the famous things in value investing psychological is always the concept that losing hurts twice as much as winning or whatever the two times, three times at a differential. And the fact of the matter is the losing money doesn't bother me and hasn't bothered me somehow. And so the opportunity of being right, which is making money, but it's not necessarily making money. It's really, I think, more like being right. And so therefore looking at things and kind of getting a differentiated view and supporting that and coming to conclusions that are different than others is a great puzzle. So it's a personal pursuit that happens to bring along with it a bunch of money. You're right too. So that's the outcome of it. But I don't do it.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“That you know, so those are opportunities. And so, as I joked when my nephew came to live when he was 12, I said, Sue, this is perfect. I said, you know, he's already had some issues here. So like, it's a win-win for us. Either, you know, he's got some issues with and he has, and that's difficult. And we can say, well, it wasn't us. And if it turns out, okay, we take the credit. That's great.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“So it's amazing. I always kind of realize that I'm not as introspective a person as I really should be. So for example, my dad, we never really appreciated the fact that his eyesight was so impaired. Now my mother was a critical element in making that less transparent to all of us. So we were in a way in many ways almost sheltered while we lived with him that he had these issues. So we really kind of didn't see it. And then we didn't, there's my shortcoming. They didn't delve into it and say, dad, you know, what are these things? And how do they really affect your life and everything? And so I always regret that I have today that I didn't have those conversations. To a certain extent, the way, and there hasn't been great adversity in our lives, I'd say we've been amazingly fortunate in so many ways. And so therefore, occasionally, there's a little bit of wrinkle here and there. So you deal with it.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“That she has that kind of input and additional value that I think that A, she derives from that process. Because all these things we do, we get benefits from it. This isn't just give things away. We see things, we hear things, and we have appreciation for things. And we learn stuff. So therefore, there's a lot of learning from that process. And learning those things are really critical, important, and potentially make us better at contributing and making the world not so bad.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Edinburgh and Bug just 12 year olds in a Catholic school don't necessarily jive. And suddenly, like, well, Ridlin is the thing for him. So my wife went to go see the doctor and talked about Ridlin and said, well, what are the side effects? And they said, oh, there's no side effects if we would know. And she didn't feel very comfortable with that as an answer. He's a precedent child. We're going to give him a drug. He's going to be on it for an indefinite amount of time that has to have some kind of impact. So he didn't go on the drug. We were fortunate to be able to give a little more money to the school and they said, okay, he doesn't need to go on the drug. So she had that experience too with Dan. And when he came to Limpetus and so therefore that's another experience that she said and from Manchado, she's done other things too. So she's involved with the FDA and she's actually on advisory committees and if we're regularly hauled down as the drug safety component on hearings with the new drum applications in terms of what are the side effects, what are the medicine should we approve this? How does this all work? And so therefore”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Wife's situation is well, you kept giving them medicine. Get them off the medicine. They need to get up. They need to exercise. They need to diet and exercise are really the solution to many things. But yet, there's times when you need medicine. So therefore, you need to do that. But if we need to be cognizant of what's my side effect of those things, and especially as you get older, there's multiple medicines that you're taking and therefore the impact of those and how they interrelate is kind of complicated. But of course, our situation is different. Our mother took a drug. therefore caused her infertility so therefore it's a critical part of her life and then when our nephew came to live with us when he was 12 he didn't come because you see the ideal child is a rambunkous 12 year old”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Well, that's what it is. So she's had personal experiences that put her in the position to therefore think about this issue in many different ways. And so therefore to have the ability to have impact on it and potentially change things is critical and positive. And that's what we're here for. We can do good things in the process. That's great. And that's what it is. It's a pharmaceuticals are, I think it's number four, number five in terms of largest causes of death in Americans. And that's not misuse of drugs. But those are prescription pharmaceuticals, right? That's not heroin that you got on the corner that you got an opus and dose and die. So, you know, it is a problem. And therefore, thinking about, because that's what it is, right? We live in a world in which we're looking for the easy way out. And so that's post financial crisis, the government decided the easy way out was I'd make interest rates zero and therefore I'll help everybody instead it's effectively the same as my”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Likelihood that you're going to come up with the same graduation rate of what Harvard's going to come up with. Of course, you're not going to do that because that group inherently has all these advantages they come in with. That's not the situation with face. And so that's why I'm much more active in giving money to PACE, because it really changes people's lives and has impact as opposed to, you know, yeah, an hour endowment's bigger than Colgates, and that's wonderful and whatever else.