1 00:00:00,040 --> 00:00:01,760 Do you think those are money markets? 2 00:00:01,880 --> 00:00:03,720 Are. More inefficient. 3 00:00:03,960 --> 00:00:06,120 More inefficient. You know, it's interesting. 4 00:00:06,360 --> 00:00:09,800 These names always just follow what the commodities do, and 5 00:00:09,800 --> 00:00:13,520 then you get periods where that just stops working. 6 00:00:20,920 --> 00:00:23,320 We talk about what it takes to make a good commodity investor 7 00:00:23,320 --> 00:00:26,680 all the time and namely you've got to ride volatility through 8 00:00:26,680 --> 00:00:27,960 the cycle. We know that you've got to be 9 00:00:27,960 --> 00:00:32,200 patient, but there are these big huge institutions, multi Strat 10 00:00:32,360 --> 00:00:36,360 hedge funds, which by definition a very short term oriented. 11 00:00:36,720 --> 00:00:42,880 And thankfully today we've got just a guess to to tease out why 12 00:00:42,880 --> 00:00:46,920 multi Strat hedge funds or pod shops are the worst way to 13 00:00:46,920 --> 00:00:51,360 invest in the sector. This is a a super exciting chat 14 00:00:51,360 --> 00:00:54,200 and it's one we actually wanted to to have for quite a while. 15 00:00:54,200 --> 00:00:57,280 I think we're going to to a large extent try and demystify 16 00:00:57,280 --> 00:01:00,360 what is pretty foreign to a lot of the punters around here, 17 00:01:00,360 --> 00:01:02,360 right? So you might hear the words pod 18 00:01:02,360 --> 00:01:05,800 shop, multi Strat firm, you know, these big hedge funds like 19 00:01:05,800 --> 00:01:08,080 Citadel, like Millennium, like .72. 20 00:01:08,480 --> 00:01:11,240 And we're going to speak with David Sparks and he's going to 21 00:01:11,240 --> 00:01:14,000 try and help us answer this question and sort of share 22 00:01:14,000 --> 00:01:17,400 thoughts and share ideas around why they have such a tough time 23 00:01:17,760 --> 00:01:21,400 investing in commodity players, in mining companies, in natural 24 00:01:21,400 --> 00:01:24,200 resource companies because of that vicious commodity cycle 25 00:01:24,200 --> 00:01:27,360 that a lot of the other investors we speak with try and 26 00:01:27,520 --> 00:01:30,240 make a winning from, right? And, and David Sparks is, yeah, 27 00:01:30,240 --> 00:01:33,200 one of the, one of the, the wonderful few people out there 28 00:01:33,200 --> 00:01:36,160 who has worked in one of these institutions. 29 00:01:36,880 --> 00:01:39,320 He's worked at Millennium, but it's not the only the only one 30 00:01:39,320 --> 00:01:42,160 that like he's he's working this, this kind of hedge fund, 31 00:01:42,160 --> 00:01:44,720 more multi Strat model, multi manager model. 32 00:01:44,840 --> 00:01:48,520 Like several times he actually started his career like, you 33 00:01:48,520 --> 00:01:51,600 know, working for a hedge fund for the for the Bass family. 34 00:01:51,600 --> 00:01:56,560 Yeah, famous, famous oil family. And these days he's, yeah, he 35 00:01:56,560 --> 00:01:59,720 works for First New York and he's got a more kind of 36 00:01:59,720 --> 00:02:03,080 discretionary strategy that he runs, but still investing in our 37 00:02:03,080 --> 00:02:05,120 favorite sector being and metals and mining. 38 00:02:05,120 --> 00:02:06,520 And I think he covers some energy too. 39 00:02:06,600 --> 00:02:08,840 That's right mate, I'm excited to share this conversation. 40 00:02:09,080 --> 00:02:12,200 David Sparks, thank you so much for joining Money of Mine. 41 00:02:12,760 --> 00:02:14,560 With a lot of that, you're willing to have the 42 00:02:14,680 --> 00:02:16,880 conversation. So peeling back the curtain on 43 00:02:17,240 --> 00:02:20,680 the mysterious multi manager hedge fund, world pod shops, 44 00:02:20,920 --> 00:02:23,760 multi Strat funds, they've got a variety of different names, but 45 00:02:23,920 --> 00:02:27,800 they have kind of taken over where capital is, what's moving 46 00:02:27,800 --> 00:02:29,680 markets, where a lot of the flow is. 47 00:02:29,680 --> 00:02:32,040 So we have to talk about it. There's an intersection in 48 00:02:32,040 --> 00:02:35,400 metals and mining. You've worked at multi Strat 49 00:02:35,400 --> 00:02:37,080 hedge funds. You spent three years with 50 00:02:37,080 --> 00:02:39,840 Millennium and that wasn't your only visit in that world, but 51 00:02:39,840 --> 00:02:43,560 you've seen the lot and you're now obviously working prop shop 52 00:02:43,560 --> 00:02:45,640 instead with a lot more discretion. 53 00:02:46,120 --> 00:02:48,080 What is a multi Strat hedge fund? 54 00:02:48,080 --> 00:02:51,760 What is a pod shop? The the rise of the multi Strat 55 00:02:51,760 --> 00:02:54,200 it has been 20 years in the making. 56 00:02:54,280 --> 00:02:58,400 I think a lot of people know the big names being Millennium 57 00:02:58,760 --> 00:03:06,000 Citadel in 2072 or not, but it's a grouping of a lot of different 58 00:03:06,000 --> 00:03:10,920 types of strategies. The idea being if we put a lot 59 00:03:10,920 --> 00:03:15,400 of smart people together that run money differently, we can 60 00:03:15,400 --> 00:03:20,320 approach the efficient frontier of returns and offer the best 61 00:03:20,320 --> 00:03:23,200 risk reward to our investors. That's the idea. 62 00:03:24,200 --> 00:03:28,160 And how did you find yourself Dave, in one of these with a 63 00:03:28,160 --> 00:03:30,400 meadows and mining lands? Because we always hear that 64 00:03:30,400 --> 00:03:34,080 meadows and mining is a credibly small market and you're in the 65 00:03:34,080 --> 00:03:36,240 States. So you found your way to 66 00:03:36,760 --> 00:03:40,760 investing a bit of money in this specific sector for a multi 67 00:03:40,760 --> 00:03:42,680 strap fund? Yes. 68 00:03:42,680 --> 00:03:48,680 So they're always on the lookout for talent and you know, their 69 00:03:48,680 --> 00:03:52,840 assets have been growing very steadily for a very long time. 70 00:03:53,360 --> 00:03:58,680 I had been working for a portfolio manager for a wealthy 71 00:03:58,680 --> 00:04:00,680 family for the first seven years of my career. 72 00:04:00,960 --> 00:04:06,360 And then he got interest from Millennium and they kind of made 73 00:04:06,360 --> 00:04:08,560 him an offer. And we went over and they throw 74 00:04:08,560 --> 00:04:10,960 a bunch of money at you. You take what you were doing 75 00:04:10,960 --> 00:04:13,200 before and you say, OK, I can do that there. 76 00:04:13,200 --> 00:04:15,040 And then that's how that whole thing happens. 77 00:04:16,000 --> 00:04:20,160 With the model of these multi Strat funds is it's so different 78 00:04:20,160 --> 00:04:22,880 to what you can be used to anywhere else right? 79 00:04:22,880 --> 00:04:26,760 Like the risk overlay, the way that capital scales in 80 00:04:26,760 --> 00:04:30,800 accordance with performance, but that model has enabled them to 81 00:04:30,960 --> 00:04:33,200 accrue so much funds under management and now there's such 82 00:04:33,200 --> 00:04:36,200 a force in our markets. But when you're going from a 83 00:04:36,200 --> 00:04:39,120 more discretionary strategy to and then applying it in a multi 84 00:04:39,120 --> 00:04:42,320 Strat world with like how did, how did that, how did that, how 85 00:04:42,840 --> 00:04:45,320 did that pan out? How'd that go? 86 00:04:46,280 --> 00:04:50,720 It is not entirely different from what you know you would do 87 00:04:50,720 --> 00:04:55,360 with a traditional longshore, but you know, there's a lot more 88 00:04:55,360 --> 00:04:57,200 emphasis placed on risk controls. 