Adam Rozencwajg, Managing Partner, Goehring & Rozencwajg Associates
Adam A. Rozencwajg, CFA, is Managing Partner at Goehring & Rozencwajg Associates, LLC.
Mr. Rozencwajg has 15 years of investment experience.
Between 2007 and 2015, Mr. Rozencwajg worked exclusively on the Global Natural Resources Fund at Chilton Investment Company with Mr. Goehring.
Prior to joining Chilton Investment Company, Mr. Rozencwajg worked in the Investment Banking department at Lehman Brothers between 2006 and 2007.
Mr. Rozencwajg holds a bachelor of arts degree with a major in economics/philosophy from Columbia University.
In this 2,639 word interview, exclusively in the Wall Street Transcript, Adam Rozencwajg details his basis for the oil price increase and the natural resource company stock prices that will result.
“Clearly, over the last decade, the natural resource sector has been unbelievably out of favor.
People have taken the weighting in the various indices down, in some cases, 90%.
If you look at the S&P 500 for instance, energy was at its peak — 30% of the S&P — in 1980.
The average has been between 10% and 15% and we got as low as 1.8% last year. It’s clearly a very out-of-favor sector.
It’s a very, very out-of-favor asset class.
In the way we like to look at the world, that is where true value is created, at least in the natural resources space; that is, when investors have no interest when prices are very, very low, market caps wither to near nothing.
And what I think has been so fascinating is so many alleged value investors have steered clear of the space, whereas I think if you’re really truly disciplined in the value approach, you look at that and you say, “OK, to the extent that we want to have an energy business going forward, to the extent that we need basic materials, this represents value here.”
The oil price predicted by Adam A. Rozencwajg is based on both microeconomic and macroeconomic considerations:
“When will oil reach obsolescence? The answer to that might be a little abstract.
Oil will become obsolete and fall by the wayside when the total amount of energy to extract oil, refine it into gasoline and use it to power a car — when it takes more energy to do that, using an internal combustion engine, than to generate electricity from windmills or solar panels and mine the minerals to make an electric vehicle battery and produce the EV.
Right now, that is clearly to the benefit of the internal combustion engine.
So long as that’s the case, it’s going to be very, very, very difficult to move away from gasoline and diesel.
And jet fuel; there’s really no viable alternative. So we monitor that very closely.
We look at all the different technologies coming out. We look at all the different battery technologies.
But we’re extremely critical, and we don’t see anything that can really improve on the energy economics.
People say, “What about the CO2 side of things?” But what people don’t understand is that if you can’t do something in a more energy efficient manner, you’re never going to save the CO2.
It just doesn’t work that way.
Look at places like Germany, where there’s this huge renewable push, and yet the United States is beating Germany in terms of reducing its CO2 per unit of energy. Why?
Well, the United States shut down coal and went to natural gas.
If you look at that, natural gas is just as efficient as coal and it emits half the CO2. That’s great.
That’s why we have 20% of the fund in natural gas.
When you look at oil, it’s a little bit trickier — because what’s the alternative? The alternative today requires a lot more energy, and it’s a lot less efficient than the internal combustion engine.
How far can the names run? Well, for that, you have to really look at what is the long-term sustainable equilibrium price for crude. And then how are the names, the different stocks, what are they discounting in right now.
Today, with oil in the low $70s, I would say that the average oil stock is probably pricing in between $50 to $55, so it’s below spot, let alone what we think the long-term equilibrium price is.
Now activist investors have ingrained themselves in all of the major, supermajor, oil companies around the world and no one is looking to add any upstream spending there whatsoever.
So you had declines already in the Exxon (NYSE:XOM) and Chevron (NYSE:CVX), Shells (NYSE:RDS.A) of the world that’s going to accelerate.
This might sound shocking, but I think oil prices could probably reach $200 a barrel at some point in the next coming years.
We’ve underspent so dramatically on this industry.
That might sound crazy, but right now, natural gas in Europe and Asia is trading between $30 and $35 per million cubic feet for 1,000 cubic feet and that — on an oil equivalent basis — that’s $220 per barrel oil.
That’s the magnitude of what we’ve done.
We’ve starved this industry for capital for too long, and it’s really coming home to roost now.”
Once the oil price thesis is accepted, the prediction implies many stock market repurcussions. Primarily, of course, oil price influences the exploration and production stocks:
“We tend to avoid the supermajors because they have some challenging geological issues and now they also have a target on their back from a lot of activist investors and governments.
We prefer the high-quality remaining independent E&P companies out there.
We prefer a name that we’ve held for years, and we continue to really like, which is Pioneer Natural Resources (NYSE:PXD).
Also Matador (NYSE:MTDR) and Diamondback (NASDAQ:FANG).
These are companies that were sort of the usual suspects before, but now there’s absolutely no premium in them whatsoever.
The high-quality Permian names are really sort of the last sweet spot as far as oil stocks to own in 2022.”
Get this complete detailed 2,639 word interview with Adam Rozencwajg , exclusively in the Wall Street Transcript.
Adam A. Rozencwajg, CFA
Managing Partner
Goehring & Rozencwajg Associates, LLC
www.gorozen.com
www.azvalor.com/en
email: arozencwajg@gorozen.com
Hal Malone, Sea/Switch Partners
Martime decarbonization expert Harold (Hal) L. Malone III is a Princip 3,25al of Sea/Switch Partners, a strategic platform dedicated to ocean decarbonization, and the founder of White Fir Global, Inc., a strategic adviso7ry firm focused on the maritime, offshore and energy industries.
Mr. Malone is a member of the Index Committee for the Marine Money Decarbonization Index and serves as Executive Manager of Marine Transportation Partners LLC.
Prior to founding White Fir, Mr. Malone served as the Head of Transportation at Invesco Private Markets, a private investing division of Invesco Ltd., overseeing a more than $2 billion maritime investment portfolio.
Before joining Invesco, Hal Malone served as the Chief Strategic Officer of the Navig8 Group, a fully integrated provider of shipping management services, and spent over 18 years in investment banking, most recently as a Managing Director in the maritime group at Jefferies LLC.
Mr. Malone previously served as a director of Diamond S Shipping Inc., a NYSE-listed crude and product tanker shipping company, and Navigator Holdings Ltd., a NYSE-listed LPG shipping company, and Chairman of Nautical Bulk Holdings Ltd, a drybulk and product tanker shipping company.
In this 3,257 word interview, exclusively in the Wall Street Transcript, Hal Malone details the objectives of maritime decarbonization.
“The global maritime industry generates an estimate of somewhere between 2.5% and 3% of all global carbon emissions.
To put that in context, if that were a country it would be roughly the same emissions footprint of Germany. It is also equal to the carbon footprint of all of the passenger cars in the United States, so it is a very sizable contributor to global carbon emissions.