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“And of course, so my college is Bucknell. And so I do give money to Bucknell because Bucknell did give me a loan and some money when I was there. So I owe them. And of course, everybody owes money to the schools they go to because the reality of it is when you get charged for tuition, it's less than what it costs to educate you. So there really is a gap that you've been the beneficiary of. But Bucknell also is a place that has a veteran endowment and educates generally people from a higher socioeconomic background as opposed to pace is a different input group. And so the people who go to Bucknell probably will do whatever they're going to do in life anyway, change the direction of that too much. The fact of the matter is the people who go to pace and then get a college education. Potentially you have impact. And of course, Pace is a place that has harder numbers in terms of what's the graduation rate and where it is and isn't as good as other universities because you start with a population. That's kind of more disadvantaged. And so therefore the”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“There's a value, it may all go back a little bit to, so when I was in sixth grade, seventh grade, then I went to Catholic schools. So the nuns used to raise money for the people in some places in Central America. And so therefore there was a competition that they would sit. So therefore there were 46 kids in our class, right? Half girls, half boys. And they said, okay, who's going to give more money than girls to the boys? And so Marie Napolitano used to always give money, but I used to give money. So there was a competition they set up between us. And at the end of the day, my family came from a modest neighborhood. We actually had reasonable money. So I describe my situation growing up with the family and nine of us in the house and there's only one bathroom and lived that. And so someone said to me, oh, so that's why you're successful because you're driven because that was a difficult environment. I said, I love my childhood, which is wonderful. We had the most. The idea that I could share that with people.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Ended up for the next six years doing all these trips to Asia, visiting all these companies. And the information that you get, you know, as Freeman said, the world's flat. That's why I say it's not deglobalization. It's just the evolution of globalization. It continues to move places. And so my appreciation for that was colored by the fact that I listened to Isaac and said, okay, let me humor him. This maybe I'll learn something. And of course, I learned a lot. So therefore, in the process of talking to people, you do learn a lot because they ask different questions. They go different ways. They do different things. So therefore, there's a value to that clearly. And it's also a value in terms of, you know, giving someone who's hardworking and is looking to figure out how to advance their situations in life and be able to help them in that process. Because opportunities are somewhat limited to the extent that you can give opportunities to people who are anxious to do things to improve that does something and clearly this.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Well, first off, you let full disclosure. I know Joe and I know Joe well. So this is a question from a friendly person, too. So he's giving me an opportunity. He's throwing me the fat softball here. Let's see if I can at least get a ground ball. So I think it's really interesting. And of course, it's fulfilling for me. My experience, you know, like when I graduated college and said we should invest in Asia. And so I said, okay, let me go try that. So I would go with him and I, you know.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Companies become something very different and an opportunity for large oil companies to be part of their portfolio of energy and energy solutions.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Because you're in the right place producing with a lower cost structure, you're a cost advantaged. But the other thing is there's also end market demand for use of the intermediate product to make that are in new uses that aren't there. So huge growth opportunities. And as a result further, ammonia becomes part of the equation potentially. So you have seen Exxon mobile bought, Denberry Energy, Denberry owns a CO2 pipeline that moves CO2 for carbon sequestration purposes. And so that's why they get into the business. And so they're going to be advancing carbon sequestration because they own the CO2 pipeline. So therefore, Exxon is looking at, okay, so we're not just an oil and gas company, that energy transition is going to put us into CO2 capture as part of the business. Ammonia looks like it's part of the business too. And so therefore, is there that kind of logic where the integration ammonia”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Is hydrogen. So these new uses are there. So that's what I really think over the