Ep. 37 - The Inoculated Investor with Ben Claremon

Ep. 37 - The Inoculated Investor with Ben Claremon

Ben Claremon is a Principal and Portfolio Manager at Cove Street Capital, a value-oriented investment advisor based in Los Angeles. In this episode, we learn Ben’s background from growing up in real estate to catching the Value Bug. We also talk about his in-depth research process that focuses on business, fundamentals and people. In addition, we do a deep dive on Lionsgate and reveal Ben’s Super Power. To learn more about Ben please visit www.covestreetcapital.com [https://covestreetcapital.com/] or follow him on Twitter @BenClaremon. To learn more about Richard or to request a transcript of the podcast please visit www.thinkaen.com [http://www.thinkaen.com/]. “Warren Buffett once wrote that value investing is like an inoculation--it either takes or it doesn’t--and when you explain to somebody what it is and how it works and why it works and show them the returns, either they get it or they don’t.” -Seth Klarman of the Baupost Group Show Notes: (01:12) Ben provides introduction. From Arizona to New York City to California. First job at a hedge fund right before the financial crisis. Attending Berkshire Annual Meetings and posting notes on his blog appropriately titled the Inoculate Investor. (06:15) Going into more detail about the Berkshire Meetings. Handwriting versus on a computer. (06:56) Early equity investments. (08:02) First big investment working at the New York Hedge Fund was actually a large short trade on many regional banks before the financial crisis. One of the last great short opportunities. (11:25) Ben talks about Cove Street Capital and its research and idea generation process. Running screens and Monday Morning Meetings. The importance of taking management meetings. Speaking to company executives as well as former and current employees is a huge part of the investment process. (16:00) Three Pillars of the Cove Street Capital Investment Process include the analysis of the Business, Fundamentals and People. (18:24) Deep dive into interviews with former employees. Leverage multiple sources including social media and Tegus, which it uses for investor-led interviews of industry experts including past employees and executives. (22:25) Culture is a very important aspect for Ben. He doesn’t want to invest in a company with bad culture even in a turnaround situation. He believes a turnaround is hard if you have a poor culture. This can take years to fix, if ever. (27:12) ESG versus Culture. (31:38) Ben discusses one of his top ideas, Lionsgate. He recently presented it on the Market Champions podcast (see link here [https://drive.google.com/file/d/1rVjw8l6Q0-KdLNbfmVf4oT2fY1c5Ib4A/view]). He thinks there is a gross misunderstanding of the people involved at the company. He also thinks it is trading at a large discount to intrinsic value. (35:10) Streaming wars, MGM and Amazon deal. Ben doesn’t think Lionsgate will remain a public company, but is serious about selling to larger player. (39:24) Lionsgate is one of the only media companies where insiders don’t have total control of the company. You aren’t going to force Viacom or Brian Roberts to sell their companies or do anything for that matter. (43:21) Ben goes into his intrinsic value estimates of a base case of $18 and an upside case in the high $20’s. He also talks about one of the Lionsgate Board members, Gordon Crawford, jumping on a JP Morgan call and detailing a sum of the parts valuation for the company which assigned a base case value of $33. (48:12) What distinguishes a great investor? Through the understanding of people and what their motivations or incentives are. “Read the Proxy Statements”. (51:22) Compounders: The Anatomy of a Multi-bagger Podcast. Ben talks about the genesis of the program and why he believes it’s one of the few shows that interviews management teams the way an institutional investor would, for the long term. (56:15) Wrap up and contact information. Don't forget to follow Ben's Podcast at the Compounders Podcast [https://covestreetcapital.com/compounders-podcast-episode-1/].

