YouSaid · the spoken record

Will Thomson

lines on the record: 61
first: 2022-12-16
most recent: 2022-12-16
sittings or episodes: 1
sources: podcast

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“So we publish a lot. We think our research is basically our marketing material. So we publish basically all of it. It can mostly be found on our website, which is www.massif.com.com. And then I'm on Twitter at WM Thompson22. I tweet a reasonable amount and am about to start sort of a whole series of tweets and things about copper really focused on copper at the moment and inviting some copper traders and copper miners on for some Twitter spaces, assuming Twitter still exists. So if you're interested in copper, you should follow. That's where you can find us.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“And Ecuador and stuff, but it's an interesting opportunity, I think. And a great platform that the management team is building that they can continue to add to for the long term. So this is an example of a company where we look for three to five years, but every year we reassess and every year that fifth year gets pushed out again, right? We keep rolling our timeline. So when we say three to five, just as an aside, you know, that's not a hard and fast thing. We reassess our timelines every year. And some investments we end up holding, we recently exited an investment after seven years, that's because every year we reassessed and every year we thought there was more.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Lot of wind, water, and sun. But given the geography of South America, it doesn't necessarily lend itself as well to the sort of hub-and-spoke electrical system that we have in the United States where we have giant power plants that can power multiple cities. The geography is quite, everyone is quite separated and they're separated by mountains and rainforests and whatnot. And so building a grid through that is quite hard. So PIF operates in this sort of segment of assets that are anywhere from 10 megawatts to sort of like 300 megawatts, which is very small, but ideal for a sort of small communities of 10, 15, 20, 100,000 people. So it works quite nicely in South America. That would be an interesting one to submit. It's a little bit of political risk because they're in Nicaragua and they've got exposure in the Dominican Republic.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Let's see. That's interesting. Well, we got a couple of interesting things in our portfolio at the moment, in my opinion. We have a company called PIF. A ticker symbol is PIF-P-I-F. Trades in Canada. It's called Polaris. They just changed the name, so I don't remember what they just changed the name to, but originally it was Polaris Infrastructure. They do, they run, operate renewable assets in South America exclusively. Run of river hydro, a little solar, and a little wind. It's probably a double from here, I think, relatively low risk. The assets are mostly on the ground, operating assets already. They're doing a little bit of development and growth, but it's paid for, funded, permitted, and the off takes are signed. So that's a nice situation to be in as an independent power producer. Plus South America lends itself quite nicely to renewables. Not only do they have a”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“And every time they bought back stock, they did basically a bought deal with Brookfield. And so the stock just never moved. And it turned into a bit of a disastrous investment. I think we were down 30% in it or something. By the time we got out. Second run in with Brookfield will never touch anything Brookfield does again.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. So They had squared away what we thought were great long term contracts at very high prices for their electrodes. And we thought that they were going to be able to continue those contracts. And what turned out to be the case was twofold. One, they couldn't continue the contracts. They didn't manage to re-sign contracts at high prices. And two, we ended up being a minority for whom a majority shareholder, Brookfield, could care less about. And the result was that every time the stock went up, Brookfield sold down their position. So we went into this thinking we had a partner in Brookfield. That was a big mistake. We thought private equity firm who said that we want to buy owner operators of this business. We're in this for the long haul. Our incentives were not aligned in any way whatsoever. And every time the stock went up, it got back down again by them issuing stock.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“What do you do with them? You know, you learn about them as people. And mining is, you know, you're very much betting jockeys quite frequently. And so getting that time is probably the most value-added component. I would suggest that anyone who's interested in junior mining, you can call up these mining firms. They have trips. You'll have to pay for it. But you're making an investment. It might be worth the additional cost of that research.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Regards to security. Actually, going to site and seeing, okay, look, we're in the middle of the jungle. There's nobody around. There's no one around for hundreds of miles. Maybe a security issue might come up, but security issues are going to come up in the same way it could come up anywhere that's hundreds of miles from the nearest civilization. So you learn a lot about risks that in some regards are risks you either have to choose to accept or not. You don't learn as much about, say, I don't know, the finances and stuff like that at the business. So it's quite critical in emerging and developing markets to go see the asset. It's quite critical to spend a lot of time with management. That's actually what I derive the most value from. When I go to these sites, you're always with management. And so you get to spend like three or four days just chatting with management. How often do you really get to do that? Just endless conversations about not only the business, but what's your family life? You got kids? Great. Where are they going to school?”