It is also deemed to be a hard-to-abate sector along with the industries such as the airline industry or aircraft, cement, steel manufacturing, and so on. These are significant contributors to carbon emissions and ones that will require new technologies and new solutions that don’t exist today.
In comparison, the power generation industry has solutions, such as solar or wind or even nuclear, that are zero emissions, but there are no large-scale carbon-free solutions for the global maritime industry.
So it is a big, big problem that is important to all of us. It is also one that is at its earliest stage of technological evolution. That is why we chose to create the Marine Money Decarbonization Index. We really highlighted the companies that have a range of technologies and services to help address this problem.
We then had the opportunity to partner with ETFMG to make the MMDI investable by ordinary investors.”
Marine decarbonization expert Hal Malone lists the specifics that lead to an investable security for ocean cleaning stocks:
“One thing I’ll just point out here is the diverse use cases for a ship — so whether it’s traveling over a regulfar route, or how far it’s traveling, or what cargo it is transporting.
For ferries and short sea shipping, say around Europe or say between the United States and Hawaii, or the United States in the Caribbean, you have a set fleet that’s traveling back and forth, so solutions such as batteries or fuel cells can be very efficient.
But when you look at things like large container ships moving from Asia to the West Coast of the U.S. or vessels carrying grain from South America to Asia over voyages that last weeks, if not months, you’re going to need a potentially different solution.
This brings us into the second category, and that is green fuel production and related infrastructure. There are a number of initiatives to look at other potential fuels, as opposed to hydrocarbon-based fuels, such as ammonia, methanol, or liquid hydrogen itself.
There are a number of companies that are developing fueling solutions and the infrastructure that will be needed to ultimately deliver these to the maritime industry.
The industry will need distribution and storage systems and you would need essentially the gas station equivalent for ships that are capable of actually delivering the fuel to the ultimate vessels. That would be a second large category.
The third large category would be what we call on-board systems and technologies such as trip optimization technologies.
There are also a lot of on-board carbon capture and storage technologies that are super interesting.
A company with a technology that’s actually available today is called Kongsberg Gruppen (OTCMKTS:NSKFF), and it has developed a hull-cleaning robot.
It is a relatively simple solution that can have a meaningful impact of, say, 5% to 10% of the fuel consumption of the ship just by keeping its hull clean.”
Maritime decarbonization is an issue that drives the highly experienced Hal Malone:
“Until recently, I ran the maritime investment portfolio within Invesco’s private capital business, and we had about $2 billion of capital there that we were stewarding. I also sat on the board of two public NYSE-listed companies in the sector and so from that realized how topical marine decarbonization was…
Shipping faces a substantial decarbonization challenge that matters to all of us.
We have helped create what we believe is a unique way for investors to participate in what we think is going to be a rapidly growing investment in solving this challenge.
We are offering investors exposure to unique non-U.S.-based companies that they may not be familiar with or might not otherwise come across…We have a core tier, which is fixed at 20 names and that has an 80% weighting in the index…
Ultimately, our mission is to help address challenges that we all share as a planet, which is how to decarbonize everything that we consume and everything that we use in our daily lives.
Ninety percent of all of those things move by ship at some point and so it is something that is part of all our daily lives.”
Read the entire 3,257 word interview, exclusively in the Wall Street Transcript, to get the full detail from Hal Malone on the prospects and investing opportunities in maritime decarbonization that will clean our oceans.
Harold (Hal) L. Malone III
Principal
Sea/Switch Partners
www.seaswitch.com
A value investing portfolio manager rarely gives a detailed interview on how to maximize returns by finding undiscovered public market gems. 2022 may turn out to be the focus year for value investing as stocks rotate into more asset rich sectors. These portfolio managers tell you how to maximize your gains at this point in the stock market cycle.
Ira Rothberg, Broad Run Investment Management
Not-Hot Sectors Offer Long-Term Growth and Compelling Valuations
Ira Rothberg is a Portfolio Manager and Managing Member of Broad Run Investment Management, LLC, which was founded in 2012 and serves as the subadviser to the Hennessy Focus Fund (HFCSX/HFCIX). Between 2009 and 2012, Mr. Rothberg worked for FBR Funds as the Co-Portfolio Manager of the FBR Focus Fund (the predecessor to the Hennessy Focus Fund).
Randy Warren, Warren Financial Service
Fintech, Regional Banks, and Travel: Rising Sectors
Randy Warren is Chief Investment Officer of Warren Financial Service, a registered investment advisory firm. He also manages WFS Funds, the institutional division of Warren Financial Service, which includes hedge fund and private equity investment products.
Scott M. Kimball, Taplin, Canida & Habacht
Buying Debt Securities That Were Sold for the Wrong Reasons
Scott M. Kimball is Co-Head, U.S. Fixed Income for BMO Global Asset Management. In this role, his primary responsibility is leading the application of the investment process across the team’s strategies.
Janet Rilling, Wells Fargo Asset Management
Incremental Yield in a Low Interest Rate Environment
Janet Rilling, CFA, is a senior portfolio manager and head of the Multi-Sector Fixed Income – Plus and High Yield team at Wells Fargo Asset Management.
Sean Chaitman, Shelter Rock Management
Reopening Plays That Also Offer Good Long-Term Performance
Sean Chaitman has been the President and Chief Investment Officer of Shelter Rock Management since the firm was founded in 2006. He has close to three decades of investment experience leading portfolio managers and as a research analyst.
Raymond Saleeby, Saleeby & Associates
Fragrance and Flavor Businesses Remain Strong in Inflationary Times
“The…best business that I found in the last five years — it’s a phenomenal business — is the flavor and fragrance business. It’s termed different names in different areas. But it’s a great business. The same companies have been around, for the most part, the last 100 years, and the barriers to entry are enormous.”
Bill Caton, First Wilshire Securities Management
“Given our long history of researching small-cap value stocks, we possess a massive database of individual company research which allows us a more comprehensive view of a company’s life cycle. We have built proprietary research tools to quickly assess company fundamentals no matter what global exchange they are listed on.”
Eric J. Marshall, Hodges Capital Management
Hard Asset Companies Better Positioned to Weather Inflation
“Companies that have a lot of hard fixed assets will actually see better equity appreciation in an inflationary environment than companies that, for instance, may be in software or cloud computing, where you don’t have the same type of hard assets benefiting from inflation. They’re not as sensitive to property, plant, equipment, land…”
David A. Volpe, Emerald Advisers
Stephen Amsterdam, Emerald Advisers
Joseph Hovorka, Emerald Advisers
Mega Caps Offset Smaller Growth Names
“We’re fortunate [portfolio managers] at Emerald. For 30 years, we’ve employed pretty much the same fundamental, bottom-up research approach to help us stay ahead of the market. We have specialized staff. You’ll see we have individuals who are Ph.D.s and physicians, as well as those with deep technology skills, skill sets and experience on the business side to understand and invest in those more technical and specialized areas. We also have venture capitalists and policy veterans, industry experts, and so you have this mixture of both highly skilled specialists, as well as generalists, which allow us to do a real fundamental deep dive into the companies that we invest in.”