Ep. 36 - Becoming FracSlap with Collin McLelland

Collin McLelland is the Co-Founder and CEO of Digital Wildcatters, which is a content platform transforming the Oil and Gas Industry. In this episode, Richard talks to Collin about his journey starting off as a roughneck in the West Texas oil patch to becoming FracSlap, King of Energy Content. Collin also discusses some of the changes occurring in the industry to include ESG, Bitcoin Mining, Canada versus Texas Drillers and so much more. To learn more about Collin visit www.digitalwildcatters.com [https://www.digitalwildcatters.com] or follow him on Twitter @FracSlap. To learn more about Richard or to request a transcript of the podcast please visit www.thinkaen.com [http://www.thinkaen.com/]. Show Notes: (01:12) Introduction to Collin McLelland. Co-Founder and CEO of Digital Wildcatters, a media company focused on the Oil and Gas Industry. Growing up in Midland, Texas which is the Capital of the Permian Basin. Becoming a Roughneck right outside of high school in 2008/2009. (03:58) More about growing up in Midland, Texas. This part of the Permian Basin is one of the most prolific oil fields in the world. You live in Midland and Odessa to work in the Oil and Gas Industry. (05:09) First job with a drilling company in Texas. Learning on the job and the dangerous yet fulfilling work on the oil field. Getting a call on Day 1 and having to show up late at night for the shift. Canadian versus US Drillers, how they differ. (08:46) Learning Roughnecking on the job. No instruction manual necessary. Complex operation, lots to learn. Value of Teamwork and Trust. The work “Made a Man” out of Collin. Baptized by fire. (09:43) Collin does a deep dive into the complexity of oil and natural gas drilling. He also talks about how the industry has evolved over the last decade plus other technological advances. (12:40) Employment opportunities in the oil patch. We also discuss this later in the episode. (14:39) The Birth and Evolution of Digital Wildcatters. Helping bring awareness to the energy industry in a positive and memorable way. (21:36) Collin talks about authenticity regarding the content he puts out. He believes people respond to his genuine style. Naysayers told him he would be committing career suicide by being himself. (24:20) Having a plan as it relates to social media content. Unstructured versus Structured content. (26:05) Collin is bullish on social media and the Internet. He thinks it is an incredible tool to connect with people and that Energy Companies should take full advantage. Digital Wildcatters has created its own Niche by transforming how Energy Companies communicate with stakeholders. (29:19) Talking Climate Change and the importance of a smooth transition to renewable fuels. Collin thinks there is a lot of bad press regarding fossil fuels and mentions specific energy shortages and price spikes due to the lack of capital in the space. (34:46) Discussion around big oil investments in renewables. Outside of oil and gas production, Texas is also a leading producer of wind power generation. (36:53) Leveraging the Digital Wildcatters Network to help people get jobs in the oil field. (39:15) Detailed thoughts on Bitcoin Mining. Major opportunity to mine Bitcoin using flare gas. Flared gas is a bi-product of Oil and Natural Gas drilling and is typically burned off as waste. With Gas Prices being so high for Bitcoin Miners, it could prove a highly effective way of mining Bitcoin that is both clean and economically feasible. (44:07) Discussion over the Bitcoin Mining device itself. Collin talks specs and goes into further detail on how it can use Flare Gas for Bitcoin Mining. Texas, Oklahoma, Wyoming and North Dakota can be leaders in the industry. Highly attractive investment opportunity in the early stages. (50:41) Wrap up that includes some Kenny Lay (Parody) lines and EFT (Energy FinTwit). Lil FracSlap, Friday Night Roll Call and more.