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“So you don't learn much that's critical to the investment. You always learn a lot about mining, that, again, informs that mosaic of understanding, but you don't always learn a lot necessarily that impacts the investment itself. When you do, though, it's usually critical. And the examples I would give would be, I mean, something like AlphaMin, learning about and following the trail, if you will, of the tin, the route out of country in Africa learned a lot about the process and whether it was going to be viable going forward. It could be done in a four-wheel drive vehicle. The answer was yes. And so it could be done also with a semi-truck. Yes. Did it go through war zones in the case of AlphaMin that's in the DRC? It's in what's called the Lakes region, which is just sort of a notorious region for a lot of insurgencies and terrorists and things of that nature. So what's the environment around the mine specifically?”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“And so that, in some regards, makes our job a little easier. What also makes our job easier in the case of some of these niche metals and tin sort of straddles the line because I may say tin to you and you may say, wow, that sounds really nichey, but tin actually trades on the LME. It's actually a major metal in the grand scheme of things, especially when compared to, say, the volume of weird rare earth metals that are sometimes needed. But when interesting things start to happen in the commodity price of these niche metals that we track, we start to look for companies. And there are very few mines, oftentimes. And so that makes the job of understanding the entire universe much easier in regards to the boots on the ground. I would say we don't get to every mine we invest in, but we try to. Sometimes we get to the mind and we learn something that's really valuable and really important.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“So you're referring to a company called AlphaMen. We are still invested in Alphamen, took a little off the table at one point, so we don't have our full position on, but we are still invested in it. AlphaMin is the highest grade tin mine in the world. And tin is a critical metal for all electronics. It's basically, they talk about it as the glue that keeps electronics together. You flip over, say, a motherboard and you see all those little dots. Those are all tin. Tin is also important in various different other mostly electric related sort of things, robots, the grid, et cetera. We came across that, basically we follow a lot of niche metals. And we just sort of watch the metals. And when interesting things happen in niche metals, we start looking at the different companies. And oftentimes for niche metals like tin, there just aren't that many businesses.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“And who's committing capital to the project can tell you a lot about the geology. But we ourselves are not geologists. Geology is important, but it doesn't need to be the be-all and end-all only variable, especially when considering either a developer or a producer. If you're looking at pre-production, pre-development, it's a whole other story. But there's this stage in mining firms. And this is why I said they're often like biotech firms, where when a biotech firm first discovers a drug, you get this big pop. And then everyone's like, oh, we got to go through the FDF pipeline, sell us down. Of course, while it's in that pipeline, that FDA pipeline, it's technically de-risking. Oftentimes it's de-risking and trading down. That's a really great scenario. And then they get approved and it pops. Mining firm is the same way. You got that same curve. There's a sweet spot right here where you're de-risking and trading down or trading sideways. That's where you want to be. So it's more about finding the right companies than necessarily having”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“That because we basically get this document that says this is what's going to happen over the next five to ten years in the most detail you could possibly imagine. And then you get to sort of work with that data. It'd be as if Facebook had given you the entire plan for the metaverse. That would be the sort of equivalent. So that makes mining sort of easier to approach. But on the qualitative side, you want to think about things like permitting risk and funding risk. Those would be sort of the two first issues we think about when we look at a pre-production mine, whether you are a developer or a producer matters. If you're a producer,”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Document that must be published called a 43101. South America, it's called Something Else, in Australia, it's called something else. And in the United States, we've done nothing but anyone, any mining firm operating in the United States basically abides by Canadian rules. In that document, the entire plan for the mine is laid out with all the assumptions management has made. And so oftentimes management actually hands you a predone DCF. It's their assumptions. The DCF is done. So all you need to do is assess, you know, is management viable. Do you really think that they can execute on this operation? So basically what they've done is they've taken all the quantitative workout and you're left with just the qualitative work. Now admittedly the qualitative work is actually the hardest component. So saying valuing a mine is easy is a bit of a misnomer, but they've done a lot of the heavy lifting for you in some regards. And so we like that. We appreciate.