John Buckingham, Kovitz
“Kovitz is a wealth management firm providing asset management, financial planning, retirement projections — pretty much the full gamut of anything that a high net worth client would need..And the principles, if you will, that we follow are espoused in The Prudent Speculator investment newsletter.”
Martin H. Bergin, DUNN Capital Management
Commodities Strategy Does Well in Inflationary Times
“…Once you start seeing the velocity of money pick up, inflation is going to take off. And you’re starting to see it now because you see wage rate gains in the employment sector. So this will start driving what they call wage inflation spirals. And, of course, wage increases always fall behind the inflation in the marketplace. So inflation is like a tax on everybody. It hits everybody equally.”
Complete your investing education by reading all these detailed interviews and more, only in the Wall Street Transcript.
Asset management has a long term goal: the acceleration of returns greater than the overall market with the preservation of your client’s capital. Developing an investment philosophy and the discipline required to see it through many years of market volatility is a highly prized skill that creates measured value. The asset management firms, money managers, and portfolio managers that are profiled in these very detailed interviews demonstrate the top professionals in this business today.
Bottom Up Stock Selection on Both the Long and Short Side
“Sector agnostic on both the long and short side of the strategy…By design, we avoid high short interest stocks. We don’t use leverage and we don’t use derivatives…Then, waiting to see if our thesis plays out.”
Chris Wright, Kayne Anderson Rudnick Investment Management
Double Digit Returns for Investors
Mike Moore and John Birkett are “bottom-up fundamental analysts” who invest both long and short.
John Birkett, Goodnow Investment Group
Mike Moore, Goodnow Investment Group
Find Unique ESG Investments with Fairpointe
Frances Tuite finds the best values in the ESG investment space, often overlooked value gems.
Frances E. Tuite, Fairpointe Capital
Smaller is Better in High Yield Investing
Robert Sydow finds the high yield credit opportunities that his competitors overlook due to small deal size.
Robert Sydow, Mesirow Financial
Global Deep Value Stocks with Significant Upside Potential
“We seek unique, deep value ideas on a global basis…We have offices in Singapore, India, as well as in the U.S.”
Sandy Mehta, Value Investment Principals
Buy Industry Leaders When They’re Down
“You buy good companies and you hold them forever. You hold them and don’t ever sell. You don’t pay any tax unless they change the rules on you…”
Bobby Edgerton, Capital Investment Companies
U.S. Structured Credit Markets for Higher Current Income
“The Angel Oak Multi-Strategy Income Fund is a unique strategy focused on identifying the best relative value within the U.S. structured credit markets, predominantly mortgage credit.”
Sam Dunlap, Angel Oak Capital Advisors
Quality Small- and Mid-Caps Deliver Better Performance
“What we see is investors overpaying for high-beta stocks and underpricing high-quality, stable, boring businesses. We believe that the opposite should be true. Investors should place a premium on these companies that can deliver stable and growing free cash flows and returns on invested capital in excess of the cost of capital.”
Jeff Kautz, Ballast Equity Management
Randy Hughes, Ballast Equity Management
With Higher Rates Looming, Tax Optimization Is Even More Essential
The complex nature of tax policy in the United States creates specific investment hurdles for each individual taxpayer. The professionals at Knightsbridge Capital use their experience to maximize the returns for their investors.
John Prichard, Knightsbridge Capital Management
Kurt Beimfohr, Knightsbridge Wealth Management
Investment Returns Become Magnified from Out-of-Favor Stocks
Minneapolis Portfolio Management Group finds the out-of-favor value plays that return big when 2020 becomes 2021 and beyond. These money managers believe in Aesop: “That in the End, the steady, resourceful & relentless Tortoise Still Wins the Race.”
Phil Grodnick, Minneapolis Portfolio Management Group
Harrison Grodnick, Minneapolis Portfolio Management Group
Rob Britton, Minneapolis Portfolio Management Group
These 5 equity analysts made brilliant stock recommendations that returned over 100% to the investors that followed their advice in 2021. These portfolio picks are the result of deep analysis of often overlooked stocks in a variety of industry sectors.
The stock recommendations of Perficient, Inc. (NASDAQ:PRFT), Customers Bancorp (NYSE:CUBI), Diamondback Energy (NASDAQ:FANG), Targa Resources (NYSE:TRGP) and Ulta Beauty (NASDAQ:ULTA) deserve congratulations to these analysts for making 100% returns for their investors.
Maggie Nolan, Equity Analyst, William Blair & Company
William Blair equity analyst Maggie Nolan gave her investors a home run in this April 2021 interview.
“TWST: Can you give us close at a few of your top-rated “strong buy” stocks, along with your investment thesis for these? Where is your strongest conviction?
Ms. Nolan: I’ll start with a small-cap name that I’ve been pretty interested in for a while now. It’s a company called Perficient (NASDAQ:PRFT). It has about a $2.2 billion market cap.
They are a digital transformation consulting firm. They’re serving the Global 2000. The reason I think they’re really interesting right now is that the company is picking up a lot of momentum.”
Following Ms. Nolan’s advice gave investors a run from $60 and change per share to well over $150 per share by November and this stock receommendation is still trading over $130 per share today.
https://www.twst.com/bio/nolan-maggie/
Peter Winter, Managing Director, Wedbush Securities
In the banking and finance sector, Peter Winter, a Managing Director at Wedbush Securities, identified Customers Bancorp (NYSE:CUBI) as a top pick in his July 2021 interview.
“The other bank that I like is Customers Bancorp (NYSE:CUBI).
The stock is trading at 1.28 times tangible book versus the group trading at 1.76 times.
They were one of the largest federal PPP — Paycheck Protection Program — lenders in the country and they’ve got $300 million in unrealized fees that will be realized over the next 12 months.
That will drive tangible book value up from $30 in the first quarter of 2021 to approximately $41 in the next 12 months.
Using a multiple of 1.25 times tangible book at $41, that puts the stock price at $51. There’s 32% upside just with growth in tangible book value.
But in addition to that, they’ve got good levers for margin expansion by lowering deposit costs, they terminated a swap, and they see good loan growth because they’ve expanded into some specialty lending businesses that are more niche focused and not as competitive as traditional C&I — commercial and industrial — lending.