Ep. 35 - Information Arbitrage in Microcap Equities with Maj Soueidan

Maj Soueidan is the Co-Founder of GeoInvesting, a leader in microcap stock research. GeoInvesting’s bullish focus centers around three major themes. Growth + Value; Information Arbitrage and inflection point investing. On this episode, we will learn Maj’s backstory, how GeoInvesting adds value to clients, the power of Research Collaboration, some stock ideas and so much more. We will also discuss some valuable insight on SEC Filings and 10K’s in particular. To learn more about Maj please visit www.geoinvesting.com [https://geoinvesting.com] or follow him on Twitter @majgeoinvesting. To learn more about Richard or to request a transcript of the podcast please visit www.thinkaen.com [http://www.thinkaen.com/]. Show Notes: (01:11) Maj goes over his background plus GeoInvesting, which he launched in 2007 to bring Tier One quality Microcap Research and Idea Generation to membership base. (02:22) Growing up in Pennsylvania and attending management meetings as a kid. Maj talks about his father, Peter Lynch and watching the Nightly Business Report with dad. (05:22) Seeing a management presentation at the American Stock Exchange in Philadelphia at the age of 18 and asking the tough questions :) (06:40) Talking first big multi-bagger win, Wireless Telecom Group NYSE:WTT. (08:56) Maj talks about why he invests in microcaps. Access to management, getting into new technologies and meeting a new type of investor. Microcap investors just think differently. Much less competition. (13:06) Introducing the concept of information arbitrage with Evans Sutherland. Buying the dip on misunderstood news. OTC:ESCC. (16:45) OTC:IAIC another example of information arbitrage. Initially purchased in 2018. Company helps government agencies modernize IT infrastructure. Everything an investor needed to know was in filings. (22:11) Investors should read more 10K’s and 10Q’s and put down the books. They get easier to read after some practice. (23:43) Maj talks about GeoInvesting. Premium site for members. Do intensive research. Wall Street caliber research for the everyday investor. Morning email, then weekly email every Sunday. (28:35) More detail on coverage list and GeoInvesting Model Portfolio. (29:54) GeoInvesting Principles and places they avoid. His firms edge. (32:57) Maj talks his top idea, Konatel OTCQB:KTEL. Talking government subsidies and management’s ability to use cash in a shareholder-friendly manner. (43:30) Konatel Valuation and target price. Where will it go? Power of GeoInvesting Network. Insider purchases. (47:70) Richard goes over his history with government subsidies, OTC:LICT. (50:46) Maj talks GeoInvesting Collaboration and Skull Session. (57:10) Looking at charts. (58:17) Closing remarks and contact information.

Ep. 34 - All about NFTs with Michael Lee, Jr.

We are happy to welcome back Michael Lee, Jr. In this episode, we talk to Michael and Call Participants about NFTs. As an alumnus of the Riches in the Niches Investor Podcast, Michael was the perfect guest to walk us through NFTs and the Metaverse. Michael is the Founder and CEO of Gondola Capital a firm focused on the Alternative Asset Space. *This is a recording of a Group Call that took place on October 7th, please excuse any audio issues as participants were using their mobile phones. To listen to our prior podcast with Michael please click here. Bitcoin: Few Understand This. [https://richesintheniches.libsyn.com/website/ep-18-bitcoin-few-understand-this-with-michael-lee-jr] You can reach Michael on Twitter at @MLeeJr. To learn more about Richard please visitwww.thinkaen.com [http://www.thinkaen.com/]. Show Notes: (01:15) Michael goes over his background. Talks Morgan Creek Capital, Mark Yusko and endowment investing in the Blockchain. Also talks about Ben Forman at ParaFi, Ethereum and more. (06:36) Introduction to NFTs. How Michael got into researching NFTs and how he leveraged his blockchain experience to understand it. Odell Beckham, Jr. Jay Z and other celebrities having their own avatars. (10:45) Crypto gives us the ability to transfer value at the speed of information. Michael think NFTs will be called something else five years from now. Discussion over the dynamics of the NFT market and how sales on platforms like OpenSea impact pricing. (14:20) Introduction to OnChain Monkey and other Avatars, in general. (18:14) Profile Picture PFPs represent the perfect avenue for new users to get familiar with the NFT space. Discussion over the other PFP art including Crypto Punks. Potential for sporting events to use NFTs. Mark Cuban has talked about this a lot. (22:56) Dive into the Metaverse, Michael talks about his nephew Cooper. Kids are growing up digitally native in the Metaverse. (30:39) 24 by 24 pixelated art versus 3D Generated Art. The value of a lot of NFTs is based around the artist. The real deal is that a 16-year-old artist from Afghanistan can create art and sell it anywhere in the world completely permissionless and censorship free over the blockchain. (33:19) Michael talks about energy consumption. He believes that Bitcoin is the most secure computing network the world has ever known. (35:43) Introduction to SerSleepy who goes over the Metaverse. The metaverse is a collective virtual share space, including the sum of all virtual worlds and the internet. It may contain derivatives or copies of the real world, but is distinct in augmented reality. Metaverse is made up of the prefix, meta meaning beyond and the stem verse - a back formation from universe. It’s a 3D world that allows you to be your true self. (37:32) People are already in the Metaverse creating new worlds. People are creating galleries where you can put your art. (41:08) How copying NFTs is beyond the point. The creator really matters. (45:37) Where to network all things NFT? There are various meeting hubs on Twitter and Discord where you can chat with other collectors and artists. (47:24) Question from Erin regarding NFTs and mortgages; things like a deed to a house. (49:04) Richard talks about prior Podcast Guests including Mike Cagney, CEO of Figure Technologies and Jeff Moore. Through Figure, Mike is using the Provenance Blockchain to reshape Payments, Stock Exchanges and Lending. (49:57) More remarks regarding use cases for blockchain within the Financial Services Industry. Closing comments. If you would like a full copy of this recording, please email Richard. Our interview with Mike can be found here. Financial Transactions on Blockchain with Mike Cagney. [https://richesintheniches.libsyn.com/website/ep-22-financial-transactions-on-blockchain-with-mike-cagney]