89 00:04:57,200 --> 00:05:00,920 I mean they have a prescriptive formula that they try to provide 90 00:05:00,920 --> 00:05:07,600 to management teams and that really isn't it. 91 00:05:08,320 --> 00:05:12,680 How to say this, you're kind of fitting, you're fitting A 92 00:05:13,440 --> 00:05:17,320 desired volatility construct into a portfolio. 93 00:05:17,320 --> 00:05:24,960 So the with the technology or consumer or utilities, it's 94 00:05:24,960 --> 00:05:28,680 pretty easy to fit into like what exposures you're taking, 95 00:05:28,680 --> 00:05:33,120 how do you find, how do you define your idiosyncratic risk? 96 00:05:33,480 --> 00:05:36,600 Where it gets trickier, I think to the point of your question 97 00:05:36,920 --> 00:05:41,400 with mining or energy or something with commodity risk is 98 00:05:41,560 --> 00:05:46,440 how do you define what idiosyncratic risk you're taking 99 00:05:46,840 --> 00:05:52,440 and do it in a kind of neutral way? 100 00:05:52,440 --> 00:05:56,680 That's not going to put them at risk, right? 101 00:05:56,680 --> 00:06:02,640 Because I mean, their whole game is growing assets, generating 102 00:06:02,640 --> 00:06:06,920 fees off those assets. And what they're doing is 103 00:06:07,920 --> 00:06:11,400 putting a lot of leverage on that capital. 104 00:06:11,640 --> 00:06:15,920 So think of it, for every dollar that they get from their 105 00:06:15,920 --> 00:06:21,080 investors, you know, you're probably putting 3 to $4.00 long 106 00:06:21,360 --> 00:06:23,880 and three to $4.00 short into the marketplace. 107 00:06:24,280 --> 00:06:29,160 So if you're a 10 billion fund, you might have 30 billion long, 108 00:06:29,160 --> 00:06:31,920 30 billion short spread across a number of teams. 109 00:06:32,840 --> 00:06:37,040 If you lose money, you know, if if a couple of teams start 110 00:06:37,040 --> 00:06:43,080 losing money, that creates a huge problem for that asset base 111 00:06:43,320 --> 00:06:45,400 and and the returns to the investors. 112 00:06:45,680 --> 00:06:51,880 But the idea is like, all right, if I have 20 smart teams and I 113 00:06:51,880 --> 00:06:55,200 can tell them all right, fit into this risk model. 114 00:06:55,640 --> 00:06:59,280 And as long as you stay within the this risk model, which we've 115 00:06:59,440 --> 00:07:04,280 figured out is what's going to keep your volatility down, then 116 00:07:04,280 --> 00:07:06,440 you're smart. You're going to have your alpha 117 00:07:06,720 --> 00:07:11,360 and we're going to be able to generate returns with a ton of 118 00:07:11,360 --> 00:07:13,720 leverage that's going to look amazing to our investors. 119 00:07:14,680 --> 00:07:18,280 The issue with that is the incentive structure of the 120 00:07:18,280 --> 00:07:22,360 management team of a multi manager. 121 00:07:23,400 --> 00:07:26,560 Then you have the incentive structure of like the portfolio 122 00:07:26,560 --> 00:07:33,280 manager and what are they trying to achieve and your investing 123 00:07:33,280 --> 00:07:40,440 style may not necessarily align with wanting to fit perfectly 124 00:07:40,800 --> 00:07:45,200 into that structure. Where as you can be much more 125 00:07:45,200 --> 00:07:49,880 risk seeking, willing to ride out more volatility in what's 126 00:07:49,880 --> 00:07:52,720 happening with your positions and your theses because of the 127 00:07:52,720 --> 00:07:55,960 leverage employed in the system. Dave, can you just expand on the 128 00:07:55,960 --> 00:07:57,800 neutral component? Yeah. 129 00:07:57,800 --> 00:08:02,200 So there are a number of factors that these guys are looking at 130 00:08:02,520 --> 00:08:07,000 and it varies by firm, like how intense the factor models are, 131 00:08:07,360 --> 00:08:11,400 whether it's value or growth or momentum or just beta. 132 00:08:11,400 --> 00:08:16,920 Like some, some firms are very focused on having you like very 133 00:08:16,920 --> 00:08:22,240 factor neutral where your longs and shorts kind of cancel each 134 00:08:22,240 --> 00:08:27,960 other out. So your exposure to the value 135 00:08:27,960 --> 00:08:32,960 factor would be 0 in essence. But if you build a portfolio 136 00:08:33,280 --> 00:08:37,280 where the positions you like the best you want to take create an 137 00:08:37,280 --> 00:08:42,840 imbalance, then they can either tell you you need to cut the 138 00:08:42,840 --> 00:08:48,560 positions or you start forcing in other positions that you 139 00:08:48,560 --> 00:08:52,640 don't necessarily want in your portfolio just to hedge out some 140 00:08:52,640 --> 00:08:55,360 sort of factor risk. And I think that's where a lot 141 00:08:55,360 --> 00:08:58,680 of people tend to get frustrated with the system, if they are 142 00:08:58,720 --> 00:09:05,240 frustrated with the system, is that you can spend time forcing 143 00:09:05,240 --> 00:09:07,880 positions that you don't necessarily want in a portfolio, 144 00:09:08,200 --> 00:09:12,960 which can be often diluted to your process, your alpha, your 145 00:09:12,960 --> 00:09:14,840 time. That can be one of the 146 00:09:14,960 --> 00:09:18,360 significant frustrations. The whole model, it's looking to 147 00:09:18,520 --> 00:09:21,680 reward alpha, right? And you as a portfolio manager 148 00:09:21,880 --> 00:09:23,960 will have some insights to express them. 149 00:09:23,960 --> 00:09:27,400 With certain longs and shorts, maybe they get hedged out. 150 00:09:27,760 --> 00:09:31,640 But if you're roughly kind of neutral in some respects, then 151 00:09:32,320 --> 00:09:35,600 that idiosyncratic insight should be rewarded as alpha and 152 00:09:35,600 --> 00:09:38,120 you get remunerated accordingly. Is that kind of a fair 153 00:09:38,120 --> 00:09:41,520 characterization? Yeah, that's basically the idea. 154 00:09:41,520 --> 00:09:46,480 And also your comp at the end of the year, you know there'll be a 155 00:09:46,480 --> 00:09:51,040 baseline percentages that you're paid, but that also scales 156 00:09:51,160 --> 00:09:57,000 generally with most firms based on how well you perform relative 157 00:09:57,000 --> 00:10:01,880 to a risk model. So the model itself is fantastic 158 00:10:01,880 --> 00:10:06,040 for endowments and all these sorts of big institutional 159 00:10:07,000 --> 00:10:10,880 allocators of capital because the risk parameters are so 160 00:10:10,880 --> 00:10:13,480 tightly controlled and all these sorts of things. 161 00:10:13,480 --> 00:10:15,960 So they can give money to it and they're happy when the model 162 00:10:15,960 --> 00:10:17,880 works. Sharp ratio, sharp ratio. 