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“So I guess probably want to soften that statement a little bit. Nothing is easy to value. But I think one would say that from a technical perspective, minds tend to be relatively straightforward. And that has to do with the fact that mining companies are all project companies and that project due to historical frauds requires the publication of your plan. So there were a lot of frauds back in the day. And still to this day, there are frauds in the mining industry. just like any other industry. But there was the example that's most well known is Brix, where the mining firm actually took their assays, took their samples to get assay, determine how much gold was in them, and on the route to the place where the assay was going to occur, they sprinkled some extra gold in there, basically boosting the grade. As a result of that, there's now, in the case of Canada, adopted.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Compound on it. And that means shifting around on the value chain. So there are a lot of metals that are going to be important in the battery transition, but picking your spots and where in that value chain you would choose to invest depending on where we are in the cycle is going to be critical.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Called Thacker Pass in Nevada. This is all very interesting, great stuff. They're bringing on lithium. They're going to go from being a no one to a major in the industry in about 10 years. Great. By about 20, I don't know, 28, 20, 30, second half of this decade. We don't think that the opportunity is going to be in lithium mining. It's going to be in processing and it's going to be in sort of that second step, basically the chemical step, if you will, of the battery industry where you turn a raw material into a useful material because no one, you know, you don't pull out of the ground 99.9% pure battery grade lithium. You pull a concentrate out of the ground. And so that processing step is where the opportunity is going to lie. And so that's why we think it's really important to think about these things in terms of cycles and value chains because once you learn stuff about batteries and mining, that information and knowledge, you don't want to lose it.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Requires five to ten years, depending on what kind of asset it is. So there's that sequencing issue. We've primed the pump, if you will, for EVs. Has that also primed the pump for mining? It hasn't. So there are dislocations that are occurring through the value chain. But this also speaks to the importance of viewing these industries within, again, this concept of a real asset ecosystem, because mining it is not where it ends. You mine it, you process it, you put it into a new sort of form, then they put it into a battery cell, then the cell goes into a pack, and the pack goes into a car. And so along each of these step, there is a different company involved and a different opportunity. And those opportunities occur at different points in the economic cycle. So we are invested presently in a company called Lithium Americas. Lithium Americas is producing lithium from a mine in South America called Kachari, and they're building an ass.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“You dig a big open pit, that creates a scar. But once that pit is then filled back in within a decade or so, you can't even tell it was there unless it was right in the middle of the rainforest in Brazil, it's going to take a little longer, but most of the time you can. It's the processing element that's quite nasty. And so we spend a lot of time focused on looking at different mining firms that are developing alternative processing methodologies or are just very sort of conscious of how they're processing the metal and the material. And I think that that is going to become increasingly important going forward. What I would also say is that I think someone like Elon Musk has spot on when he says a lot of these metals, there is no battery metals for some of them, specifically lithium. There is no shortage of lithium. What there is a shortage of is A, operating mines. And this goes back to the sequencing issue, turning on a lithium asset.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“So we think batteries definitely have some life. These are definitely going to happen and utility scale storage of some kind is definitely going to happen. We are not 100% certain what chemistry is going to work. So lithium batteries have lots of different chemistries. Some of them are nickel-based, some of them are iron-based. All of these different chemistries have different qualities around them. Some make them ideal for utility scale storage. Some make them ideal for a car. And different chemistries require different metals to be mined. The negative environmental impact of mining basically can't be mitigated. You either want to mine stuff or you don't. Either way, you're digging a giant hole in the ground, pulling up a lot of stuff, and then more importantly from an environmental perspective, processing it. That processing component is really where this sort of negative environmental impact for mining comes from.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“When you drop in a 25% chance or something or 10% chance of $40 barrel of oil, your DCFs on a lot of oil companies, you know, the price goes down quite dramatically.