Ep. 33 - Bridge to Private Markets: The Story of P10 Holdings (NYSE:PX)

On April 26th, 2017 Robert Alpert and Clark Webb invested a combined $4.654mm of cash in exchange for a 48% interest in a prepackaged reorganization of Active Power, Inc. As of October 22, 2021, that stake is worth much more. In today’s episode, we speak with David Waters of Alluvial Capital and open it up to podcast listeners to go over this incredible transformation as well as future prospects for the company now known as P10 Holdings. David Waters is the Founder and Managing Member of Alluvial Capital. Since inception in 2014, David has been able to achieve great returns by investing in mostly unloved and under appreciated OTC stocks. David is also our first returning podcast guest. Congrats to David. To learn more about David Waters and Alluvial Capital please visit www.alluvialcapital.com [http://www.alluvialcapital.com]. For more information on Richard please visitwww.thinkaen.com. [http://www.thinkaen.com/] *This is an audio replay of a conference call held on Wednesday, October 20th, 2021. *To listen to our first interview with David earlier this year please check out Episode 3 here. [https://richesintheniches.libsyn.com/website/ep-03-over-the-counter-pink-sheet-stock-investing-with-david-waters] Show Notes: (01:28) David Waters introduction to Alluvial Capital and P10 Holdings. P10 is a Diversified Alternative Asset Manager making its debut on the NYSE. Robert Alpert and Clark Webb invested roughly $5 million in 2017. The company was then known as Active Power and had over $400 million in NOLs. First transaction was RCP Advisors, which is a lower middle market private equity shop. P10 has since done multiple transactions and used the management fees as revenue streams to offset NOLs. (08:44) Going over strategic roadmap of P10. Company should have a lot more detail out in public markets now that it is an SEC Filer. (09:50) Audience question regarding P10 and the tax credit space. (11:23) P10 Value Proposition to acquisition targets. Great platform company that allows acquiring partner to diversify and be part of a larger company. Acquiring company retains “Carry” and is able to leverage P10’s expertise in a number of areas. (14:16) David talks about the roughly $400 million in Net Operating Losses and how P10 is using it to grow in a tax-efficient manner. (17:22) Good discussion regarding valuation and how to compare P10 to other publicly traded Alternative Asset Managers. What is a fair valuation? 4-5% on an earnings yield basis; 30x’s recurring cash flow. (22:21) We discuss why P10 chose to do an IPO when it was already listed on the OTC stock market. Also go over the capital structure and Globalscape transaction. (26:50) A versus B shares in IPO. Voting and Non-Voting. How to think about it as it relates to index buying, etc. (30:12) Audience question from Doug M. David, how do you think P10 is pricing acquisitions? David responds with some historical acquisition multiples at the company and hints at a potential strategy going forward. (32:33) Doug M. goes over why he made his initial investment in P10 Holdings. (35:59) David talks about comparable Asset Management companies like Aberdeen and KKR. He also talks about how there aren’t any perfect comparable companies due to the fee structure, which could provide additional alignment with partner firms. (40:16) Discussion over EBITDA multiples and a potential range of 55-60% margin per management guidance. (44:19) More conversations about IPO dynamics, pricing range and float. Investment Bank coverage, etc. (48:34) What is the next P10? David goes over his investment criteria and focus on management quality.