163 00:10:18,280 --> 00:10:21,680 But if we look at it from the other lens of financing mining 164 00:10:21,680 --> 00:10:25,520 companies and financing assets to get them built and get them 165 00:10:25,520 --> 00:10:29,480 off the ground, there seems to be a bit of a disconnect because 166 00:10:29,840 --> 00:10:33,960 the duration that needs to go in and the volatility often 167 00:10:34,160 --> 00:10:37,360 inherent in financing mining projects is, you know, it's 168 00:10:37,360 --> 00:10:40,840 hugely volatile. So how do you marry those up and 169 00:10:40,840 --> 00:10:43,400 you sort of sitting in between making no way? 170 00:10:44,280 --> 00:10:48,640 You don't, I think this is it's one of the interesting things, 171 00:10:48,640 --> 00:10:50,560 right? It's like the multi managers are 172 00:10:50,560 --> 00:10:54,960 so large and you're so active in the market trading that you 173 00:10:54,960 --> 00:10:58,320 generate tons of commissions that you pay to the street, 174 00:10:58,760 --> 00:11:02,920 which means you have world class access to management teams. 175 00:11:03,520 --> 00:11:07,840 So you end up getting to know management teams incredibly well 176 00:11:07,840 --> 00:11:11,360 and that is one of the largest benefits of working in a place 177 00:11:11,360 --> 00:11:15,440 like this. However, because of the risk 178 00:11:15,440 --> 00:11:20,320 model, you are forced in largely into being a traitor, especially 179 00:11:20,320 --> 00:11:25,720 in a space like ours which is so volatile that you have to 180 00:11:25,920 --> 00:11:27,920 constantly be monetizing positions. 181 00:11:28,880 --> 00:11:33,160 And if you're talking about financing a mind and taking a 182 00:11:33,160 --> 00:11:38,160 long term view on something or writing something out through a 183 00:11:38,160 --> 00:11:40,400 period of volatility. I mean, I'm thinking about my 184 00:11:40,400 --> 00:11:45,640 own experience in 2015 trying to ride out Glencore through 185 00:11:45,800 --> 00:11:48,000 everyone thinking it was going bankrupt at the end of that 186 00:11:48,000 --> 00:11:51,720 year. That is not viewed favorably. 187 00:11:52,280 --> 00:11:57,080 So to your question, very difficult to marry those two 188 00:11:57,080 --> 00:12:00,360 ideas. Management teams get amazing 189 00:12:00,360 --> 00:12:05,440 access to these investors and I think they tend to enjoy 190 00:12:05,440 --> 00:12:08,880 conversations because, you know, there's a lot of talent, there's 191 00:12:09,280 --> 00:12:12,960 a lot of very smart people that work at these places, but they 192 00:12:12,960 --> 00:12:19,240 are not your typical cornerstone long term shareholders. 193 00:12:20,320 --> 00:12:22,720 Talk me through this Glenn Core period. 194 00:12:23,240 --> 00:12:28,480 Oh, 2015, not a positive time in our markets. 195 00:12:28,480 --> 00:12:30,440 One or two of the trading houses were going bankrupt. 196 00:12:30,800 --> 00:12:33,320 I think it was Noble groups that was having issues. 197 00:12:33,480 --> 00:12:36,760 If I recall, everyone then looked at Glencore and said, oh, 198 00:12:36,800 --> 00:12:37,920 Glencore's got a trading business. 199 00:12:37,920 --> 00:12:42,000 Glencore is going bankrupt. Glencore CDs was blowing out in 200 00:12:42,000 --> 00:12:46,320 the fall of 2015. Ivan's coming to town and this 201 00:12:46,320 --> 00:12:48,120 is great part of working at multi manager. 202 00:12:48,520 --> 00:12:51,720 You have access to Ivan, got to sit down a couple times. 203 00:12:52,120 --> 00:12:54,640 Hey, what is your trading business like? 204 00:12:54,640 --> 00:12:59,000 From my understanding, you move cold from here to there and the 205 00:12:59,000 --> 00:13:01,840 duration is very short. You should not have a financing 206 00:13:01,840 --> 00:13:04,480 problem. That got reiterated a number of 207 00:13:04,480 --> 00:13:08,240 times. OK, Understand this like you're 208 00:13:08,240 --> 00:13:09,920 not actually going to go bankrupt. 209 00:13:10,800 --> 00:13:16,400 Trying to explain that when CVS markets are telling people 210 00:13:16,400 --> 00:13:19,760 otherwise became a difficult discussion to have. 211 00:13:20,120 --> 00:13:24,280 How do you manage that volatility then in a 2015 is the 212 00:13:24,320 --> 00:13:27,000 ultimate kind of bear market the commodities where everything's 213 00:13:27,400 --> 00:13:29,680 like do you get forced out of a position early or? 214 00:13:30,240 --> 00:13:32,280 I mean, that's what happens. You get forced out. 215 00:13:32,400 --> 00:13:35,120 You really have to shrink, you force on bad hedges. 216 00:13:35,840 --> 00:13:40,160 Yeah, Anything that you shouldn't do or that you 217 00:13:40,160 --> 00:13:42,600 wouldn't want to do. We see, we see this like 218 00:13:43,160 --> 00:13:47,320 justification about volatility in in markets these days when 219 00:13:47,320 --> 00:13:50,440 there's unexplainable volatility, like fingers get 220 00:13:50,440 --> 00:13:55,080 pointed to a pod shop blew up. And yeah, it kind of feels like 221 00:13:55,080 --> 00:13:57,840 an explanation just to just to explain something away. 222 00:13:57,840 --> 00:13:59,760 But it is a real phenomenon too, right? 223 00:13:59,760 --> 00:14:02,040 Like what? Does that mean, Well, think of 224 00:14:02,040 --> 00:14:05,000 it as a kind of like a cascading factor, right? 225 00:14:05,000 --> 00:14:12,160 Where there's so much money and a Millennium might have 10 teams 226 00:14:12,160 --> 00:14:17,440 trading 1 sector and .72, I have a couple teams that will have a 227 00:14:17,440 --> 00:14:20,240 number of teams. So you have all this capital 228 00:14:20,720 --> 00:14:24,640 flowing into a sector and especially if the sector is 229 00:14:24,640 --> 00:14:26,680 small, you can get very crowded positions. 230 00:14:26,720 --> 00:14:31,200 If you look at the factors to watch on Bloomberg, if you look 231 00:14:31,200 --> 00:14:35,560 at a 10 year return profile, the best performing factor is 232 00:14:35,840 --> 00:14:38,440 earnings momentum, which makes a lot of sense. 233 00:14:38,440 --> 00:14:43,960 What hedge fund analysts are trained to look for and invest 234 00:14:43,960 --> 00:14:48,160 in are positive earnings revisions and short negative 235 00:14:48,160 --> 00:14:51,640 earnings revisions. When you throw a lot of very 236 00:14:51,640 --> 00:14:57,160 smart people looking at the same set of data, you're going to get 237 00:14:57,160 --> 00:15:00,600 a lot of people that come to the same conclusion, which means 238 00:15:00,600 --> 00:15:03,920 that a lot of people are going to get stuck in the same trades. 239 00:15:04,480 --> 00:15:11,080 And then if you have some exogenous factor happens and 240 00:15:11,080 --> 00:15:15,520 someone needs to gross down or someone's book of some size is 241 00:15:15,520 --> 00:15:19,680 getting hurt and now they're getting hit by the risk 242 00:15:19,680 --> 00:15:23,720 department saying, hey, you just triggered A drawdown limit, we'd 243 00:15:23,720 --> 00:15:26,360 like you to cut your book. All right, Now you have an 244 00:15:26,360 --> 00:15:28,480 indiscriminate seller, like they just have to sell. 245 00:15:29,040 --> 00:15:33,440 So someone starts selling and there's no fundamental reason 246 00:15:33,440 --> 00:15:36,040 why you'd sell that stock, but like, you just have to cut your 247 00:15:36,040 --> 00:15:40,320 book. Well that may put pressure on a 248 00:15:40,320 --> 00:15:45,360 stock down 4 or 5%. And then someone else is looking 249 00:15:45,360 --> 00:15:48,840 and says why is this position down Now their performance is 250 00:15:48,840 --> 00:15:53,080 starting to drag and they're thinking, Oh well I can't take 251 00:15:53,080 --> 00:15:54,680 this pain anymore, now I have to sell. 252 00:15:55,120 --> 00:15:58,840 And that's how it kind of becomes a self fulfilling 253 00:15:58,840 --> 00:16:01,920 prophecy until the selling stops and it's exhausted. 