The Pain and Pleasure of Inflection Points

Published on
July 23rd, 2018
Duration
33 minutes

The Pain and Pleasure of Inflection Points

Skin In The Game ·
Featuring Adam Rodman

Published on: July 23rd, 2018 • Duration: 33 minutes

Adam Rodman, founder and CIO of Segra Capital Management, provides a peek into his portfolio. He is still excited about uranium, thinks gold miners could be at a turning point, and sees deep value in specialist ocean-going tankers. He also relives the experience of being short an Argentinian equity market that was rising perilously against him. Filmed on July 3, 2018 in Dallas.

Comments

  • CM
    Christopher M.
    9 August 2018 @ 14:30
    I am so thankful for Geiger Counter Ltd (GCL) and Yellowcake (YCA) being London listed. Eligible to hold in my UK S&S ISA tax-free whoop whoop no Capital Gains Tax!!
  • PS
    Patrick S.
    4 August 2018 @ 11:41
    Elaborating on Cameco's tax case - for everyone new to the sector this is probably the lowest risk way to play this as you are getting the Walmart name of the sector at a 90% discount due to all the shenanigans in this sector - No-one seems to speak about Camecos pending CRA case just for all the US watchers out there the way Canadian tax law works is you have to prepay 50% of the worse case scenario in a pending audit. However the exact same case was before the IRS and they settled for 1% yes 1% of the slated amount, they hired the best corporate tax form in the world with expertise in transfer pricing and paid them 170 million dollars AND Canada pension plan, government of Saskatchewan, and government of Alberta are invested in shares of Camecos and with recent lay offs being high profile news do you really thing the federal government (CRA) is going to screw the largest employer in northern Saskatchewan when they are giving money to companies like GM begging them to keep jobs? With all the supply demand stuff if the case goes their way in the next 1-2 months they will get an 850 million dollar tax refund, current MCAP of 5 billion potential 20% day right there.... Even section 232 stuff is hilarious UEC and UUUU CEOs tout their chests how they are the largest lowest cost producers in the US however Camecos can bring 4m+ pounds of production online in the US within 12 months just it is on care and maintenance right now like alot of other stuff - making it in fact bigger. Great interview keep it up!
    • PS
      Patrick S.
      4 August 2018 @ 11:43
      Apologize my cell phone spell check is atrocious :S
    • PS
      Patrick S.
      4 August 2018 @ 11:43
      Apologies*
    • PC
      Paul C.
      13 December 2018 @ 15:59
      Many thanks for the info, Patrick.
  • WM
    Will M.
    28 July 2018 @ 17:37
    Very good, cogent arguments and Adam came back below with an actionable gold trade. Loved it.
  • JM
    Jason M.
    28 July 2018 @ 12:37
    Adam is smarter than you are. Give the man some money and stick to your day job. The bubble in everything has you delusional re: your future returns. Unless you are a talented short-seller its time to seek professional help with your portfolio. Suppress your pride.
  • JG
    Jay G.
    28 July 2018 @ 07:12
    Adam Rodman completely nails this interview. Does he have a Twitter handle? Even his fund doesn’t. I want to follow this guy. Unbelievably well thought out investment thesis
  • PB
    Pieter B.
    26 July 2018 @ 04:40
    Thank you Adam and Roger! This was really great!
  • AV
    Adrianus V.
    25 July 2018 @ 11:27
    Good luck going long tankers. With IMO2020 coming up and the low entrance barrier for owners to build Afra and MR tankers means that if there’s a recovery they simply build more tankers. Hard to believe but that’s exactly what’s happening, too much money floating around on the side lines, especially China. There might be periods with spikes but over all a very tough market. Gas tankers on the other side totally different story, especially LNG tankers. Barrier to enter that market is much higher bc of capital involved and they’re not going to be effected by IMO2020 as they use cargo boil off as bumper fuel. Happy sailing!
    • AV
      Adrianus V.
      25 July 2018 @ 11:28
      *bunker fuel
  • SS
    Sam S.
    24 July 2018 @ 17:19