next three, four, five years. So the end market demand for the intermediate product they make ammonia is going to be substantially higher. So there's substantial growth with energy transition. So not only does it have the attributes with a positive situation where you're going to make ammonia, you make it here in the US, natural gas prices are two to three instead of nine or when they were 60 they were nine here. So you get this huge pricing differential and that's your raw material input. So therefore you make it for less year. The pricing is set by the European or Asian producers. So that's with the pricing power, their cost structure is such that they make a margin on it that North American producers have a huge margin on that. And that's a sustainable advantage because our energy costs are lower than there. So the business, the fundamental business as is, I think is one in which there's substantial growth in terms of profitability.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“There's a movement afoot, and there's plenty of companies who have identified engine capacity, therefore, to burn ammonia as a substitute. There's also in Asia, they're doing test burn now to substitute in with coal ammonia. Because again, when the ammonia is burned, you don't have the CO2, you don't have the other output and noxious things that come out of burning coal. And so therefore Japan and South Korea are testing that process. And that could be a huge market for incremental ammonia demand. And then the third use of ammonia is it's really hard to move hydrogen and hydrogen is kind of one of the holy grails of energy transition if we can get to use hydrogen. But hydrogen is hard to store. It's hard to transport. But ammonia is not as hard. It's still got its own issues, but not as hard. And therefore, you can transport ammonia and convert it to hydrogen. So therefore, it's a bridge fuel to be able to use.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Out how to convert engines to burn something other than something that creates CO2. And so there are two identifiable options for that. One of them is methanol and the other one is ammonia. So therefore, by burning ammonia, when you burn ammonia, you don't produce any CO2. You do produce other”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“It is, but I'm looking for more. I'm greedy. I tell you, I'm greedy. LSB, what they do is they in large part, they're making fertilizers, cyclical business depending on crop prices and all those things. However, to make that, they make ammonia. So this is part of the energy transition. So energy transition is something that is real. We'll continue to gain momentum and therefore we'll call on capital and part of that process, that call on resources means that's an interesting dynamic. But ammonia is interesting from the point of view of it has three different roles that logically in the next decade, it could now have huge increase in demand. The first one is as a marine fuel. So shipping is a huge impact in a big carbon output and therefore they're trying to figure out.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“These industries are going to be competitively advantaged and probably have pricing power and therefore have growth and therefore good economics and start out with low valuations too.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Europe because Europe is more focused also on the environment and decarbonization in many ways is deindustrialization and therefore the movement of industry from Europe to America is definitely something that will continue to accelerate I think and so that creates a headwind there's probably other opportunities in Europe too I wouldn't be so sanguine about you know like things look really bad there so I actually see a world in which yes, North American markets and I can't help but think that that also is a whole bunch of positives that end up being for America. Now at the same time we have a whole bunch of debt that has not come home to roost and that continues to grow and so therefore you know there there is there is a cloud out there too this is it's not just funny clear skies ahead and again that's probably more like you pick the light industry you pick the right company because in spite of the fact that America may have other structural issues”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Well, I actually think both of those are true because I just went through an example where resources and materials are in the South. And those are emergency markets. And so I do think that emerging markets are going to have an emergence. And so therefore they are the beneficiaries of the continued movement, evolution of globalization out of China. So therefore, I think emerging markets have really good growth in front of them because they're going to pick up some of that advantage from the movement out of China at the same time the appetite for materials are going to be things that also do well for them at the same time if we're in North America and we have really low cost energy and we have that huge advantage that means we're building out all this infrastructure, we're building out all this industrial capacity and therefore North America will do well in that process too. And of course a place that's I think substantially at risk is”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“And then economics start to float to parts in the world that have had more difficulty, haven't been able to capture the value what they own and what they own today is in very high demand and increasing demand and the value capture was going to be significant. And that means in the process, it's going to cost a lot more money to do the things we need to do to build out renewables.