254 00:16:01,920 --> 00:16:05,560 Like all the books are grossed down or someone with a bigger 255 00:16:06,080 --> 00:16:08,400 checkbook says I'm willing to take those out of this. 256 00:16:08,920 --> 00:16:11,720 How do you think about it now, Dave, after having been in that 257 00:16:11,720 --> 00:16:16,440 side of the table and witnessed how things play out in your new 258 00:16:16,440 --> 00:16:18,720 role? Do you take a more patient lens 259 00:16:18,720 --> 00:16:22,760 and know, hey, this earnings momentum being the the sort of 260 00:16:22,840 --> 00:16:26,120 methods you mentioned there, like, hey, I can be a bit more 261 00:16:26,120 --> 00:16:28,160 patient. These guys are going to slam it. 262 00:16:28,160 --> 00:16:32,480 But if I can take A2345 year view there's real money to be 263 00:16:32,480 --> 00:16:35,680 made while the kind of straighten or the multi Strat 264 00:16:35,720 --> 00:16:38,080 shots hate this stock for whatever reason in the short 265 00:16:38,080 --> 00:16:40,720 term. Yeah, I think, you know, when 266 00:16:40,800 --> 00:16:43,280 you're given freedom, you can take advantage of that. 267 00:16:43,760 --> 00:16:47,960 I mean, like now, having listened to Neil talk about 268 00:16:48,080 --> 00:16:53,360 Ivanhoe and listening to their web cast last week, Ivanhoe 269 00:16:53,360 --> 00:16:55,040 seems like a very mispriced story. 270 00:16:55,480 --> 00:16:57,840 Obviously, this is something that's going to take a little 271 00:16:57,840 --> 00:17:03,400 time and for someone in a different seat, right? 272 00:17:03,400 --> 00:17:08,240 Like that's still messy. Like you don't know when, what 273 00:17:08,240 --> 00:17:11,640 the new mine plan looks like, what next year's production is 274 00:17:11,640 --> 00:17:15,839 ultimately going to look like. So you can't actually stay with 275 00:17:15,839 --> 00:17:19,440 comfort. Oh, I understand how this 276 00:17:19,839 --> 00:17:21,119 earnings trajectory is going to move. 277 00:17:21,720 --> 00:17:26,800 Whereas I'm sitting here and saying, well, Robert Friedland 278 00:17:27,079 --> 00:17:29,440 doesn't really trade at a discount ever. 279 00:17:30,280 --> 00:17:35,240 And he's got Western Forland's and Zambia and Angola, like 280 00:17:35,240 --> 00:17:37,880 sitting there all waiting to get proved out. 281 00:17:38,320 --> 00:17:43,400 You're going to fix whatever this mine issue is, right? 282 00:17:43,760 --> 00:17:45,840 I mean, I would hope so for their sake. 283 00:17:46,360 --> 00:17:51,720 And you can, you know, in a world where every single mining 284 00:17:51,720 --> 00:17:54,840 company wants more copper, I'm sure there'd be tons of people 285 00:17:54,840 --> 00:17:57,120 wanting to buy. I even know 50% up from here. 286 00:17:57,520 --> 00:17:59,360 But Robert Freeland's not selling. 287 00:17:59,360 --> 00:18:01,600 I even know 50% up from here. He's probably things were a lot 288 00:18:01,600 --> 00:18:05,080 more so. But yeah, I mean, being able to 289 00:18:05,080 --> 00:18:08,320 say this is the value disconnects and I can sit on 290 00:18:08,320 --> 00:18:13,400 this for a bit is nice. Now you could do that at a multi 291 00:18:13,400 --> 00:18:16,800 manager as well, right? But like you're just keeping 292 00:18:16,800 --> 00:18:22,160 that position size a lot smaller and it's not necessarily going 293 00:18:22,160 --> 00:18:24,160 to really move the needle for you. 294 00:18:24,920 --> 00:18:26,320 Why is it? Why is it smaller? 295 00:18:26,320 --> 00:18:28,920 Can you? Can you case that out is because 296 00:18:28,920 --> 00:18:32,040 the is so long dated and it's a gradual? 297 00:18:32,040 --> 00:18:35,720 Thing you can't determine when it's going to work with any sort 298 00:18:35,720 --> 00:18:38,280 of confidence. So because of that, you just 299 00:18:38,280 --> 00:18:40,600 can't size it up. Gotcha, gotcha. 300 00:18:41,200 --> 00:18:44,280 And the whole kind of betting and position sizing around of 301 00:18:44,440 --> 00:18:47,280 events, it can be kind of drastic to the other side as 302 00:18:47,280 --> 00:18:49,520 well, right. If you have some unexpected 303 00:18:50,160 --> 00:18:53,320 volatile shock to in a big size position then that's where 304 00:18:53,320 --> 00:18:55,960 things can go pear shaped. Thanks. 305 00:18:56,120 --> 00:18:59,000 Beginning of April and Trump's tariff announcements. 306 00:18:59,000 --> 00:19:02,320 I mean, that was just pure gross down behavior for two weeks. 307 00:19:02,840 --> 00:19:05,360 Yeah, yeah. When you and I first connected 308 00:19:05,520 --> 00:19:08,760 Dave before you know we even jumped on a call, you sent me 309 00:19:08,760 --> 00:19:11,200 this message and I said I'm curious to learn more about the 310 00:19:11,200 --> 00:19:13,920 multi Strat like a New York hedge fund world and a pretty 311 00:19:13,920 --> 00:19:16,280 unfamiliar from it. And you replied and you said the 312 00:19:16,280 --> 00:19:18,720 worst way to make money in the sector. 313 00:19:19,160 --> 00:19:21,400 And that kind of stuck with me. It resonated for a lot of ways 314 00:19:21,400 --> 00:19:23,720 because you look around our sector and it's created some 315 00:19:23,720 --> 00:19:25,160 phenomenal wealth for many people. 316 00:19:25,160 --> 00:19:27,480 But the people that got rich, they got rich by taking 317 00:19:27,480 --> 00:19:29,360 entrepreneurial risk. They were patient, they had the 318 00:19:29,360 --> 00:19:32,160 long term outlook. They may be back to geological 319 00:19:32,160 --> 00:19:34,440 alpha as a strategy. Maybe they had phenomenal kind 320 00:19:34,440 --> 00:19:36,840 of like long term patient stock picking ability. 321 00:19:36,880 --> 00:19:40,440 But the common theme amongst it all is you had to stick with it 322 00:19:40,440 --> 00:19:43,200 through the volatility and definitionally like a multi 323 00:19:43,200 --> 00:19:46,400 Strat hedge fund can't do that. Yeah. 324 00:19:46,400 --> 00:19:51,720 I think the other piece of that is concentration, right? 325 00:19:51,720 --> 00:19:52,320 Like. Yeah. 326 00:19:52,880 --> 00:19:57,440 You make money by betting on something in a major way. 327 00:19:57,880 --> 00:19:59,360 You make money at a multi manager too. 328 00:19:59,440 --> 00:20:01,720 I'm not discounting the wealth generation there, but if we're 329 00:20:01,720 --> 00:20:04,320 talking wealth, you. Shouldn't you can be a 330 00:20:04,400 --> 00:20:06,600 millionaire at a multi chart hedge fund, but you're not going 331 00:20:06,600 --> 00:20:09,160 to be a billionaire like what some mining entrepreneurs can 332 00:20:09,160 --> 00:20:11,320 be? Yes, yeah. 333 00:20:11,400 --> 00:20:13,080 I mean, if there is a difference, and I think it's a 334 00:20:13,080 --> 00:20:17,880 difference in your personality, make up your style of who you 335 00:20:17,880 --> 00:20:20,160 are and how you think and what you want. 336 00:20:20,640 --> 00:20:23,240 You know, there are a lot of merits to it. 337 00:20:23,240 --> 00:20:26,920 But again, if you want to swing and that's your personality 338 00:20:26,920 --> 00:20:30,480 type, then you can't fit a square peg into a rental. 