    Not sure I understand enough to rely on reactor operators non-responsive to price increases. 21 gigawatts and a new flux capacitor----back to the future. Maybe short term trades with a long term position to ride the power surges. Captain Kirk to Scotty-----I need more power!
  • PS
    Paul S.
    24 July 2018 @ 07:35
    Only issue with the uranium story is that the withdrawn low cost supply may be put on care and maintenance but it isn't depleted/withdrawn forever. Makes it difficult for me to see a significant ramp in U308 prices lasting for a time sufficient to benefit investors in developers - beyond the inevitable pump and dumps. The 'physical' ETF etc vehicles likely reflect this scenario - trading at such premiums to NTA. It is very difficult to get access to the theme at the prevailing low spot price. Great interview though, enjoyable
    • JL
      Jacob L.
      24 July 2018 @ 10:22
      Paul, Yellow Cake listed in London is a "physical vehicle" meaning they have bought uranium and hold it, and this stock actually trades at a discount to the spot price currently (unlike Uranium Participation, which tends to trade at a premium). I suspect this won't last long. Stock ticker is YCA.L
    • jd
      john d.
      25 July 2018 @ 04:44
      Hi Paul, re C&M for U mines; These are not easily put on C&M and quickly brought back into production (e.g. shale O&G wells). For example, PDN recently announced the shut down of LHM and stated that it would cost c. US$60m to restart it. Thus, decisions to bring supply back into the market will not be made on a whim. The price of U will need to rise materially before this supply is brought back - A big part of this is due to the fact that the capital will need to be sourced externally from the companies that have shut in production as they are all nearly bankrupt. The prospective debt/ equity providers will not commit the capital unless they have certainty that a repeat of the current disaster will not occur. The only way they can gain this certainty is via LT contracts with utilities. This means that, based on the AIC for these mines and allowing a reasonable return on capital, these LT contracts will need to be >$50 lb for most miners with Q3 and above on the cost curve requiring >$65 lb. Given that the primary mine supply is currently running at a deficit to annual supply (balance supplied via inventory and secondary sources) it means that the entire cost curve will be required to be in production during the next cycle to meet U reactor requirements. Thus it means that during the next cycle it is nearly certain that U prices will go >$70 lb IMO and potentially >$100 lb if there is a fear from utilities that U fuel will run out. These U mines aren't shale wells. Cheers John.
    • RM
      Robert M.
      25 July 2018 @ 17:15
      Thanks for that John D. That is a good outline of the mechanism of U price increase. By cycle do you mean contracting cycle? Do you have thoughts on when that might be?
  • SR
    Steve R.
    24 July 2018 @ 06:24
    He's dead right about Blockchain technology! Everyone I come across thinks Blockchain is the solution to every problem on earth, they spew out example after example, until I then spew out example after example of how these so-called 'problems' have ALREADY been solved WITHOUT the Blockchain! Blockchain is largely a technology in search of a problem where there is none. And I work in technology.
  • JM
    John M.
    24 July 2018 @ 05:35
    Adam: Great interview. When we finally have a significant correction in equity markets do you think uranium & gold equities will follow the market down (at least initially)? Thanks.
    • PW
      Phil W.
      24 July 2018 @ 22:15
      Baby with the bath water...………….. imho
  • LT
    Lucas T.
    24 July 2018 @ 01:19
    So if he is unwilling to say the miner names he is interested in, he probably has not accumulated his entire gold miner position yet and may be expecting more lows to buy more. If he was done buying, he would broadcast to the world his positions and why others should buy them.
    • AR
      Adam R. | Contributor
      24 July 2018 @ 03:08
      Hi Lucas, Adam Rodman here. This response goes to Kulbir and David below as well. You are very fair to point out that I promised an open book and didn't deliver in the gold section! Sometimes in the moment you instinctively default to keeping specific portfolio names close to the vest. But fair is fair... our top choice in the gold space is (and has been for some time) Gold Standard Ventures, ticker GSV. We were positioned before the interview, and believe it will be a fantastic name to own for years to come.