Customers also has good organic growth and should generate solid appreciation in the tangible book value, which would drive the stock price higher…”
Investors who followed Peter Winters stock recommendation advice were rewarded with gains starting from $34 and change on July 19th. CUBI is now trading at over $66 per share by the end of the same year.
https://www.twst.com/bio/winter-peter-j/
https://www.twst.com/interview/regional-banks-offer-attractive-dividend-yields-low-multiples
Noah Barrett, Research Analyst, Janus Henderson Investors
Back in his early February 2021 interview, Noah Barrett of Janus Henderson Investors declared that Diamondback Energy (NASDAQ:FANG) would be his top pick for investors.
“We regard management highly. I think they’re very conscious of the need to increase the value proposition to shareholders, particularly on the capital return side…
Diamondback has been a good operator.
They’ve been able to deliver consistently strong well results. We think that’s a company that is well positioned and has meaningful leverage to higher oil prices.
Every $5 or $10 move in the oil price significantly increases their free cash flow and their earnings.
We also like Diamondback because we think they’re one of the low-cost producers in the basin. In a world where oil prices have pulled back from current levels and potentially stay rangebound, in a band of say, $40 to $60 WTI, we think that the company offers a solid value proposition.
Unlike some of their peers, they don’t need higher oil prices to offer a compelling value proposition to investors.”
And unlike the stock recommendations of his energy analyst peers, this pick from Noah Barrett went from $58 per share in early February to $116 per share in December.
https://www.twst.com/companies/NASDAQ-FANG
https://www.twst.com/bio/barrett-noah/
Sunil K. Sibal, Managing Director, Seaport Global Securities
Another energy sector pick, this one substantially downstream from production, is Targa Resources (NYSE:TRGP) the midstream natural gas liquids distribution company. This high performing security was recommended by Seaport Global Securities Sunil Sibal in his February 2021 interview.
This prescient pick set up his investors for success:
“TWST: What are your top investment recommendations right now and why?
Mr. Sibal: As I said, natural gas liquids, NGL, is a theme that I’m positive on. In that regard, I recently upgraded Targa (NYSE:TRGP), which is a premium NGL player. It’s second to Enterprise in terms of its footprint for its handling and exporting NGLs out of the U.S., and it has a pretty strong and integrated platform in the Permian.”
From $28 per share in February, this stock topped out at over $58 per share, and is still trading above $52 per share, along with a dividend.
https://www.twst.com/bio/sibal-sunil-k/
Adrienne Yih, Managing Director, Barclays
Our fifth analyst returning over 100% to investors is Adrienne Yih, a managing director at Barclay’s. In her August 7 2020 interview with the Wall Street Transcript Ms. Yih braved the retail sector COVID meltdown to declare that
“…We love Ulta Beauty (NASDAQ:ULTA).
Again, some of these have transient issues right now. Right now, people aren’t wearing makeup as much as they work from home, and if they are going on Zoom calls, that’s a fraction of the time that they would be full time going to work wearing makeup every single day.
And so right now, Ulta Beauty is underperforming because makeup sales are not as robust.
Also, when you’re wearing a mask, there’s not as much of your face to show.
When you think about the drivers of why she’s not buying, when we recover from this, when we go back to the office, I can bet you every woman, girl, Millennial out there is putting a full face back on.
You can see that happening.”
What investors who followed Ms. Yih’s advice saw happening was a stock that went from $200 per share at the beginning of August 2020 go to over $404 per share today.
A 1000% return on a stock portfolio is not a common occurrence.
These 10 Wall Street Transcript Interviews with the CEOs of companies that have achieved the rare 1000% return are an illustration of the results of hard work, perseverance and innovation.
![Patrick Smith is the CEO and Founder of Axon [ticker symbol: AXON], formerly TASER](https://www.twst.com/wp-content/uploads/2015/09/Patrick-Smith.jpeg)
Patrick Smith, CEO and Founder, Axon Enterprise [AXON]
TASER International, now known as Axon Enterprise [ticker: AXON] has been led by founder Patrick Smith who discusses his company in this interview published November 22, 2013.
“While living in Europe, two of Mr. Smith’s high school friends were shot and killed in a road-rage incident in Arizona…in 1991, Mr. Smith set out to develop alternative technologies that would allow people to protect themselves, but without killing.…”
Many other Wall Street Transcript interviews with Mr. Smith are available which detail his strategy for achieving over a 1000% return for his investors.
![Andy Marsh is the CEO of Plug Power [ticker symbol: PLUG]](https://www.twst.com/wp-content/uploads/2015/09/AndyMarshPlugPower-96x109-1.jpg)
Andy Marsh, CEO, Plug Power [ticker symbol: PLUG]
Plug Power operates in the broadly defined “alternative energy” industry. This company creates warehouse mobility systems – forklifts and the like – using a proprietary hydrogen fuel cell technology. CEO Andy Marsh first interviewed with the Wall Street Transcript in June of 2009 when his company was trading at $10 per share. By February of 2013, the company was trading at 13 cents per share. The increase to 1000% return and beyond began soon thereafter with a business model change.
In his Wall Street Transcript interview in February of 2014, Andy Marsh stated “Plug Power sells fuel cells, which power forklift trucks. And that’s what I’ve told you over the last three, four years, but the business has really expanded over the past six months where today we actually sell full turnkey solutions for distribution centers and manufacturers”.
At one point during 2021 PLUG traded over $63 per share, rewarding those investors who believed in this fuel cell pioneer, and Andy Marsh continues to interview with the Wall Street Transcript, most recently in 2020.
![Peter Pascal is the CEO of PyroGenesis [ticker symbol: PYR]](https://www.twst.com/wp-content/uploads/2016/04/PyrogenesisCEO.jpg)
Peter Pascali, CEO, PyroGenesis [PYR
Another transformation from product to platform has driven the 1000% stock returns for PyroGenesis formerly the Pyr Energy Corporation. Originally a Canadian oil and gas exploration company, the CEO in 2001 explained his strategy in this August interview with the Wall Street Transcript.
By 2016 the CEO was Peter Pascali and this April interview from that year describes the continuing evolution of the company: “…a number of years ago, we were being slotted as a very successful environmental company basically servicing the U.S. military; however, we said we could bring our plasma expertise to other industries.
We decided to see what other industries might benefit from the application of plasma processes. We looked at the oil and gas, mining and metallurgical, and 3D printing, which are things that are close to home, and lo and behold, we found that these industries had not really had the benefit of considering plasma solutions for various problems.”
By December of 2016 the company was trading at 16 cents per share. Today, the shares are over $3 per share and have traded well above $6 per share at certain points this year.
![James Cline is the CEO and President of Trex, [ticker symbol: TREX]](https://www.twst.com/wp-content/uploads/2018/04/MN_TREX_32818DF-Photo-of-James-Cline-Trex.jpg)
James Cline, CEO and President, Trex Company [TREX]
This company is creating global environmental benefits through technological innovation. In March of 2014, the Trex strategy of converting plastic bags to building materials was described as being based upon the “benefits of the high-performance composite, the second generation material, is that it’s scratch-, stain-, fade- and mold-resistant, and it includes a 25-year fade and stain warranty.”