339 00:20:30,960 --> 00:20:35,040 What are the other parts of the strategy which may be like 340 00:20:35,240 --> 00:20:38,520 useful or applicable to other sectors, but there are inherent 341 00:20:38,520 --> 00:20:40,120 limitations when you look at it with them. 342 00:20:40,200 --> 00:20:41,800 You know, the mining or commodity lens. 343 00:20:42,760 --> 00:20:45,960 Yeah. So I think you know, when you go 344 00:20:45,960 --> 00:20:51,480 back to why these have been so successful, you go back to the 345 00:20:51,480 --> 00:20:55,280 early 2000s when these sorts of funds were really getting 346 00:20:55,280 --> 00:20:59,760 started, it was you actually had a lot of money getting made in 347 00:20:59,760 --> 00:21:02,720 utilities. So I mean, think about the 348 00:21:02,720 --> 00:21:05,480 market is really just every single day, who are you 349 00:21:05,480 --> 00:21:09,560 arbitraging, right? Like where is the information 350 00:21:09,560 --> 00:21:11,520 asymmetry and what are you taking advantage of? 351 00:21:12,480 --> 00:21:17,520 And you go back to like early 2000s with utility hedge funds 352 00:21:18,000 --> 00:21:24,400 and they were arbitrage in like long only money that wanted a 353 00:21:24,400 --> 00:21:29,760 dividend and really wasn't doing a lot of work on what was going 354 00:21:29,760 --> 00:21:33,240 on with those companies. Then you throw a bunch of like 355 00:21:33,800 --> 00:21:38,440 really smart hedge fund people with a lot of time looking at 356 00:21:38,680 --> 00:21:43,480 fuel clauses and how CapEx was going to change rate base and 357 00:21:44,040 --> 00:21:47,640 change earnings trajectories of utility companies, which seems 358 00:21:47,640 --> 00:21:52,560 like, you know, very nuanced, but it made a huge difference. 359 00:21:52,560 --> 00:21:57,080 And you would have these gaps on earnings days where people went, 360 00:21:57,080 --> 00:21:58,960 oh man, I didn't realize that was going to happen. 361 00:21:59,440 --> 00:22:07,760 So that's where you had true information asymmetry and where 362 00:22:07,760 --> 00:22:11,000 you saw a lot of alpha generation and why this became 363 00:22:11,000 --> 00:22:16,080 so attractive these days, right? Like you're who you're 364 00:22:16,080 --> 00:22:18,240 arbitraging has entirely changed. 365 00:22:18,920 --> 00:22:23,920 You know, it, it's not the long only is really anymore like so 366 00:22:23,920 --> 00:22:28,640 much money has moved to the multi managers that you're kind 367 00:22:28,640 --> 00:22:33,160 of arbitraging each other and it's what what did you hear? 368 00:22:33,160 --> 00:22:36,480 Like what data point just took came out from that conference. 369 00:22:36,760 --> 00:22:39,160 The management team said what and and now I need to 370 00:22:39,880 --> 00:22:42,280 reconfigure what I was thinking for this quarter. 371 00:22:42,280 --> 00:22:45,760 And you know, if if you talk to a management team, a, a 372 00:22:45,760 --> 00:22:49,320 complaint that they would have when they talk to some of these 373 00:22:50,360 --> 00:22:54,880 pod shop analysts and in meetings is the questions, you 374 00:22:54,880 --> 00:22:58,240 know, sometimes revolve around like what's going on with your 375 00:22:58,240 --> 00:23:00,280 business. But it's more like, how's this 376 00:23:00,280 --> 00:23:02,440 quarter looking? Like what's in my model? 377 00:23:02,440 --> 00:23:06,000 Like how do I fix this? And that's where the arbitrage 378 00:23:06,040 --> 00:23:08,480 has kind of moved to which it's just different. 379 00:23:09,240 --> 00:23:11,960 And you invested globally, right, Dave? 380 00:23:12,920 --> 00:23:16,280 Yeah, that was exhausting. Did you notice this phenomenon 381 00:23:16,560 --> 00:23:19,480 was much more pronounced in the States than it was perhaps in 382 00:23:19,480 --> 00:23:22,280 other markets? Or by this point, is it pretty 383 00:23:22,520 --> 00:23:27,600 equally sane everywhere? Every market's different. the US 384 00:23:27,600 --> 00:23:29,960 is different from Europe is different from Australia. 385 00:23:30,400 --> 00:23:34,760 Australia always felt like you really needed to be there to 386 00:23:34,760 --> 00:23:38,360 know what people were getting excited about. 387 00:23:38,640 --> 00:23:41,520 There would be days where I would not understand why 388 00:23:41,520 --> 00:23:43,960 Fortescue was moving the way it was, and it was just like, wow, 389 00:23:44,240 --> 00:23:46,200 everyone's really excited about iron ore right now. 390 00:23:46,720 --> 00:23:50,680 But yeah, I think still, every geography is kind of its own 391 00:23:51,040 --> 00:23:53,240 animal. I want to talk about the the 392 00:23:53,240 --> 00:23:56,000 shorting component as well, because we've we've talking 393 00:23:56,000 --> 00:23:59,120 about the difficulties in, in staying long and being long and 394 00:23:59,120 --> 00:24:01,480 sizing that. But shorting is this kind of 395 00:24:01,640 --> 00:24:04,680 dark art and it's. Yeah, I think it's kind of 396 00:24:05,080 --> 00:24:08,560 simplified a bit. Yeah, I think the nuances and 397 00:24:08,560 --> 00:24:11,480 just how difficult it is, is a bit underappreciated. 398 00:24:11,480 --> 00:24:15,080 Can you sort of give a bit of color on just how difficult it 399 00:24:15,080 --> 00:24:18,840 is to sort of stay short, the various costs you have to pay to 400 00:24:19,160 --> 00:24:22,840 just have a position on short and what the difficulty it is in 401 00:24:23,400 --> 00:24:24,960 staying on that side of the trade? 402 00:24:25,920 --> 00:24:29,800 Yeah, I think it depends what you're shorting. 403 00:24:30,360 --> 00:24:34,200 If you're shorting something where everyone else is short, 404 00:24:34,560 --> 00:24:40,280 that's where the cost and the risk is like shorting lithium 405 00:24:40,280 --> 00:24:42,800 stocks. Now, if you have a bunch of 406 00:24:42,800 --> 00:24:45,840 people short, you tend to pay more in borrow rate, which means 407 00:24:46,240 --> 00:24:49,880 you are paying to think that it's going to go down. 408 00:24:50,280 --> 00:24:53,080 And that's where that can kind of create a problem. 409 00:24:53,920 --> 00:24:57,400 And that's kind of where your your cost is. 410 00:24:57,680 --> 00:25:02,880 The painful side of that is you may be looking at Albemarle and 411 00:25:02,880 --> 00:25:07,040 say like Albemarle has no cash flow right now and everyone is 412 00:25:07,040 --> 00:25:10,720 at this fast markets conference falling over themselves to say 413 00:25:10,960 --> 00:25:13,040 lithium's oversupplied until 2030. 414 00:25:13,040 --> 00:25:18,080 No, it's 2033, you know, like and lo and behold, Albemarle is 415 00:25:18,080 --> 00:25:22,520 up 7 1/2% at one point today and it's gone up 15% in like 4 days. 416 00:25:22,920 --> 00:25:27,920 So that is a function of the fact that probably a lot of 417 00:25:27,920 --> 00:25:31,000 people are short. You can't take the pain because 418 00:25:31,320 --> 00:25:34,920 you start losing money and now you're like worried about that 419 00:25:34,920 --> 00:25:37,720 drawdown limit and having your capital cut. 420 00:25:37,720 --> 00:25:41,920 So one person starts to buy and cover their position and then 421 00:25:41,960 --> 00:25:44,080 that becomes reinforcing and you get the short spans. 