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Kevin Smith: The Ten Year Bear Market in Juniors has Created Enormous Opportunity

Tom welcomes a new guest to the show, Kevin Smith. Kevin is the founder and CIO of Crescat Capital.

Kevin discusses the enormous credit bubbles that exist in China and Hong Kong. These credit bubbles have resulted in housing bubbles with a very similar signature to the last housing bubble in the United States.

Crescat has eight different valuation factors they use to assess the U.S. stock market. All of these are currently close to or 100% overvalued. They estimate that P.E. ratios today are higher than they were in 1929 before the great depression.

Kevin discusses their new fund and how excited they are to have added geologist Quinton Hennigh to their team to help them evaluate new opportunities.

He is optimistic that money will soon begin flowing out of the bubbles created by central banks and head into the gold sector. They consider silver to be extremely cheap today, and ultimately, it will be repriced much higher. Lastly, Kevin discusses several junior companies that they believe have great potential.

Time Stamp References:
1:20 – China’s Debt Bubble
4:15 – Extreme imbalances in Hong Kong
6:18 – Valuation factors in their macro model.
8:05 – Managing risk in their funds.
9:10 – Precious metals fund.
11:45 – Opportunities in explorers.
14:50 – Thoughts on silver.
15:45 – Factors for identifying explorers.
17:43 – Juniors they are interested in.
19:40 – Their focus and strategy.

Talking Points From This Episode
• Situation with currencies in China, Hong Kong, and housing bubbles
• Crescat’s valuation indicators show an overheated stock market.
• Silver remains very undervalued.
• Evaluating new opportunities for their fund.

Kevin Smith is the founder and CIO of Crescat Capital. He has been managing investment portfolios since 1992, a career spanning multiple business cycles. Kevin has been the lead portfolio manager of Crescat’s four investment strategies since their respective inceptions. He is the creator of Crescat’s firmwide global macro investment process and systematic equity valuation model. Before founding Crescat, Kevin worked as a wealth advisor with Kidder Peabody. He earned an MBA from the University of Chicago Booth School of Business with a finance specialization and a concentration in statistics. Kevin received a bachelor’s degree in economics and German studies from Stanford University. He holds the Chartered Financial Analyst designation.

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