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“One, but we would suggest that oil and natural gas is quite tricky at current prices. So we got out of most of our oil and natural gas in March and April of this year and have yet to go back in. And the challenge from our perspective is that everything looks to be priced at sort of like a perfect $65, $70 barrel of oil right now, and we can't come up with that scenario, those scenarios, those probability weighted scenarios where we're dropping, let's say, a $40 oil case, right? So sure, oil and natural gas supply and demand are out of whack, but oil has fallen as much as 40 or 50 percent, something like eight times over the last decade. I'd have to go back and look at the actual math, that it could happen again is perfectly reasonable. And to just dismiss that case, we think is short-sighted. And of course,”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Quite profitable. Solar in Arizona makes all the sense in the world and can be quite profitable. So the question is, can you buy some of these OEMs and some of these actual operators at prices now or in the near term that allow you to hold it for probably the five to ten year period it's going to take before this sort of cycle here where we're in quite a messy way trying to figure out the energy system works itself out And so if you want to buy energy now and hold for a while, there are opportunities in the OEMs. If you want to buy and hold for return, sort of a capital return via a dividend or something like that, there are some operators of wind and natural resources or wind and solar that play quite nicely in a lot of portfolios. The other opportunities are of course in the assets that people have sort of given up on. Oil and natural gas being the most obvious.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Of 5%, 4%, sometimes it goes negative. Siemens Gamesa, which we own a small piece of via our investment in Siemens energy, is a basket case. I mean, it's a bit of a nightmare. The Chinese, who knows what's going on with their wind turbine manufacturers, they make polysilicon quite cheaply that we all use. But despite the fact that they make polysilicon from subsidized coal, their polysilicon producers mostly don't make any money either. So there are a lot of opportunities on the short side because there's a lot of enthusiasm about these things that the valuations don't justify. There's a lot of opportunity on the long side, but one has to keep in mind what the timeline is going to be and what is going to happen in the meantime. So I am a strong believer that wind and solar have a time and place. Wind in the North Sea makes all the sense in the world.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Challenges of its own that we needed to start to address probably 15 years ago or 20 years ago if we want to hit this target of 2050, copper mine. If you discover a copper asset today, you will be lucky to turn that mine on in 15 years. So the copper that we need in 2030, someone needed to figure out where it was in 2015. Now, that investment, those investments in mining that will facilitate this have not occurred. So you've got all these bottlenecks that are building up. On top of that within renewables in particular, wind and solar, you have a nasty issue where everyone is laser focused on driving the cost of electricity down, yet the OEMs, the original equipment manufacturers for wind and solar all mostly don't make money. Vestas has a net income margin.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“All the various inputs becomes a significant challenge, not only environmentally, but economically. And then you layer on top of that the fact that in order to make a transition using those tools, you really need to be quite clever and thoughtful about your sequencing. And this is what we're seeing or where we're seeing issues in Europe at the moment. Sure, there are parts of economies and different places that can be run on renewables. But in order to get there, everyone around them has an impact and that sequence of how you phase out hydrocarbon powers becomes critical. And it's a very subtle game that you have to play because, of course, power, for example, always needs to balance supply and demand always need to be exact. Otherwise, we run into an issue collapsing the grid. So that solution set not only falls short of addressing the entirety of the challenge, but also creates all kinds of”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Well, so first, I think it's important to clarify we believe in climate change. We believe the science is quite sound. I don't think there's a lot to argue about with the science. Now, what is open is how do we address this problem? Now, we seem to have decided upon somehow an almost singular solution. And the singular solution is wind, solar, and EVs. Now let's put aside the fact that if we make all those changes, change the way we generate electricity and change automobiles, we only really address, we don't even address half the emissions problem. So let's put aside the fact that that solution doesn't address all the problems. I think more importantly, the fact that those solutions only address 40-ish percent of the problem, how you create that solution, where you get the copper from for the EVs, where you get the polysilicon for the solar panels, where you get”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“We at least really want to make bets where we have an understanding of how long we're going to be involved in this for and what our return profile looks like. Let's say, because the story with uranium has been the same for 10 years, that basically what you said is that the supply demand doesn't balance and that there's more demand than there is supply. That's the same story that's been for 10 years. All you've added in is further growth, which is fine. But if you had bought it 10 years ago, you'd still be waiting now. Now, if you know what your return profile looks like, that 10-year weight is perfectly acceptable, right? Like if you know that you're going to somehow get out of that with a Kager of 14, 15, 20, whatever it is you demand waiting 10 years is fine. Or at least if you have some inkling of it. But again, you don't know how high it's going to go. And not only do you not know how high uranium is going to go, but you're actually dealing in a derivative of uranium. You're dealing in a company.