422 00:25:44,680 --> 00:25:47,880 So that's kind of where you have your cost is you have that risk 423 00:25:48,440 --> 00:25:50,800 of a short squeeze on a crowded name. 424 00:25:50,880 --> 00:25:54,840 And if it is a crowded name, you can tend to have to pay for the 425 00:25:54,840 --> 00:25:58,280 right to borrow it. But otherwise, I mean, if you 426 00:25:58,280 --> 00:26:02,520 want a short BHP, it's not going to cost you anything. 427 00:26:03,320 --> 00:26:05,720 It's not going to hurt you, It's not really going to move like 428 00:26:06,120 --> 00:26:07,800 that. That tends to be a very like 429 00:26:08,400 --> 00:26:11,960 dummy type placeholder short that people would use. 430 00:26:12,840 --> 00:26:15,800 When you you're borrowing shit, it's too short. 431 00:26:16,320 --> 00:26:18,680 Sometimes the party that you borrowed them from can demand 432 00:26:18,680 --> 00:26:21,280 them back as well. Right, they can pull them. 433 00:26:21,360 --> 00:26:22,320 Back. They can pull them back. 434 00:26:22,800 --> 00:26:26,120 Yeah, that's, that's a, that's a dynamic that I didn't understand 435 00:26:26,280 --> 00:26:27,840 until recently. Yeah. 436 00:26:27,840 --> 00:26:31,080 So I mean that you can have shenanigans like that if you're 437 00:26:31,080 --> 00:26:35,000 trying to be cute and short something with $500 million 438 00:26:35,000 --> 00:26:37,920 market cap. Yeah, well, someone decides to 439 00:26:37,920 --> 00:26:42,160 pull the borrow on a small company that can have a very 440 00:26:42,160 --> 00:26:46,000 meaningful impact. Shorting something that is small 441 00:26:46,120 --> 00:26:48,560 tends to not be the best idea in the world. 442 00:26:48,960 --> 00:26:52,400 I'm curious to tease out, so how do you get, how do you get like 443 00:26:52,600 --> 00:26:56,200 you know for every dollar invested like 4-4 dollars long 444 00:26:56,200 --> 00:26:57,840 and $4.00 short, like how does that work? 445 00:26:58,280 --> 00:27:01,840 That's set up with prime brokers, so they'll let them 446 00:27:02,160 --> 00:27:07,120 borrow against that and up against your asset base, and 447 00:27:07,200 --> 00:27:13,720 they're working under the assumption that because the lack 448 00:27:13,720 --> 00:27:18,880 of risk that they're taking, they're very comfortable lending 449 00:27:18,880 --> 00:27:22,400 out a lot of money. Lack of risk, it's a funny word, 450 00:27:22,400 --> 00:27:24,480 right? There's like this, this I guess 451 00:27:24,480 --> 00:27:26,720 inherent assumption that yeah, like a lot of these different 452 00:27:26,720 --> 00:27:29,520 risks are being hedged out and all of the the various pods are 453 00:27:29,520 --> 00:27:34,320 all in, in independent views. There's not the the like, yes, 454 00:27:34,360 --> 00:27:37,120 the, the it's diversified portfolio risk as opposed to 455 00:27:37,440 --> 00:27:40,360 magnified and amplified. But do you also think that 456 00:27:40,360 --> 00:27:44,280 there's like a big cascade kind of risk that that can enhance a 457 00:27:44,280 --> 00:27:46,960 lot of market volatility as a result of? 458 00:27:47,000 --> 00:27:48,720 I mean a huge hidden risk, right? 459 00:27:48,720 --> 00:27:53,560 I think the mobile T managers had a huge issue during the 460 00:27:53,560 --> 00:27:57,160 COVID. I think March 2020 was very 461 00:27:57,160 --> 00:28:00,600 scary for a lot of funds. You had a lot of PMS losing 462 00:28:00,600 --> 00:28:03,560 money. You're looking at returns doing 463 00:28:04,480 --> 00:28:07,080 negative and wondering if you're levered. 464 00:28:07,200 --> 00:28:11,400 How are we paying this back? Given the amount of leverage in 465 00:28:11,400 --> 00:28:16,040 the system, there's an inherent risk that's sitting there every 466 00:28:16,040 --> 00:28:18,840 single day. You spoke as well before about 467 00:28:18,840 --> 00:28:22,120 having potentially a number of teams or number of pods looking 468 00:28:22,120 --> 00:28:24,880 at certain sectors. How did you always feel sitting 469 00:28:24,880 --> 00:28:26,960 within a metals and mining kind of team? 470 00:28:26,960 --> 00:28:30,080 Within a bigger shop? I'm sure tech would have had way 471 00:28:30,080 --> 00:28:31,760 more pods kind of allocated to it. 472 00:28:32,200 --> 00:28:35,040 How much attention was paid to the metals and mining space in 473 00:28:35,040 --> 00:28:39,320 these New York fans? You get some. 474 00:28:39,400 --> 00:28:43,160 I mean, look, it's niche. There generally is not a ton of 475 00:28:43,160 --> 00:28:44,920 interest for people looking for mining. 476 00:28:45,760 --> 00:28:51,320 And I think it's also changed a bit in that the space is not 477 00:28:51,320 --> 00:28:56,880 nearly as liquid as it used to be, which makes it a lot harder 478 00:28:57,000 --> 00:28:59,760 because they have vast amounts of capital, right? 479 00:29:00,040 --> 00:29:02,240 And they want you to put it to work. 480 00:29:02,560 --> 00:29:05,360 If you're not comfortable because of a lack of liquidity 481 00:29:05,720 --> 00:29:12,040 to have a $30 million position on and something, then you're 482 00:29:12,040 --> 00:29:15,640 kind of constrained. So that's kind of the governing 483 00:29:15,640 --> 00:29:18,200 factor. I guess what is the market cap 484 00:29:18,200 --> 00:29:21,680 of your space relative to the overall market? 485 00:29:21,960 --> 00:29:25,880 That tends to be how teams are constructed. 486 00:29:26,200 --> 00:29:29,400 You're obviously going to have way more tech than you will 487 00:29:29,400 --> 00:29:33,040 mining or energy, but there was a problem years ago where you 488 00:29:33,040 --> 00:29:37,040 were over represented in some of the smaller sectors like energy 489 00:29:37,320 --> 00:29:40,960 and you had many more teams than you should have had for the 490 00:29:40,960 --> 00:29:45,880 market cap, which then created that phenomenon of increased 491 00:29:45,880 --> 00:29:50,240 crowding and greater risk from everyone being on the same side 492 00:29:50,240 --> 00:29:52,520 of a trade. The beauty is you get to meet 493 00:29:52,520 --> 00:29:54,360 with management teams, you get access. 494 00:29:54,560 --> 00:30:00,080 However, when you are at one of these bigger places, you often 495 00:30:00,080 --> 00:30:05,200 have to share meetings. So that can be fine. 496 00:30:05,440 --> 00:30:08,760 But if you're trying to work on a thesis and flush something out 497 00:30:08,760 --> 00:30:12,560 with a management team, you don't necessarily want to share 498 00:30:12,560 --> 00:30:17,240 the meeting because maybe you're educating someone who's a 499 00:30:17,240 --> 00:30:19,640 competitor. Ultimately, even though you work 500 00:30:19,640 --> 00:30:24,600 at the same fund and you know you're trying to create this 501 00:30:24,600 --> 00:30:28,680 alpha in your head is like, OK, I think this is an idea and I 502 00:30:28,680 --> 00:30:31,760 want to work towards something. And then someone is getting a 503 00:30:31,760 --> 00:30:33,320 free ride on what you're working on. 504 00:30:33,640 --> 00:30:36,600 And that can create a bit of an issue where people get 505 00:30:36,600 --> 00:30:39,280 competitive with who gets meeting spaces. 