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“And it's good, but you've got to do this to get that. And so, therefore, I think we're ignoring the idea that this, but you got to do this to get that. And so therefore, there's an extra process involved. There's an extra burden on the environment, an extra concern about that. And that's going to be mitigated in some way, and that's going to cost you more money. So it clearly is. And now, of course, I'm a Pollyanna. I think everything, you know, works. I see how everything works out well. In my mind, it's really good because one of the arguments in the last two, three, four years is the South is short of resources and money. And the North has got all these advantages. Well, the northern part of the hemisphere is going to need all the stuff that's in the southern part of the hemisphere. And the southern part of the hemisphere is going to say, that's fine, but these are the conditions in which you will take that resource from me. And this is what I want in return. And so I think that's really good because that means that that value.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Part of the economics in that project. And you're going to do these things. And Indonesia, in Freeport Mac Moran's copper discovery that they have in development, they were planning on taking the copper someplace else to have refined. Indonesia said, no, no, no, you're going to build a smelter here in Indonesia. We're going to capture more value in that process. And therefore, you're not just going to take that mineral and run away with it. So we're going to take the second bite at that apple and we're going to build out our economy. So what I think is the demand for incremental new resource, these countries are in a different position than they were 50 years ago when you came in, you paid them some money, stuff, and you ran away. No, no, no, no, no. So what's the environmental impact? You're going to have to do things that are going to minimize the environmental impact, which means a lot more money and a lot longer time to develop these materials that are going to go in. So life is a trade-off. It's not like you did this thing and it's only good. It's kind of like you do this.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“At the same time, for the copper mine, when I'm talking to them, they say, yeah, we have this copper mine and we're doing this expansion. And fortunately, we have a water desalination program. And because you can't use ground award anymore. And desalinate water is 10 times the cost groundwater. And it also means the energy consumption is 33% higher for that operation because of the desalination. And because we have the desalination, there's a guy who has a copper discovery not far from us and he thinks he's going to develop that copper mine. He's never going to be able to do that because he doesn't have the infrastructure. He doesn't have the desalination capacity. So the fact that we have all those things, but it's going to cost us more money. And then lithium, which is another big product that, you know, comes from Chile, the government of Chile says any new lithium projects we're going to own.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“And get loaded up with rock. And now they have to go up to serpentine hill to get to the top of the mine. And they move at a pace of about two miles an hour, earning huge amounts of energy and diesel to be able to move that rock to get to the point. And then eventually you take that rock and you process it and you come up with 20 or 30 percent copper. And then you ship that to China probably, who then refines it to make 99% copper, who then ships it to someone else who then incorporates copper into their wire or whatever else.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“It's inflationary. So last September, I was down in Chile. And so Finning is the largest caterpillar dealer in the world. And so they had a field trip. And so we would spend three days with them going through their facilities. And at the end of it, we actually went to an open copper mine. When, of course, the scale of these things, we all have like no appreciation for it, you know, like you have a copper thing at home. You don't think much of it. So first off, I'm sure everyone's seen a picture of one of those large caterpillar bump trucks that holds 100 tons, like the wheels are eight feet high and each one of them costs $250,000. Truck's just a behemoth. And, you know, you stand next when you go up. It's 40 feet high. Oh my God. Then you go to the open pit vine and you see 50 of them like little ants running around the mine.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“If we're electrifying everything and we want to do all these things, we want to have all these renewables and we want to have EDs, you got to have a whole bunch more comfort than we produce today. And you see that, right? Because that's what's going on in the copper markets. Look at people in the business identify the coming tight supply, short supply, and they're buying each other. So I don't want to start a new mine because the timeline on that is very expensive, uncertain. And the economics today don't necessarily justify it. But I can't turn it on a die. And so in the meantime, I want to buy the guy who has the copper. So therefore, I supplement it. So, you know, BHP's bid to buy Anglo was not efficiencies, synergies, or anything else. Kind of like, I want to own more copper. How do I do that? I'm a big copper producer. So we think the colon materials is a really interesting opportunity for long-dated investment today.