By April of 2018, the CEO James Cline declared in this interview with the Wall Street Transcript that his management team “came to the conclusion that this is a consumer products company who happens to sell building products.”
From $8 per share in 2014, TREX is trading today at over $132 per share.
![John Fieldly is the CEO of Celsius Holdings [ticker: CELH]](https://www.twst.com/wp-content/uploads/2016/02/John-Fieldly-1.jpg)
John Fieldly, CEO, Celsius Holdings [CELH]
Another consumer products company and a more recent new member to the 1000% return stock club is Celsius Holdings, whose CEO interviewed with the Wall Street Transcript in February of 2016 when the stock closed the trading day at $1.70/share.
More recently, CEO John Fieldly has guided his energy drink company to a value of over $100 per share as recently as November of 2021 and gave his strategy for future growth in this April, 2021 interview.
![Richard Thompson is the former CEO of Freshpet [ticker symbol: FRPT]](https://www.twst.com/wp-content/uploads/2015/11/Richard-Thompson.jpg)
Richard Thompson, former CEO Freshpet [FRPT]
The pet industry has seen a sharp upturn over the last several years with many high return companies participating in this sector. In 2015, the CEO of Freshpet, Richard Thompson, declared in his Wall Street Transcript interview that his newly public company will “bring a completely different idea to the marketplace.”
By February of 2016, the stock price had declined to less than $6 per share and Mr. Thompson was out, replaced by the Board of Directors after an executive search in July of that year with William “Billy” Cyr. By April of 2021, the stock had passed $180 per share and still stands at about half that.
![William Doyle is the Executive Chairman and former CEO of Novacure [ticker: NVCR]](https://www.twst.com/wp-content/uploads/2016/06/William-Doyle.jpg)
William Doyle, Executive Chairman and former CEO, Novocure [NVCR]
Everyone loves a cure for cancer and a company that innovates an entirely new method of treatment is a good candidate for 1000% return stocks.
In July of 2016, William Doyle declared in his interview with the Wall Street Transcript that when Novocure “first went to the FDA, this was completely new and something that had never been thought of before. They had us start in the brain with patients who had failed existing therapies and had no hope.”
Currently the company has a run rate of over $500 million in revenue per year in revenues and the stock has gone from $8 per share to over $80.
![Terry Gregg is the former Executive Chairman and CEO of Dexcom [DXCM]](https://www.twst.com/wp-content/uploads/2015/09/MED25902.jpg)
Terry Gregg, former Executive Chairman and CEO, Dexcom [DXCM]
Diabetes has been an accelerating disease phenomenon globally. In the US alone, over 10% of the population is estimated to suffer from its effects.
In his June, 2014 interview with the Wall Street Transcript, Terry Gregg, the CEO of Dexcom remarked that “this isn’t my first time in a high-growth company. When I was the President and Chief Operating Officer of MiniMed, it went from $30 million in sales to close to $400 million, and we sold that business to Medtronic [ticker: MDT] for $3.4 billion back in 2001.”
The stock was trading at $40 per share.
Terry Grigg transitioned to executive chairman that next January in 2015 and was replaced by Kevin Sayer who is still the CEO of Dexcom, which traded as high as $659 per share in 2021.
![Anthony Makuch is the CEO of Kirkland Lake Gold [ticker symbol: KL]](https://www.twst.com/wp-content/uploads/2015/09/Tony_Makuch.jpg)
Anthony Makuch, CEO, Kirkland Lake Gold [ticker symbol: KL]
No list of 1000% return stocks would be complete without a gold mining company.
In December of 2016, the President and CEO of Kirkland Lake Gold, Anthony Makuch, interviewed with the Wall Street Transcript: “I was born in the mining industry. My father worked in mines, and I grew up in the mining town in Timmins, and that’s what I did for summer jobs…in preparing me for my role, it’s been about 30 years of a variety of roles and at different mining operations.”
From $4 and change in December of 2016, Kirkland Lake reached well above $50 per share in 2020 and is currently trading well above $40 per share.
![Paul Nahi is the former CEO of Enphase Energy [ticker symbol: ENPH], currently CEO of Solidspac3](https://www.twst.com/wp-content/uploads/2015/09/MED26085.jpg)
Paul Nahi, former CEO of Enphase [ENPH], current CEO Solidspac3
In January 2015, then CEO Paul Nahi stated that “the distributed generation of solar and energy management trends are a tidal wave that’s hitting the energy markets right now. Combine that with a proven Silicon Valley hardware model, investors should find Enphase attractive and interesting.”
The stock price took a roundabout route to its 1000% return however, bottoming out as a penny stock in the spring and summer of 2017 and Mr. Nahi was replaced as CEO by Badri Kothandaraman by September of 2017. From that point on, Enphase has gone on a run and at one point in 2021 was over $280 per share
Interviews with the 20 best performing CEOs of 2021 have been gathered together in one report: the 20 Best CEO Interviews of 2021.
Several energy companies made the list. Robert D. Bondurant serves as the President and Chief Executive Officer of Martin Midstream Partners (NASDAQ: MMLP), a US petroleum products transport and storage company operating primarily in the Gulf Coast region. The stock is up over 90% on the year and looks to continue it’s turnaround in 2022. You can read the entire 2,889 word interview for a more complete picture.
W&T Offshore (NYSE:WTI) is up well over 40% for the year for investors. CEO and President Tracy Krohn and CFO Janet Yang explain how they got it done for this oil producer, also located in the Gulf of Mexico, in this 3,514 word interview. Bottom line: “Oil and gas companies are declining commodity businesses. So the three mantras are: you need to replace reserves; you need to increase production; and you need to increase cash flow. So those are the things that we focus on.”
Obsidian Energy (OTCMKTS:OBELF) is up a whopping 375% in 2021. This Canadian oil producer is operating primarily in the Cardium region and CEO and New York University grad Stephen Loukas explains his strategy in this 2,959 word interview.
Robert Herlin of Evolution Petroleum (NYSEAMERICAN:EPM) insured that this company returned over 80% on stock appreciation in 2021 and also paid out a substantial dividend. Mr. Herlin explains in this 3,858 word interview that EPM “is distinguished from its peers in the upstream energy business in that we focus on long-life reserves, conservative financial management and a belief that shareholders should be given a very substantial portion of the cash thrown off by its assets.”
Operating in Africa in not an easy management issue, yet the CEO of VAALCO Energy (NYSE:EGY) Cary Bounds has managed nearly a 70% return for his investors in 2021. He explains how in this 3,189 word interview.
Standex International (NYSE:SXI) is a diversified manufacturing company based in the United States, the type of conglomerate that is not supposed to return almost 40% in a year to investors but this one does and pays a dividend as well. Chairman, President and CEO David Dunbar explains how in this 3,118 word interview.