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“I mean, look, I don't remember the difference when we owned Caz Adam problem, we had our own supply curve that we ran in-house. And it's pretty easy for uranium because there just aren't that many mines, right? Oftentimes these cost curves are hard to put together because there are a lot of inputs. Uranium, there aren't that many mines, so it's not that hard to put together the cost curve. You put together the cost curve, the market never clears. There is not enough uranium produced to meet demand. It's made up in this secondary market, which has got uranium from all sorts of different places. The idea that a growth in demand is going to spur price movement within the context of that cost curve does make sense. No doubt about it. But again, come back to this question of timing and we come back to this question of, well, again, mostly just as sort of a question of timing. The market can stay irrational far longer than we can all stay solvent. And so, you know,”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Adam Rodman and Arthur Hyde, I think they tell you it's highly opaque and that the utility contracting is only just getting started. So a really strong move in uranium prices has yet to occur because that's really yet to feed back into the market. And when that does occur is anyone's guess. There's a lot of supply sitting on the sidelines in various different places that are hidden out of sight. The market doesn't clear, but somehow everyone still gets the uranium they need. So, you know, this is a highly opaque market that's very hard to read. And so reading turning points in it are going to be really difficult. So I'm not sure why you'd want to just bet that prices are going up, which is essentially what the bet is. Prices are just going to go up. They have to. Really? Why?”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Uranium prices to move at all. I don't want to make a bet on a commodity producer where everything hinges on the commodity price movement. If that is the hinge upon which a bet is going to play out, then I don't really think that's a great bet to make unless you are an expert at commodity prices. But if you're an expert at commodity prices, my question would be, why aren't you expressing your opinion in futures, right? There are cash settle geranium futures. I don't know how that market trades, but if you're really predicting commodity prices and that's the game you're in, why execute it via equity? Why not execute it via commodity futures? So I think that uranium, at least this year, hasn't panned out because it's all just a bet on the movement and the price of uranium. And it's a highly opaque market. I think if you had someone, the real experts on the secondary market and the contracting cycles for utilities are segregated.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Prices have improved, but they haven't improved enough for any of these juniors to say, yeah, we're going to start to build a mine. And so none of the, very few of the juniors have made that really strong move. They've made some initial small moves. Chamico's made a reasonable move, but they're a producer, so they benefit right off the bat. When we invested in Kaz AtomProm, the reason we invested in Kaz Atom Prom was not because we thought uranium was going to rise. We had a thought that it might, but we didn't really have strong feelings about it, to be perfectly frank. What we had strong feelings about was that on a discounted cash flow across various number of scenarios that the IPO price was at best half of what the company was worth at current uranium prices. And meanwhile, while we waited for it to appreciate, hopefully, they were going to pay us, I think the dividend started at 7% or 8%. So a very healthy dividend. So we didn't need.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“It or attempt to monetize it until uranium prices had already crossed 65, thereabouts. That seems to be the price at which a lot of these firms like NextGen, which has the aero deposit in the Athabasket Basin in Canada, or any of these other sort of firms up there in that region, or there are several in Africa. $65 uranium seems like the price that they're going to do it at. If you buy any of those juniors, it doesn't matter what they've got, doesn't matter what they're doing, your bet is that the price of uranium is going up. It's not a bad bet. I don't disagree with it, but I don't know how long it's going to take. And I don't know how high it's going to go. All I know is where I'm starting at. That's a hard equation, if you will, both to figure out what position to take, what position size to apply, how long to give it before it works out or doesn't work out. It's quite challenging. And so I think that this year, what's happened is that you're any”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so uranium is actually a good example for this sort of entire conversation, if you will. So I have watched uranium one investment in my fund in a company called CASATOM Prom when it IPO'd in 2018, 2019, blanking, blanking on exactly which year. But so I've watched uranium for 10 to 12 years. It's the only time I've done anything. I was just recently. We bought it at 13-ish. We exited at 40-ish. And that was last year. The reason I watched it and did nothing was because when one looked at the industry, one saw two different buckets. There was Chamico and Kaz Adamprom producers. And then there were juniors. Now, juniors, as I've said, we tend to like junior miners. The difference, though, is that these juniors all had an asset on their balance sheet that had theoretical value, but they were not going to monetize.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Becomes the most critical question, as opposed to thinking like an owner. It's in some regards a second step, though, that you can only do after you assess the company as if you're an owner. You don't want to buy something that you yourself wouldn't want to own and operate. Warren Buffett and I are like on the same page in that regard. But at the same time, why we will realize a return in the stock, which has more than just fundamental value at play, especially these days with the way the market and market action has changed becomes critical.