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“And yet, is it an important backdrop? The other thing is, of course, there's still an increasing demand for energy. And, of course, there's a bunch of the concern about the environment, you'd rather not have the case. Natural gas is clearly the ridge-fueled that will facilitate how quickly we can build out renewables to be able to supply enough energy from renewables or battery storage or all of those things, which will take demand, steel, and all kinds of materials and copper. And therefore, the buildout, that's what I say. The buildout of renewables has a really high cost of materials consumption, materials that are already in tight supply. And so in our mind, I just can't see how 10 years from now the demand for copper is substantially larger than our ability to produce copper. And so that's an inevitability. Now, when that happens and how that happens and how it plays out, I don't know the answer to that, but.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“We've been fortunate the last three, four years. You really haven't seen the impact of the fact that if you lost 5 million barrels of oil, I don't know what we do because it just isn't there. And again, I emphasize, I thought a year and a half ago when the Saudis first announced their ramp up in spending, right? They said we're going to increase spending 60% and we're going to hold that for five years. And at the end of five years, we're going to go from 12 million barrels a day to 13 million barrels a day. Well, how do you not interpret that to be? Saudi Arabia is a place in which it's a mature oil. When you spend money that aggressively and you don't move the meter, you're on a treadmill and you're running awful hard. And so therefore not only is that supply demand really tight, there's not the rest of the world probably thinks of Saudis can like, oh, they can increase production and huge numbers. They can't. So we're in a very tight supply demand balance in oil today, which I don't think is recognized at all in pricing.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Ends up going to 40, where I started at three at the beginning of the decade, and it's now 40. But of course, there was a supply response. And therefore, places like Mexico, North Sea, all these new places were economic. And therefore, new production came online, supply came online. So the supply demand balance was met. And actually the shahs fall in 79 exacerbated the problem because the price went even higher, even though the world could, with a production that had could easily supply the demand. Demand was weighing because the price was high. So then you have a period of time in the mid-80s where the world could produce $75 million barrels a day and it consume 55 million barrels a day, a 20 million barrel excess. And over time, of course, where we are today, we now consume 100 million barrels a day, not 55 million barrels a day. And the excess supply, I don't think it's more than two or three million barrels. And so therefore, never have you had anywhere near that tight a supply down.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“So again, having invested in energy, so the first thing is, you know, I'm still in college in the 70s, but in 1974, I went down to New Orleans for Mardi Gras. And on the way down, we almost didn't make it because there was gasoline rationing odd and even. So 73 was the first event that happened when oil went in six months from three to twelve. And so, you know, I had lived through that experience. And then, of course, that decade, and of course that's what these stock set up, were energy stocks, oil stocks, because they owned an asset that was in high demand that had high profit. Therefore, money follows profits. And so therefore, they didn't buy oil stocks because they wanted to earn oil stocks. They earn oil stocks because they were making a lot of money. And so therefore, that's where the capital wins. Of course, what happened was then in 1979 is the shoppers in Iran. So you've got a second event. So oil.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Check their allocations and all say, yeah, I'm not looking to offer you a diversified investment portfolio. I'm looking to identify situations that they price the value or substantially mispriced, and therefore there's a great opportunity. You have to figure out how to allocate your own capital that you've got things in different pockets. But I'm not looking to do that. I'm going to replicate that. Instead, I'm looking to identify things that I think there's a huge investment opportunity in it and put my own capital and yours alongside me to work in those things”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“I have a big investment in side water Now, you'll be told, right? So, therefore, if you do look through my public filings, you'd see in the last months I have souls in stock. And so therefore, in spite of the fact that I say, investing is really more predicated on a price to value equation, it's not necessarily on putting together a portfolio and portfolio risk.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“I continue to add at higher prices because the price to value was still substantially discounted. So when it got to 30 cents and a dollar and I could now identify in the next two to three years, it was going to a dollar. And so therefore, the opportunity now was right. And so therefore, to put capital to work. And as a result of that, you end up having a really big investment in something that is really, I guess munger is, you know, has the phrase that, you know, there are very few things in life that really work out well. And when you have one of those, you take full advantage of it. So therefore, when these things manifest and the opportunity then comes to fruition, the investment thesis we had now manifests, there's an opportunity to put capital work at a really great risk or an opportunity.