506 00:30:40,320 --> 00:30:43,040 The access to management is an interesting part, right? 507 00:30:43,040 --> 00:30:48,960 Like remarkable access to the CTS of these mining companies. 508 00:30:48,960 --> 00:30:51,200 But isn't it kind of like it's an odd thing because you're a 509 00:30:51,200 --> 00:30:53,720 hedge fund, you know, like you're going to buy one week, 510 00:30:53,720 --> 00:30:55,760 sell the next week. Why is Millennium afforded such 511 00:30:55,760 --> 00:30:59,520 phenomenal management proximity when they don't care about 512 00:30:59,520 --> 00:31:02,600 holding the stock for too long? It's just how much you pay. 513 00:31:03,080 --> 00:31:07,160 It's the sell side that is orchestrating all the access. 514 00:31:07,360 --> 00:31:08,120 Yeah, and you pay. Fees. 515 00:31:08,160 --> 00:31:10,000 You're the one paying them all the money. 516 00:31:10,600 --> 00:31:13,200 Makes sense? Who are the management teams 517 00:31:13,200 --> 00:31:16,480 from your time working there that really left a impression. 518 00:31:16,880 --> 00:31:18,880 There are a few names that were running some of these big 519 00:31:18,880 --> 00:31:21,240 companies that you were kind of wowed by. 520 00:31:22,400 --> 00:31:27,000 On like mining management teams that I got access to. 521 00:31:27,520 --> 00:31:30,640 Ivan was very impressive. The whole Glencore team was was 522 00:31:30,640 --> 00:31:33,040 great. Mark, Bonnie was was very 523 00:31:33,040 --> 00:31:37,040 impressive. Obviously the koala just wrote 524 00:31:37,040 --> 00:31:39,880 something about what he thinks might happen there. 525 00:31:40,080 --> 00:31:42,200 So that'll be interesting to see if that plays out, yeah. 526 00:31:43,680 --> 00:31:47,040 I reckon low probability on that one, but yeah, maybe the koala. 527 00:31:47,040 --> 00:31:50,040 Knows. Yeah, well, Rio's such a mess at 528 00:31:50,040 --> 00:31:52,280 the moment, as you know. Like that would be quite the 529 00:31:52,280 --> 00:31:56,520 turn of events. Yeah, but that was top of my 530 00:31:56,520 --> 00:31:58,040 head. Those would be the names that I 531 00:31:58,080 --> 00:31:59,760 went with. Yeah. 532 00:32:00,480 --> 00:32:04,760 If you had no constraints on like investing in the sector, 533 00:32:04,920 --> 00:32:08,280 let's say you had $100 million of Personal Capital, how would 534 00:32:08,280 --> 00:32:10,920 you deploy your own Personal Capital without any 535 00:32:10,920 --> 00:32:13,760 institutional constraints? How would your strategies be 536 00:32:13,760 --> 00:32:16,720 different from? What I'm doing right now? 537 00:32:16,720 --> 00:32:23,600 Not different at all really. It's kind of blending a medium 538 00:32:24,000 --> 00:32:30,360 term thought process and monetizing as necessary on the 539 00:32:30,360 --> 00:32:33,200 trades. I mean, I've been in first 540 00:32:33,200 --> 00:32:38,480 Quantum since March of last year and thinking that Panama has to 541 00:32:38,480 --> 00:32:40,840 come to the table. It's coming back, coming back. 542 00:32:41,760 --> 00:32:45,800 Yeah, well, Chiquita just left Panama, so that might become I 543 00:32:46,600 --> 00:32:50,120 traded in and out of that a ton. I think when you can blend it, 544 00:32:50,240 --> 00:32:53,800 but this is my style. But when I'm able to blend a 545 00:32:54,240 --> 00:32:59,040 longer term thesis with short term monetization and and not 546 00:32:59,040 --> 00:33:03,800 have to worry about, oh, my copper length is is too long 547 00:33:03,800 --> 00:33:05,360 here. Well, that's the risk that I 548 00:33:05,360 --> 00:33:06,160 want. That's fine. 549 00:33:06,440 --> 00:33:08,560 You know, if I want to hedge out copper, I'll short a copper 550 00:33:08,560 --> 00:33:12,800 contracts, which you may not be able to do at a multi manager. 551 00:33:12,800 --> 00:33:15,840 Maybe you have to, you know, force a copper like company 552 00:33:15,840 --> 00:33:20,000 short and you know, all the copper companies are cheap then 553 00:33:20,000 --> 00:33:21,680 like that's not what you want to do. 554 00:33:22,120 --> 00:33:28,960 So yeah, it's really just having the flexibility to take the 555 00:33:29,040 --> 00:33:33,160 actual risks that you want and not forcing risks that you don't 556 00:33:33,160 --> 00:33:34,760 want. You mentioned a change in 557 00:33:34,840 --> 00:33:37,440 liquidity over time. How else have you seen markets 558 00:33:37,440 --> 00:33:39,640 change over your time participating? 559 00:33:40,120 --> 00:33:43,160 The crowdedness aspect has entirely changed. 560 00:33:43,200 --> 00:33:49,760 I mean, when I entered the business in 2007, that was not 561 00:33:49,760 --> 00:33:51,480 really something that you even thought about. 562 00:33:51,760 --> 00:33:58,040 I would say really 20/13/2014 is kind of the first time that we 563 00:33:58,040 --> 00:34:01,960 really started to notice, Hey, you're getting like these weird 564 00:34:02,640 --> 00:34:07,360 gross down events where I don't know why this is happening, but 565 00:34:08,239 --> 00:34:11,679 positions that you like, I like, I mean, we all like those like, 566 00:34:11,679 --> 00:34:14,800 why is this happening? And like so that, that I, I 567 00:34:14,800 --> 00:34:18,920 think is, has been one of the biggest changes. 568 00:34:19,280 --> 00:34:24,280 And that's just been a result of where the capital has gone and 569 00:34:24,280 --> 00:34:27,120 the different makeup of the investor base trading in the 570 00:34:27,120 --> 00:34:31,480 stocks in our world where things are not as liquid as they used 571 00:34:31,480 --> 00:34:35,600 to be 10 years ago. You throw in the fact that even 572 00:34:35,600 --> 00:34:39,639 more smart people are looking at the same ideas that creates 573 00:34:39,639 --> 00:34:42,760 dislocations. Do you think those and mining 574 00:34:42,760 --> 00:34:47,520 markets are substantially more inefficient than other markets? 575 00:34:48,520 --> 00:34:53,800 More inefficient, yeah. You know what's interesting is 576 00:34:53,800 --> 00:35:01,800 that on a very simplistic basis, these names always like for most 577 00:35:01,800 --> 00:35:06,160 of a period of time, will always just follow what the commodities 578 00:35:06,160 --> 00:35:08,800 doing. There's very little, unless 579 00:35:08,800 --> 00:35:11,680 you're talking about a developer where you're actually getting 580 00:35:11,680 --> 00:35:16,040 NAV accretion in it. Most of these things just follow 581 00:35:17,120 --> 00:35:22,400 what they should be following and then you get periods where 582 00:35:22,400 --> 00:35:26,320 that just stops working and you look at this and think, well 583 00:35:26,320 --> 00:35:31,000 this is going to correct itself. Like if a copper company hasn't 584 00:35:31,000 --> 00:35:35,120 done it, nothing bad has happened and it is dislocated 585 00:35:35,120 --> 00:35:38,240 from what has happened with the copper price times it's 586 00:35:38,240 --> 00:35:41,880 projected production. Why is this happened? 