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“With ETFs, where you have just a lot of price agnostic buyering, it may not be value or fundamentals or owner-operator issues that produce the return. So you take something like, we'll take a railroad because Warren's got obviously a CF. You take a railroad like UNP or CSX and you look at who owns it and you look at who's buying it. And the answer, who owns it and who buys it is passive, people buying it automatically without any consideration for value whatsoever. So the movement on that price, not its value, its price, which is what you own. You own the price. And admittedly, the price entitles you to some theoretical ownership, but try to exercise it. Show up at the meeting and say you'd like to make some changes. You're not going to get very far. So, you know, those other variables become critical to interrogate. Understanding why there is a mispricing and how the mispricing is going to close.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Into fundamental value and then maybe macroeconomic issues and then sentiment, we continue to divide those further. And so the question is, why is there a mispricing? And what is going to prompt that mispricing to close? And in our case, it's a three to five year period that we're looking for something, some mispricing to close for some particular reason. And that reason tends to be derived from fundamentals. And those fundamentals can only be assessed from the perspective of an owner operator. But you as a shareholder can't sit back and think of yourself as an owner operator because you are not owner operator, nor is your return going to accrue to you as a result of owner-operator. It's going to accrue to you for other reasons, especially if there's no dividend. And sometimes fundamental value is what drives it. But as we've seen in these markets, especially with changes in market structure associated with the market.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“You know, the challenge with looking at other investors, and this would apply to any of your listeners, you know, listening to what I have to say too, is that we all have constraints that preclude us from doing different things. Can we all have incentives that impel us to do different things? And understanding the different constraints and incentives of famous investors like Warren Buffett or Howard Marks or Seth Claran or whoever may be, is quite difficult. What I would say is that, again, sitting here as someone who almost is always a minority. I don't think I've ever been a strategic investor in anything I've touched. And I think most investors are always a minority. Your return is not a return from owning the stock. Your return comes from either dividends or capital appreciation. And capital appreciation isn't solely a function of value. If we look at the price of a stock, we can sort of decompose it.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, if you can get a dividend that meets your hurdle, whatever it may be for whatever reason, and then maybe you do want to hold it forever, but that whether you want to hold it or not very much hinges there on how the capital return is going to accrue to you. Is it literally a capital return from the company or is it just capital appreciation? Because those two things act differently and you as an investor should respond differently.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“The company anymore. Not all companies can continue to grow returns on invested cash flow and margins and free cash flow. Nobody can grow it forever. At some point, again, what someone like Michael Mubosin would call your competitive advantage period or whatever you want to call it is going to fade. And you're going to revert to doing whatever else in the industry does. And so this idea of holding something forever, I'm not sure if it plays out that way. And I think I think actually, and I believe Warren Buffett has said this, if you ask him about Coca-Cola, I think he said at some point recently that he wished he had sold Coca-Cola at some point. Coca-Cola is often tried out as the buy and hold forever example, right? Has that moat that just can't be beat because everybody knows the symbol, the little Coca-Cola circle. But even then, at some point, it was a sell. So I'm not convinced that anything really exists that you want to hold.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Everything is sort of project related. There's a specific project, there's a specific management plan, and these plans all tend to resolve themselves in three to five years. And so that within this real asset ecosystem, that's sort of why we look for investments to mature in that timeframe and get in and get out. Now, you sort of mentioned Warren Buffett and this idea of buy and hold forever. I'm going to push back on that because I don't think Warren, I mean, he may have said it. I don't remember he said a lot, but I don't think anyone actually buys something to hold forever. And it's not clear to me that that concept even necessarily makes sense. And even more so if there's no capital return component to the company. So if you are a minority shareholder who only has capital appreciation as your return mechanism, at some point you don't want to hold.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“And part of that has to do with the volatility of the underlying commodity versus, say, in mining. So you look at something like oil. Oil is about twice as volatile as copper is over any given period. And so if you think about your individual position and you say, how much commodity price risk can I stomach? Well, you have to stomach a lot with any oil company. And so you probably want to decrease your operational risk. And so that's what drives us to sort of invest more in established producers on the oil side. Whereas with mining firms, the commodity price volatility isn't as severe in our opinion. And so we can afford to tolerate more of it. And so we can afford to, so it's not as severe. And so we can afford to handle more operational risk. So it all sort of depends on what we're looking for, but most importantly, I would say.