Matt Geiger: Commodities to Skyrocket in the 2020s
Tom welcomes back MJG Capital Fund manager Matt Geiger to the show. Matt outlines his funds’ performance over the past year, and while he has few concerns about commodities in general, there is the risk of a broad market sell-off. A sell-off could affect precious metals and the junior resource equities. The general equity markets have been overvalued for some time, but it’s hard to determine when that top will arrive. It’s time to be cautious since it’s far from certain that 2021 will be smooth sailing. To that end, he is focusing on building up his funds cash position.
Matt explains the differences between class 1 and class 2 nickel and why he finds this metal particularly intriguing. Today’s batteries should be called nickel-ion batteries, not lithium-ion. In order to build out this electrification, the world will need much more nickel and copper. Where all this extra supply will come from has yet to be determined.
When evaluating companies, Matt focuses first on the management’s history, then the underlying asset, and then the jurisdiction.
His fund approach has focused on royalty and streaming companies for returns. This approach has worked well for them, and he is now looking for royalty opportunities in other commodities.
He suggests investors have a plan for adjusting their portfolio’s position sizes, particularly in a resource portfolio. For his fund, they will only allocate 2%-10% in a single position.
He discusses the Robin Hood trader’s short squeeze, the effect on Gamestop, and how a silver squeeze didn’t make sense at this time. We did get generalist investor’s interest in silver and some excitement into the market. Hopefully, this momentum holds, and we see steady price appreciation over the next couple of years.
Time Stamp References:
0:00 – Intro
0:33 – MJG Fund performance.
5:51 – 2021 Outlook
8:23 – Battery Metals and Nickel
14:24 – Copper & Nickel Demand
19:22 – Evaluating Companies & Jurisdiction
26:00 – Rebalancing Your Portfolio
30:03 – Silver Squeeze Thoughts
33:04 – Wrap Up
Talking Points From This Episode
• Use caution in case of general equity correction.
• Battery metals – nickel & copper.
• Evaluating companies, finances, and jurisdiction.
• Royalty and streaming benefits.
Mr. Geiger is Managing Partner at MJG Capital, a limited partnership specializing in natural resource investments. The partnership is long-only and holds a concentrated portfolio of resource equities. Investments include explorers, developers, and producers of precious metals, energy metals, industrial metals, and ag minerals. Matt is a graduate of the Wharton School at the University of Pennsylvania and previously founded a venture-backed technology company most recently valued at $150m.