A diversified insurance company is a different animal from manufacturing and it requires a far different management strategy. Rick Kahlbaugh of Tiptree (NASDAQ:TIPT) explains his in this 2,500 word interview for this dividend paying company that returned more than 168% in 2021: “It’s our ability to complement underwriting revenue with fee revenue that changes the dynamic of the investment for shareholders — little safer, little outsized-return environment.”
The CEO of Iron Mountain (NYSE:IRM) William Meaney explains how another form of corporate insurance can also create a profitable business and high returns for investors in this 4,886 word interview. A 78% stock appreciation in 2021 and a nearly 5% dividend deserve some further study.
Digital transformation of existing companies drives returns and the company that devotes itself to consulting on these digital transformations, Perficient, returned nearly 170% on its stock in 2021. The CEO of Perficient (NASDAQ:PRFT), Jeff Davis, explains how he gets this done in this 3,335 word interview.
Almost the opposite of the advising on successful digital transformations is the study of corporate failures: “The company built a reputation over the next few decades as a leader in failure analysis.” Exponent (NASDAQ:EXPO) stock returned over 30% in 2021 under the leadership of Dr. Catherine Corrigan and this 3,451 word interview explains how the Harvard and MIT grad gets it done.
Transforming a Connecticut cigar manufacturer into an industrial warehouse real estate trust is a feat of magic. The President and CEO of INDUS Realty Trust (NASDAQ:INDT) Michael Gamzon explains not only how he gets that done but also how it results in a 20+% return for investors in 2021 in this 3,719 word interview.
Another real estate play, this one in the real estate technology and data business, returned over 30% in 2021. Hessam Nadji, the CEO, explains the long development of a sustainable competitive advantage for Marcus & Millichap (NYSE:MMI) in commercial real estate data in this 4,374 word interview.
Another niche real estate play returned over 11% in 2021 while paying nearly 5% in dividend income. Uniti Group (NASDAQ:UNIT) is a spin out from Windstream and as CEO Kenny Gunderman explains in his 2,763 word interview: “Our strategy is simple: It’s to buy and build mission-critical communications infrastructure with a heavy focus on fiber, and then to lease that fiber on a long-term basis to high-quality tenants.”
Another beneficiary of the transition from copper wires to wireless and fiber is Napco Security Technologies (NASDAQ:NSSC) led by Founder, President and CEO Richard Soloway. “…You have 100 million residential buildings that are now going to have to be converted from copper wiring to cellular service.” This 2,924 word interview from October 2020 explains how he achieved an 85% return on his company’s stock in 2021.
Bridging the world of technology and medicine, CEO Larry Jasinski is creating an assisted exoskeleton to enable disabled people to walk with Rewalk Robotics (NASDAQ:RWLK). Read about it in this 2,582 word interview.
Another medical device manufacturer may have turned the investment corner with 90% returns in 2021. Joseph Sardano leads Sensus Health Care (NASDAQ:SRTS) in developing Superficial Radiation Therapy devices. Read about how they work and who they’re for in this 3,909 word interview.
If the Holy Grail of biotech startups is getting acquired for billions of dollars by a major pharmaceutical company, then Amit Munshi of Arena Pharmaceuticals (NASDAQ:ARNA) which is being taken over by Pfizer is a true knight. Read about how to get this done in this 3,089 word interview.
From a company already in the process of exiting successfully from being public traded to a company based on risky transactions. Monarch Casino and Resorts (NASDAQ:MCRI) weathered the COVID 19 storm in 2021 with a 22% return. Read this 2,492 word interview with David Farahi and find out how this was accomplished.
A nearly 40% 2021 stock market return would distinguish any consumer products company, let alone one operating in the hyper competitive energy drink marketplace. Read this 3,229 word interview with CEO John Fieldly for his successful strategy implementation for Celsius Holdings (NASDAQ:CELH).
Dime Community (NASDAQ:DCOM) has been a New York based savings and loan institution since Abraham Lincoln’s re-election. Read this 3,111 word interview to see how Kevin O’Connor has sucessfully navigated his bank to return over 40% to his shareholders in the first year of the Biden Presidency.
Dr. Catherine Corrigan, CEO of Exponent, ticker:EXPO
Robert Bondurant, President & CEO, Martin Midstream Partners, ticker: MMLP
David Dunbar, President & CEO of Standex, ticker:SXI
Amit Munshi, CEO, Arena Pharmaceuticals, ticker:ARNA
Steve Loukas, CEO, Obsidian Energy, ticker:OBELF
Amit Munshi, CEO, Arena Pharmaceuticals (ARNA)
Amit Munshi has been President and Chief Executive Officer of Arena Pharmaceuticals (ARNA) since May 2016 and has been a member of the board of directors since June 2016.
Previously, Mr. Munshi was President and Chief Executive Officer of Epirus Biopharmaceuticals, Inc. and Percivia LLC, a biotechnology company (sold to JNJ).
Prior to Epirus and Percivia, Mr. Munshi was a co-founder and served as Chief Business Officer of Kythera Biopharmaceuticals, Inc., from 2005 to 2010 (sold $2.1B to AGN), and held multiple leadership positions at Amgen Inc. from 1997 to 2005, including General Manager, Nephrology Europe.
Amit Munshi received a B.S. in economics and a B.A. in history from the University of California, Riverside, and an MBA from the Peter F. Drucker School of Management at Claremont Graduate University.
Mr. Munshi has 30 years of global biopharmaceutical industry experience in executive management, business development, product development and portfolio management.
Mr. Munshi currently serves on the boards of Pulmatrix, Inc. (Nasdaq:PULM), Enterprise Therapeutics Ltd, and Galecto, Inc.
In this 3,089 word interview, exclusively with the Wall Street Transcript, Amit Munshi details the turnaround business development and strategy that has led to the acquisition of Arena Pharmaceuticals (ARNA) by Pfizer Inc. (PFE).
“…We came in 2016 to reset the company. At that point, the company was about a $300 million market cap company. We focused heavily on the pipeline of products that had been generated over the last decade or decade and a half of discovery research at Arena. So, a large part of our success is in part due to the discovery research engine that Arena has had for going on almost 20 years.
When we came in 2016, we reset the board of directors, the management team, the capital structure of the company. We brought in large-scale institutional capital, and really on the back of a couple of compounds that we thought were very interesting and could make a real difference in the lives of patients.
The first compound we’d read out in 2017 was a drug called ralinepag. Ralinepag was for treatment of a disease called PAH, or pulmonary arterial hypertension, a devastating and fatal disease. We demonstrated a very strong clinical signal in that clinical program.
We eventually chose to sell that compound and licensed the compound to United Therapeutics, which we did in 2019. And that was on the back of a second data readout on the drug called etrasimod, which is our cornerstone compound today.