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Materials, energy, and industrials, what we call the real asset ecosystem, because all these companies exist on sort of their own individual value chains, if you will, that run through each of those sectors. The industrials, we look more for contracted cash flows, niche products, and sometimes moats. So I'd say within industrials, it's much more sort of buffet-style value, if you will. And then energy.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Within the mining industry, for example, which is what we're best known for, we look for opportunities to underwrite operations and due diligence as the catalyst for the company and its rerate or its move higher. So we look for companies that are not producing commodities, first of all, because once you become a commodity producer, you tend to trade with the commodity. And so that becomes an opportunity where edge in owning that stock is going to be in your forecast of the commodity price. We're not really very good at forecasting commodities. I don't really think anyone is, but we don't want to make a bet where our edge has to be in the forecasting of the commodity price. So we look for junior miners that are starting to turn on a mine in the next two, three, five years. So that's where a lot of the three to five years comes from. Within industrials, though, and my firm, Massive Capital, invests in”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Hard to do well and when to add to positions that have drawn down is such a difficult challenge. And a lot of it has to, again, do with how do you measure your own conviction in this position? And it just, it's very hard. So with the perfect portfolio idea, you now have something you can benchmark against.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Least 100 plus percent return over the next three years. So now we can immediately say, oh, well, this company is not going to give us that. And we can say benchmark against the perfection, which doesn't really exist. And the result is, well, the most we could allocate to this within the context of this perfect portfolio and this perfect position is three or four percent. And we're not going to take a 3 or 4% position. It's got to at least be 6%. And then we can look at something else and maybe it's 200% return. Okay, well, that stacks up really well against 100% return and the various different risk criteria. And so the perfect portfolio gives you this fictitious sort of idea that lets you benchmark your conviction against. And we at least have found it quite useful because position sizing is so very important and it is so very”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“To 12% for our investors, something they should be willing to pay for. We wanted to tamp down a little bit on the volatility that we had experienced in that fourth quarter. That 20-25% drawdown for us was fine for me and my personal account, but a lot of investors would have trouble stomaching that. So we expanded the number of positions. And so we came to 16 positions on the long side, all starting at 6% and 16 positions on the short side starting at 3%. Now, the idea of the perfect portfolio is then to take it one step further and say, what is the individual perfect position within that portfolio look like? Because once you establish what that individual perfect position in the portfolio looks like, you can start to say, how does this new position I'm looking at stack up against that? So for us, in the case of mining firms, let's say, we said, okay, in order for something to be a 6% mining position, we need to be able to get at”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Just doing it based on our own conviction without any real understanding or ability to wrap our hands around what that conviction was and how to measure it versus sort of conviction in other positions. And so that challenge of understanding conviction proved a hurdle that we just couldn't figure out how to overcome. How do we measure our own conviction such that we can size positions correctly? What we came up with and what we use We apply this roughly We don't stick to it exactly as if it's a rule, but we said, okay, how much time do we have in the day? This is my partner and I were doing how much time do we have in the day to do research? How many positions can we handle? How much volatility in those positions can we handle while remaining even keel so that we don't let the behavioral side of things impact what we're doing? And what kind of returns are we looking for? And so for us, we came to we're looking for a net of fees return.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so this idea of a perfect portfolio actually came as a result of some challenges we had in the fourth quarter of 2018. We had a drawdown in the one quarter of 20% as a result of a couple of mistakes we made in portfolio construction. So we liked the positions, but a couple of the positions that went wrong, one of which was diamond offshore, another of which was Tiki offshore, and then a final one was Graftech. All three of them sort of went wrong at the same time in that quarter. There are a couple of different lessons from each of them that are different, but we had allowed each position to grow quite large. At the time been running a portfolio of 10 long positions and a mass of short positions without any real sort of boundaries around what position sizing would be, without any real thought process in terms of how to size positions.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT
“Is important. I think you want to triangulate by trying multiple different approaches and seeing what kind of answers it produces. And you should be able to tell a story that runs through all the answers, in my opinion, and explains the differences between those answers as a result of how you've calculated.”
2022-12-16 · We Study Billionaires · TIP 504: Opportunities in Energy, Metals and Mines w/ Will Thomson · IDENTIFIED FROM THE TRANSCRIPT