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“At the bottom cycle, and I can buy assets for 20 cents a dollar. This is going to make really good returns. And so therefore, we started to invest. And then the other thing that I've learned from investing in businesses that have no identifiable earning stream and therefore the assets are hard to value and therefore you can buy them for far less than what it was to build those assets would be as the thesis ends up being right and the supply demand comes into balance and the thing starts to manifest when the stock doubles It's probably a better buy than where it was when it didn't because what's happening is the supply demand has come and right-sided. The economics are now starting to manifest. The earnings will be there. The valuation replacement cost becomes relevant and the identical timeline suddenly now appears. And so therefore to put more capital to work, even though it's appreciated, and that's what we've done in TideWord or over the last couple years at various points.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“It is. And that's what happened. I was down in New Orleans. We went on a field trip to go see Methanex that owns methanol plants. They were relocating a methanol plant from Chile to the Geistmill, Louisiana. So it was a field trip to Geisberg. And we're in New Orleans as long as I'm there. I'm in town. Who else to visit with? And I said, ah, Hydewater. I hate the boat business. It's such a crappy business. But I had nothing to do. So I went to go see Jeff, the CEO of Tidewater. and had looked at it and said, hey, gee, maybe it's different than what I thought what they've done with the fleet. They've upgraded the fleet. It's newer, but it's still problematic and whatever else. And so initially, I didn't even want to invest in it because I've been around the business 50 years. And so therefore, it's not a business that inherently pulled me in. But of course, it was, wait a second. Now suddenly it's gone through bankruptcy and I have a balance sheet with no net debt and I position a company that's breaking each.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“And what happens is as it disappoints, which inevitably will because the situation is not conducive to the supply demand, it's the only one place for the stock to goes down. It doesn't matter that you're buying a dollar for 20 cents, it goes to 10 cents. And if it continues to disappoint, it goes to 5 cents. So the opportunity gets larger and larger and larger, probably the opportunity gets closer to realization because the timeline is changing because the supply is dwindling. And so therefore the demand returning is an uncertainty. So that's what it is, is we look at these businesses and understand in certain cases that disparity and therefore continue to invest is that opportunity potentially gets wider as it doesn't happen in the short term. And so therefore that's, as I say, that's where we've made the most money in the short term. It worked against us. And then we invested more money when the opportunity became closer to realization and the valuation further discounted.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“You have 90% utilization and therefore the rental rates going through the roof. And so therefore the roof, it all falls to the bottom line. And so therefore, and the value of that is, well, when you get to the point where you need to buy new real estate, what's the cost of that real estate? And so that's a pretty easy to identify number. And if I can buy something for 10 that costs 50, and I'm buying it for 20% of its replacement cost. Now, when do the economics get it to the point where it's worth 50? That's the uncertainty that people aren't willing to invest in because I don't believe it. I don't know what's going to happen. In the meantime, we invested in it because I have a strong conviction that it's not that long a time horizon. And when I started 10 and I'm going to 50, that's a really good return. So therefore, the time period becomes less significant. Now, of course, the company disappoints. I'm holding up my hand so I got one high, got one low.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Come to what the underlying economics are and what the opportunities that is, and what the size and scale opportunity that business is. So it is the realization of something that I've invested in all along and that the market couldn't care less about four years ago when I went to, I could go through the litany of really small value investors who do cyclical energy cognitive investment. So it is the kind of thing they would invest in. It's not like, oh, I don't invest in that thing. No, this is what I'm saying. No, no, no, I'm going to have no interest in that. And in the meantime, tide water, it's boats. That's what a year ago I was at a conference that I said, okay, the stock pickup I'm going to have today is I'm going to talk to you about a real estate company. And the real estate company is one in which the real estate's been converted, shut down, ripped down. There's no new supply. The demand for that real estate is suddenly come into tight supply.