Etrasimod is an S1P1 modulator with a very precise pharmacokinetic and pharmacodynamic profile. It’s based on almost two decades of discovery research work here at Arena. And etrasimod has demonstrated a strong clinical signal in both ulcerative colitis, where we’re currently in a Phase III program, and in atopic dermatitis, where we’re planning a Phase III program.
So again, it’s moving forward in two Phase III programs in ulcerative colitis and in the planning stage for a Phase III program in atopic dermatitis. We also have ongoing programs or Phase II/III programs for etrasimod.”
Amit Munshi detailed the development of several trials for Arena Pharmaceuticals (ARNA):
“…We’re active in Phase III clinical trials, or the last stage of clinical trials.
We have two Phase III programs in ulcerative colitis. The first program has completed enrollment. That’s what we call our UC 52 or 52-weeks trial. And then the second program, which was called the UC 12, or the 12-week program, is currently enrolling.
We expect to have data readouts from both of those studies in the first quarter of 2022. We’re very excited to see that data. And again, we’re in late-stage development with the program.
Etrasimod also is a compound that actually has clinical utility, meaning the drug can be used in multiple diseases, multiple autoimmune and inflammatory diseases. So etrasimod has not only demonstrated strong Phase II data in ulcerative colitis, but it’s demonstrated a strong Phase II data in a second indication called atopic dermatitis.
Atopic dermatitis, more commonly known eczema, can be a very severe disease. Patients with atopic derm and severe atopic derm actually have a reduced life expectancy. So while we think of it as just a skin condition, it actually has quite profound manifestations in terms of comorbidities or other diseases that occur alongside atopic derm as well as a change in mortality rates in some studies.
We’ve demonstrated strong data in Phase II there in that setting. And we’re planning a Phase III program there.
Additionally, we’re in Phase II or Phase II/III programs in Crohn’s, also part of the IBD spectrum, another GI condition. We’re also up and running in eosinophilic esophagitis, another gastrointestinal condition, and in alopecia areata, another dermatologic condition.
So etrasimod currently is up and running in three gastrointestinal conditions, between Phase II and Phase III, and two dermatologic conditions. Etrasimod in and of itself is what we’ll call a pipeline in a drug where it’s got very broad utility, and will continue to explore additional indications over time.”
Amit Munshi notes that access to capital is a key factor for success for Arena Pharmaceuticals (ARNA):
“I think the recognition that while there’s quite a few biotech companies that are both public and privately traded, many companies are really science experiments.
They’re binary risk, single-asset companies that don’t have a lot of data behind them. They are platform companies. Again, they feel much more like a science experiment.
I think we’re in a unique situation where we have the ability to actually build a sustainable, durable company over the long term.
We’ve got a balance sheet of over $1.1 billion of cash. We’ve got a very experienced management team. And we’ve got a breadth and scope of portfolio that’s really unprecedented for a company our size.
We’ve got an active research collaboration with a group called Beacon Discovery, which is Arena’s historical discovery research engine where we’re looking for up to 12 immunology and inflammation targets. That’s a long-term research pipeline for us.
And all of that combined really sets us up to build something very meaningful over the next three to five years.”
Get the complete detail on how Amit Munshi guided Arena Pharmaceuticals (ARNA) to success by reading the entire 3,089 word interview, exclusively in the Wall Street Transcript.
In this 3,395 word interview, exclusively in the Wall Street Transcript, Mike Kozak recommends Trilogy Metals (NYSEAMERICAN:TMQ) and many other stocks.
Mike Kozak, Senior Equity Research Analyst, Cantor Fitzgerald
Mike Kozak is an Equity Research Analyst and has been covering the Metals & Mining sector since 2007. He joined Cantor Fitzgerald in 2016. Mr. Kozak holds a BASc degree in Mining & Mineral Process Engineering from the University of British Columbia, and prior to joining the financial services sector, worked in various technical roles for Fording Canadian Coal, Teck Resources, and Barrick Gold. He introduces his Trilogy Metals (NYSEAMERICAN:TMQ) recommendation in this interview:
“I can point you to some development-stage copper projects, or companies I should say, but they might be $300 million, $400 million market cap, not really that liquid, whereas for a large long-only fund or some macro fund or generalist fund, it might check all the boxes, but they can’t buy it because of its liquidity.
So you need some exposure to the large caps out there, like Freeport (NYSE:FCX) and First Quantum (OTCMKTS:FQVLF), given this macro setup.
BHP (NYSE:BHP) is the world’s largest diversified miner. It has a 12% dividend and is trading around 30% below its highs on the year.
But if you can buy and hold, and not think about it for a couple years, there’s one name that I cover, Trilogy Metals (NYSEAMERICAN:TMQ). They have the Arctic Copper project up in Alaska.
It’s the highest-grade copper project in North America. And if I put my mining engineer hat on, it’s Tier 1 in terms of any metric or any KPI you’d throw at it. They already have a partner, South32 (OTCMKTS:SOUHY), which is a large-cap Australian producer.
So they have a large-cap joint venture partner that’s fronted them $150 million to the JV and will be paying 50% of the capital when the mine starts to be built.
And their second project, which is 15 miles away, is the second- or third-largest cobalt deposit in the United States, called bornite, which is a critical input for electric vehicles.
So, although it’s kind of a quiet one, if you look at the quality of those assets, where they are, there’s no scenario that doesn’t end without Trilogy Metals (NYSEAMERICAN:TMQ) getting consolidated or taken out either by South32 or some other large-cap third party in the next two years or three years, in my opinion.”
Because of the green energy revolution, Mike Kozak recommends investing in the Uranium mining sector:
“Uranium is interesting. I’ve been covering metals and mining for almost 15 years now, starting in January of 2007 where I caught the last four months of speculative mania in uranium, when it spiked all the way to $137 per pound spot and then crashed, started moving higher again in 2009 and 2010, then Fukushima happened sending uraniums into the doldrums for years.
Then, in 2020, for most of the year I would get a lot of inbound calls from clients asking about the “green metals” — like for the electric vehicles, green infrastructure, clean tech, decarbonization and the metals they should be placing in that basket.
And the metals they were placing in that basket at that time were copper, nickel, lithium, cobalt, rare earths, maybe platinum, and palladium to a lesser extent.
And then for whatever reason, in October 2020, uranium got added to that — put in that bucket.
So the narrative on uranium, specifically, it started to turn positive in October of last year. And in the last two months, it’s completely accelerated. And now you’re seeing all these accommodative measures being made by the United States, by a lot of countries in Europe, to bring nuclear back, because it’s become obvious that if we’re going to get to net zero carbon, uranium can’t go away.
Not only can it not go away, it has to be expanded.