    • LT
      Lucas T.
      24 July 2018 @ 03:12
      Ahh dang, I thought I was being clever. Thanks Adam, you're alright.
    • SS
      Steve S.
      24 July 2018 @ 11:37
      Thank you Adam. Greatly appreciated.
  • jd
    john d.
    23 July 2018 @ 22:21
    Hi Guys. Needed to pause this after the U section just to add to Adam's comments. On the supply side, CCJ's looming decision on MR is a major one. In addition to this, the sector has a very small number of mines producing most of the global supply. It is also likely that the Rossing Mine (RIO), which is a high cost mine in Africa, will suspend production once their LT contracts (high prices) expire and they are exposed to spot prices (within a year or so). Likewise, the Ranger mine in Australia is winding down and due to Native Title issues (licence is not being renewed) will cease supplying U to the market by 2021 and Q-over-Q volume is currently falling. The Husab Mine in Africa (Chinese owned) is having significant operational issues and is unlikely to ever reach ifs BFS slated production numbers. Kazatomprom, which through its numerous JV's supplies 40% of global U, is an ISR operator. It would appear that they have cherry picked their best fields already and costs are slated to increase in the coming years and production fall. One report suggests by as much as 40% by 2030. Demand growth is baked in with EM new reactor builds, Japanese reactor restarts (2030 Government Policy commitment) and licence extensions at existing and aging Western reactors. All of this is occurring within an opaque market with the best data sources (UxC) being biased toward utilities as this is where most of their revenue comes from (like ratings agencies pre GFC). LT, IMO, this is the most skewed commodity sector for risk-reward out there. The various supply side catalysts are now actually occurring and accelerating. Re Ben Hunt, in Game Theory parlance, missionaries like Adam/ RV and many others are spreading the narrative and this is getting more widely received by an investing community which, in turn, will compete with natural buyers (utilities) for U (e.g. Yellowcake, UPC). Cheers John.
  • TE
    Tito E.
    23 July 2018 @ 18:26
    Roger you cheating swine!
  • SS
    Steve S.
    23 July 2018 @ 12:25
    Adam when asked by Roger, if he'd share what's in his portfolio said 'Absolutely, happy to share anything you want to talk about' Yet, when Roger asked him which Gold mining stocks he'd recommend, he said he would like to deflect. That was not cool.
    • DS
      David S.
      23 July 2018 @ 19:57
      I would have like the question answered also, but the person being interviewed should always have the right to not answer a question. DLS
  • CC
    Christopher C.
    23 July 2018 @ 11:13
    Great interview. If you want to do a deep dive on the Uranium space Marin Katusa has some excellent content available on the web where he lays out who he sees as being the biggest beneficiaries and time frames for performance. IMHO if Gold holds 1200 we see a nice bounce from here. In the miners as well. (Weekly candle on gold looks promising for bounce.) If it drops below 1200 it could flush hard and quickly to next support level. Right now Gold is all about the dollar, CNY, and SDR. Yen looks to be positioned to take up most of the slack if the dollar flushes from here. Just spent 3 months in Brazil.... a couple of different business owners down there were actively but quietly speaking the possibility of the country splitting into two. Those aware are very concerned about what is happening in Venezuela and more recently in Argentine currency. They know it could spread.
    • DS
      David S.
      23 July 2018 @ 20:06
      If gold falls, what do you see as the next support level? Thanks, DLS
    • tW
      tgwtom W.
      23 July 2018 @ 21:45
      Also the Mike Alkin Show ( @FootnotesFirst) podcast has maybe the best uranium in-depth, such as his best risk/reward ever episode 8 to start.
    • CC
      Christopher C.
      25 July 2018 @ 17:00
      https://twitter.com/MysteryTrader99/status/1021854851532247040