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“In service fixes jungles. So that means in 2017, Energy had a really good run, but it was all onshore and it was all shale. And I did nothing in those years. And I did not participate in it. So therefore, again, it's stock selection. And, you know, in that case, I underperformed because I didn't own the right energy stocks. And of course, what's happened more recently is, oh, no, no, no. The onshore has its place, the offshore has its place.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“It's individual stock selection. I don't buy M. I'm not buying energy broadly. And it's valuation. So it's easy. It's simple. It's really not that complicated. So valuation part is in certain parts of the oil and gas industry, the service parts of the business or the picks and shovels parts of it. There's what I would say is a true north. The true north is what's the replacement cost of that asset? And of course, it's predicated on the concept that that asset will be one that will be in supply demand balance or in tight supply. And therefore that means the economics will be determined by what it costs to build that asset because you're going to need more assets. And so where is that? And that shows you the earnings potential of the business and that shows you the value of that business. And what's happened, of course, is the focus of what I do in energy, a lot of it really does tend to be offshore related.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“You build out to mess what it is. When you build out renewables, you need steel, cement, and you need all these basic materials that are in tight supply today. And so therefore, we think inflationary situations and energy too is the same thing. Those are inflationary. And therefore, inflation is going to be more persistent at the higher level. And when financial brigadoon happens, people give up, that's not going back to Brigadoon, and interest rates adjust to the right rate where inflation levels out at. It's either going to be at higher or potentially reasonably higher than where we are today, and people will give up and say, it's not going back and I can't speculate. I can't invest based on the hope that we're going back to a two and a half percent inflation rate, because that's a hope that seems to me to be hard to get the genie back in the model. And therefore, you're not going back to that rate. And therefore, you have to reprice what you owe based on that risk-free rate of return, the risk associated.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“These things, and then the high quest importer. So that's a radically different place. So I think China is least done and probably feeds inflation in. And as you move to someplace else, it can't be as efficient given the, you know, when Microsoft or sorry, when Apple thinks about, okay, we're going to set up a line in India, it's going to be higher cost than what it is in China. You can't replicate the efficiency that you have and scale that you have. And so therefore, I think, and then the other thing is energy. So we've been fossil fuel investors from day one. Energy transition is obviously something that's going to continue to accelerate. And energy transition is going to be something that is going to be inflationary because the buildout of the infrastructure that you need, the hold on materials that are already in tight supply mean all those material inputs are going to cost more money. And so therefore you're going to have recurring commodity cost pressures as”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“Could. And what that did was we bought stuff for the same thing we paid 20, 30 years early. So therefore, inflation was sucked out. So it wasn't, as Ross Perot said, the giant sucking sound wasn't Mexico stealing things from North America in the 1992. Giant sucking sounds been going on for 40, 50 years. And therefore, it's moved to China because they could do everything cheaper. But the costs in China now have risen because now they become a net importer. So when it comes to making steel, suddenly they're at risk of being the high-cost producer because they have to import iron ore. They have to increase met coal. They have to increase energy. So the critical variable costs, they're high on the cost curves. Labor is a small component of making steel. It's not a labor-intensive business. Who cares? She got cheaper labor. And so therefore, and now when they started that process, they had all of those things internally. And they were advantaged. They had an end market that was, you know, had the demand and they could supply everything internally. Now they've got to import.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT
“You understand industrials that are a component of the business and the industry, you understand, I think, the drivers. And we see all these things that are really inflationary. And so the globalization and the movement of globalization, when you moved to the rest of Southeast Asia and you moved to India, it cannot be as efficient as with the Chinese economy is today. Yet costs in China are different than where they are today also. So therefore, it's not the same place with the same cost structure it had. So I would submit that China, of course, that's what's really happened, right? Post a financial. So again, I'll come back to this concept. I think the Fed is at the margin, has no ability to influence the really big things in life. And so, and I don't think Bulker cured inflation. I think China cured inflation because what we did over 40, 50 years was industries, you know, disappeared in the rest of the world and they all moved to China because China had all these cost advantages and can do these things and make all these things for much less than we.”
2024-06-23 · We Study Billionaires · RWH046: A New Golden Age w/ Bob Robotti · IDENTIFIED FROM THE TRANSCRIPT