And that’s because we can’t always rely on wind and solar. As great as they might be, there’s a weather effect. They’re not always reliable. And we’re still working on the technology to store those particular renewable energy sources over the long term.
Whereas uranium is clean, it’s zero carbon emitting.
The infrastructure is already there and it’s cheap. So it’s become obvious that uranium is here to stay.
And, yes, now you’ve got nuclear that’s getting subsidies from governments.
You’ve got France coming out and committing billions of dollars to small modular reactors, the U.S. extending its reactor fleet, Japan accelerating the pace of their re-starts, Finland lobbying to have nuclear labelled as sustainable energy, and so on. And on the uranium supply side we’ve been running a forty- or fifty-million-pound deficit for years. So the setup here for uraniums is excellent.”
That leads Mike Kozak to a specific uranium stock pick:
“They’re in a very comfortable spot. Number one, they have the tailwind of strengthening uranium prices.
So they have that backdrop working for them.
Number two, they already have a past producing in situ recovery uranium operation in Wyoming called Lost Creek. They’ve operated for a few years, so it has a proven history. It’s very low cost — the lowest cost uranium operation in the United States — but it’s been in care and maintenance, sitting there dormant for the last four or so years, waiting for higher uranium prices, which we’re seeing now.
So they can restart, at the quickest in about nine months, at the lowest cost of about $14 million and produce a million pounds of uranium per year at the lowest cost relative to any of its other peers in the United States.
So it’s best positioned to capitalize on the strengthening uranium price we’ve seen in the last couple months. It’s also arguably best positioned to win new long-term contracts, in my opinion. The company has $40 million in cash, so it’s close to, if not fully, financed to go back into production. So low risk, good backdrop and low cost.”
To get the full detail on Trilogy Metals (NYSEAMERICAN:TMQ) from Mike Kozak as well as many other mining stock picks, read the entire 3,395 word interview, exclusively in the Wall Street Transcript.
Jonathan Brandt, Senior Equity Research Analyst, HSBC Securities
Jonathan L. Brandt, CFA, is a Senior Equity Research Analyst covering Global Metals & Mining, as well as the LatAm Pulp & Paper sector, at HSBC Securities (USA) Inc. He was previously head of HSBC’s LatAm cement, construction and real estate equity research team. He joined HSBC in February 2010 as a LatAm metals and mining analyst, before transitioning to the pulp and paper sector in March 2013. Previously, Mr. Brandt was a buy-side analyst for six years at a major U.S. investment firm, covering commodity companies in LatAm and EMEA.
In this 2,689 word interview, exclusively in the Wall Street Transcription, an experienced metals and mining analyst from HSBC Securities analyst details his prediction for copper consumption and which stocks will benefit.
“The name we like there is Grupo Mexico (OTCMKTS:GMBXF). So their main copper exposure comes through their 90% holding in Southern Copper (NYSE:SCCO), which is a Peruvian and Mexican copper miner.
The demand for copper is coming from a variety of things. And copper is seen as the global bellwether, in that the better global GDP does, typically the better copper does.
Specifically, the uptick in manufacturing that we’ve seen not only in China, but in other parts of the world, the uptick that we’ve seen in manufacturing capacity, the increase that we’re seeing in some residential and real estate construction is all helpful.
And the continued investment in things like EVs, because EVs tend to use somewhere between four to five times more copper than traditional ICE.
And the increase in renewable power is certainly beneficial. If you look at power-generation companies — coal and traditional power companies — they’re using maybe 1 to 2 tons of copper per megawatt. But if you look at something like offshore wind farms, those can use 15 tons to 17 tons of copper.
So, as the renewable power base increases, that is very beneficial for copper consumption. And certainly, we see that expanding not just in China, but really globally, across Europe, the U.S., in emerging markets. So, we think that trend will continue, and that’s all very positive for copper.
But certainly there are headwinds. From the supply side, the Latin America countries, Peru and Chile, account for about 40% of copper production. They have had a variety of potential political and regulatory changes that could make it more costly to produce copper and have caused some concern over whether or not supply growth will continue from there, or certainly cause some concern over the timing of it.
So I think from a supply/demand standpoint, the market continues to look pretty tight.
We’re expecting the market to be in deficit for the next couple of years.
We do see some supply growth coming to meet the incremental demand [for copper consumption] that we’re forecasting. But if you look out five, six years, the market is going to need more projects. And the projects are becoming more and more difficult to bring online.
They’re costing more, so that the incentivized price for copper continues to rise. So from our standpoint, copper is one of the preferred metals that we think investors should be exposed to.”
HSBC Securities has a bit more counterintuitive prediction about mining companies with low ESG scores, not only in copper consumption.
“So there’s potentially more opportunity in a company that has poor ESG scores, if you believe that the board and management are making changes in order to improve their score. It’s better for the environment if they can improve, and typically it’s better for alpha generation as well.
So to highlight, obviously, there have been some issues at a company like Vale (NYSE:VALE), where I know some of the scores from independent and third-party ESG companies — they don’t score very well. But they have put a significant amount of emphasis on improving their ESG score.
Certainly, they’ve done it over the past four or five years from the governance side. And we think they’re doing it now on the “E” and the “S” side. And that’s everything from building backup structures along their dams — they have moved primarily away from tailings dams and to dry processing.
They are creating new iron ore products that are less CO2 intensive in the blast furnace. So there are a variety of different things that they’re doing.
The other thing to highlight is they have discussed their Scope 3 emissions targets, which very few companies have done.
So I think that even though they’re coming from a lower base than their peers, they’re putting a lot more emphasis on ESG and I think that there’s value in something like that.”
The HSBC Securities analyst likes the risk/reward for some specific names, particularly those exposed to copper consumption:
“Obviously, the Chinese economy is slowing, which given 50% to 60% of metals end up in China, that’s obviously a concern.
Now, our team in China is expecting some targeted stimulus, so that we don’t see a collapse and they’re able to keep GDP growing. But it’s always a risk — what China is doing from a macro standpoint and a policy standpoint.
…You take Grupo Mexico and their exposure to copper from their Southern Copper assets, they will produce at $0.70, $0.75 per pound.
Even if you include SG&A and freight and everything else, they still have 50%, 60% margins. So even if copper prices were to go from spot of $4.50 or $4.60, or even if they dropped to $3, they’re still making very, very good margins, great cash flow.
It would be less cash flow than what they were making before, and the share price would obviously correct in a lower copper price environment, but because of their ability to repair balance sheets — and I think this goes for pretty much all of my coverage, because balance sheets have been significantly repaired from just five or six years ago — the likelihood of a company having to sell assets to survive bankruptcy is very, very low at this point.”
Get all the details for these and other stock recommendations from HSBC Securities particularly with regards to copper consumption by reading the entire 2,689 word interview, exclusively in the Wall Street Transcription.