587 00:35:42,440 --> 00:35:48,280 And yeah, you get periods where the market just misses things 588 00:35:48,400 --> 00:35:52,000 more, overreacts to things. I think about gold fields last 589 00:35:52,000 --> 00:35:55,360 year with Solaris Norte and their pipes rose in Chile, the 590 00:35:55,360 --> 00:35:59,080 stock was down like 15%, like 3 billion or something like that 591 00:35:59,080 --> 00:36:02,760 got taken off the market cap on something that was going to be a 592 00:36:02,760 --> 00:36:05,480 handful of months delay. Yeah. 593 00:36:05,480 --> 00:36:09,000 And you know, based on what they told you, like, OK, you lost a 594 00:36:09,000 --> 00:36:12,560 couple months, you got to lose a couple $100 million in gold 595 00:36:12,560 --> 00:36:16,040 sales. Well, the market just took you 596 00:36:16,040 --> 00:36:20,440 down like $2 billion. Clearly we overreacted here. 597 00:36:20,440 --> 00:36:22,960 Like what, what are we doing? And, you know, within two weeks, 598 00:36:23,360 --> 00:36:28,080 stocks right back up 15%. So you tend to get periods where 599 00:36:29,200 --> 00:36:32,920 you get a lot of overreactions And, and it's it's really is 600 00:36:32,920 --> 00:36:34,840 this going to happen? You know, is it going to correct 601 00:36:34,840 --> 00:36:38,080 tomorrow? Or in the case of Ivan, is this 602 00:36:38,080 --> 00:36:40,160 going to take a couple months? You just don't know. 603 00:36:40,200 --> 00:36:43,680 I can't let you go Dave, without asking you about maybe some of 604 00:36:43,680 --> 00:36:46,880 your more recent views you've been fleshing out lately. 605 00:36:47,200 --> 00:36:50,120 I spoke to you on the phone maybe like 3 weeks ago and Tommy 606 00:36:50,480 --> 00:36:53,120 Sigma was looking pretty cheap where it was and then within a 607 00:36:53,120 --> 00:36:56,120 week it had popped 20%. So I really just. 608 00:36:57,200 --> 00:37:00,360 Need a tip. The yeah, I mean first Quantum's 609 00:37:00,360 --> 00:37:02,040 working a little too well at the moment. 610 00:37:02,080 --> 00:37:04,800 Sigma, I still think is interesting in how you structure 611 00:37:04,800 --> 00:37:11,720 the trade as what I was trying to do was sell a long dated put 612 00:37:11,880 --> 00:37:15,360 at $3, which was going to give me the right to buy it at like 613 00:37:15,480 --> 00:37:19,080 260 a share, which is essentially going to be you're 614 00:37:19,080 --> 00:37:21,160 going to be buying it at 580 spot. 615 00:37:21,960 --> 00:37:25,520 And then taking the proceeds from selling those puts to buy 616 00:37:25,520 --> 00:37:32,720 calls at 10 thinking all right, if you go back to some sort of 617 00:37:32,720 --> 00:37:37,240 cost curve at 800, so it goes back to the 12. 618 00:37:37,760 --> 00:37:40,200 So that to me was like an interesting way to just think 619 00:37:40,200 --> 00:37:45,240 about how you could maybe structure a bullish lithium that 620 00:37:45,480 --> 00:37:48,640 even though I'm not bullish on lithium. 621 00:37:49,680 --> 00:37:52,520 The name that I think is most interesting right now, which 622 00:37:53,240 --> 00:37:57,200 honestly I hope is kind of pay off before this podcast gets 623 00:37:57,200 --> 00:38:02,200 released, is Ramaco, which is a little met coal producer in West 624 00:38:02,200 --> 00:38:04,480 Virginia. But they're sitting on this rare 625 00:38:04,480 --> 00:38:10,240 earth project in Wyoming, which is in carbon or it's not in Hard 626 00:38:10,240 --> 00:38:11,760 Rock. They think it's a lot easier to 627 00:38:11,760 --> 00:38:15,040 process. They are waiting to release a 628 00:38:15,040 --> 00:38:18,440 report from floor. It was a pretty good indication 629 00:38:18,440 --> 00:38:21,720 that the guy who was running critical minerals for Floor 630 00:38:22,160 --> 00:38:26,360 resigned and joined Ramako to run this project, so I'm 631 00:38:26,440 --> 00:38:28,920 assuming that the economics of the project are pretty good. 632 00:38:29,160 --> 00:38:33,680 He also left Australia to move to Wyoming to do that. 633 00:38:34,880 --> 00:38:38,800 Based on the resource base that we are put out for the project 634 00:38:39,080 --> 00:38:45,760 is you, you're pretty equivalent on size as MP now. 635 00:38:46,400 --> 00:38:50,040 I did really enjoy the rare earth pod you guys did and talk 636 00:38:50,040 --> 00:38:51,840 about the trouble with the processing and what not. 637 00:38:52,400 --> 00:38:55,560 You are paying a very small amount. 638 00:38:55,600 --> 00:38:59,680 I mean the market cap for this company's gone from 500 when I 639 00:38:59,680 --> 00:39:04,520 got into it was probably like 650 now on an equivalent basis 640 00:39:04,520 --> 00:39:08,760 to MP right now because M PS valuation is absolutely absurd. 641 00:39:09,200 --> 00:39:13,000 This project is worth like $80 a share on a $12.00 stock. 642 00:39:13,640 --> 00:39:16,040 The base coal business is worth like 9 at the moment. 643 00:39:16,320 --> 00:39:19,600 Highly asymmetric. It may not work at all, maybe a 644 00:39:19,600 --> 00:39:22,880 total dud, but they are going to be releasing that report. 645 00:39:23,240 --> 00:39:25,840 They're doing a ribbon cutting ceremony in a couple weeks with 646 00:39:25,840 --> 00:39:29,320 a bunch of federal officials. 2 months ago now, Joe Manchin, who 647 00:39:29,320 --> 00:39:31,520 was AUS senator, joined the board of the company. 648 00:39:31,840 --> 00:39:34,600 But it's an interesting idea. I don't know that's going to 649 00:39:34,600 --> 00:39:37,680 work, but. The only person that's pitched 650 00:39:37,680 --> 00:39:40,840 away, I'm in cold stock as a as a rare ass like asymmetric 651 00:39:40,840 --> 00:39:42,520 trade. But it's kind of funny because 652 00:39:43,400 --> 00:39:46,040 these cold guys must get like rare FOIMO, like they want a 653 00:39:46,040 --> 00:39:50,040 sexy commodity because like Whitehaven was a top 20 654 00:39:50,040 --> 00:39:52,960 shareholder in Brazilian rare earths IPO. 655 00:39:53,680 --> 00:39:55,760 Yeah, I don't know. These cold guys just want to be 656 00:39:56,120 --> 00:39:57,960 relevant and important to the politicians. 657 00:39:59,280 --> 00:40:00,760 You know, they got to do something. 658 00:40:00,880 --> 00:40:05,640 Yeah, hopefully it works. Dave, this has been been 659 00:40:06,040 --> 00:40:09,400 fascinating and super insightful into a world we don't understand 660 00:40:09,400 --> 00:40:11,560 too much about, so thank you for sharing your time with us. 661 00:40:12,560 --> 00:40:13,760 Yeah, of course, that was helpful. 662 00:40:13,960 --> 00:40:15,560 Thanks so much mate. Awesome. 663 00:40:15,640 --> 00:40:17,520 How good was that mate? I was stoked to share that 664 00:40:17,520 --> 00:40:20,440 conversation and thanks again to Dave Sparks for joining us. 665 00:40:20,480 --> 00:40:23,680 A massive thank you also to Inter Mining Services, Rounded 666 00:40:23,680 --> 00:40:25,280 standard ground support and Cross boundary. 667 00:40:25,280 --> 00:40:29,720 Energy hoodoo hoodoo. Now remember, I'm an idiot. 668 00:40:30,000 --> 00:40:31,640 JD is an idiot. If you thought. 669 00:40:31,720 --> 00:40:33,880 Any of this was anything other than entertainment. 670 00:40:34,360 --> 00:40:36,520 You're an idiot and you need to read out a disclaimer.