Matt Geiger: Mining Complex has Never Been this Cheap
Tom welcomes back MJG Capital Fund manager Matt Geiger to the show. Matt discusses how his fund has performed very well over the past couple of years.
He believes the miners and the metals will have to play catch up with the rest of the market. When the broader market next goes sour, there will likely be some pain, but from a long-term perspective, we’re in a good position.
Matt explains the relationship between copper and gold and how last summer’s MJG Letter discussed the forty-year pattern for these metals. Last year copper was highly undervalued relative to gold, which was a good reason to be bullish on copper at that time. We then saw copper reach an all-time high quite rapidly, which was somewhat unexpected. Copper has now moved back to the forty-year mean relative to gold.
Matt believes nickel is a good investment and explains why he holds some nickel miners in the fund. Nickel will continue to benefit from the trend in decarbonization and is increasingly used in battery chemistries.
He details the importance of phosphate used in fertilizers and why his fund’s portfolio has exposure. Much of the global supply comes from Morrocco, and they made a bet on a specific project. He notes that there are very few juniors involved in this mineral.
Vanadium is another metal that interests Matt, and it is used in strengthening steel and increasingly large-grid scale battery applications. It’s a metal that tends to have a long boom and bust cycle. Most investors have never heard of this metal.
Lastly, he discusses optionality and private placements and how they can bring extra leverage to an underlying asset.
Time Stamp References:
0:00 – Introduction
0:35 – Fund’s Performance
3:03 – Commodities Market
8:45 – Sentiment & Patience
10:58 – Gold/Copper Ratio
15:54 – Nickel Exposure
20:41 – Phosphate
24:12 – Vanadium
31:44 – Optionality Plays
36:33 – Private Placements
44:27 – Wrap Up
Talking Points From This Episode
- Outlook for miners and the metals.
- Importance of nickel in battery chemistries.
- Phosphate and Vanadium and their applications.
- Private placements and optionality plays.
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.