Providing investors with a balanced perspective, Massif Capital

Massif Capital Research

Providing investors with a balanced perspective

Massif Capital

Research focused on providing investors with a balanced perspective on the environmental and economic realities of achieving a carbon-neutral economy for businesses within the Energy, Basic Materials and Industrial industries.

The Massif Capital Real Asset Strategy is a global long/short equity strategy built around bottom-up stock picking. We are focused on creating a portfolio of businesses from within the Energy, Basic Materials and Industrial sectors that balance the environmental and economic realities of achieving a carbon-neutral economy.

Commodities

Copper is a chemical element with symbol Cu (from Latin: cuprum) and atomic number 29. It is a soft, malleable and ductile metal with very high thermal and electrical conductivity. A freshly exposed surface of pure copper has a reddish-orange color. It is used as a conductor of heat and electricity, as a building material and as a constituent of various metal alloys, such as Sterling silver used in jewelry, cupronickel used to make marine hardware and coins and constantan used in strain gauges and thermocouples for temperature measurement.

<ul><li>Investing in copper and copper miners represents a significant opportunity for investors over the next ten to fifteen years.</li><li>But the market is more complicated than most believe, and success will require not only an understanding of the entire supply chain but also a willingness to be active.</li><li>In this post, we look at the role smelters play in the copper value chain.</li></ul>

Investing in copper and copper miners represents a significant opportunity for investors over the next ten to fifteen years.But the market is more complicated than most believe, and success will require not only an understanding of the entire supply chain but also a willingness to be active.In this post, we look at the role smelters play in the copper value chain.

Macroeconomics

<div><p></p><ul style="list-style-type: disc;"><li><p>Outperformance of Metals and Mining sector: The fund's gold, copper, and lithium investments outperformed their respective industry performance.</p></li><li><p>Interesting trends in the gold market: We examine gold prices and propose a shift from wealth-driven to fear-driven consumption patterns. We also identify several events that could reduce fear and slow gold price momentum.</p></li><li><p>The evolving situation at OCI: The fund holds a 6% position in OCI, a global fertilizer business that announced two significant asset sales in December 2023, from which we expect to receive a substantial capital return in 2024.</p></li></ul></div>

Outperformance of Metals and Mining sector: The fund's gold, copper, and lithium investments outperformed their respective industry performance.Interesting trends in the gold market: We examine gold prices and propose a shift from wealth-driven to fear-driven consumption patterns. We also identify several events that could reduce fear and slow gold price momentum.The evolving situation at OCI: The fund holds a 6% position in OCI, a global fertilizer business that announced two significant asset sales in December 2023, from which we expect to receive a substantial capital return in 2024.

Thematic (Sector/Industry)

<ul><li>This post examines China's economic strategies and their impact on global trade and geopolitical dynamics, focusing on the shift from low-value-added goods to high-value-added industries like lithium-ion batteries, solar cells, and EVs.</li><li>It highlights China's approach of integrating economic and political strategies under the concept of "China, Inc." where the state uses overcapacity as a strategic tool to further its geostrategic interests.</li><li>The current Chinese export-led strategy challenges the principles of free trade, raises concerns about the sustainability of global economic interdependence, and is the basis for fear about China dumping industrial products on developed markets.</li></ul>

This post examines China's economic strategies and their impact on global trade and geopolitical dynamics, focusing on the shift from low-value-added goods to high-value-added industries like lithium-ion batteries, solar cells, and EVs.It highlights China's approach of integrating economic and political strategies under the concept of "China, Inc." where the state uses overcapacity as a strategic tool to further its geostrategic interests.The current Chinese export-led strategy challenges the principles of free trade, raises concerns about the sustainability of global economic interdependence, and is the basis for fear about China dumping industrial products on developed markets.

A Deep Dive into Chinese Industrial Production

<div><ul><li><strong>Renewables as extractive industries:</strong> Renewable energy sources like wind and solar are extractive industries that depend on the “grade” of the natural resource to achieve sustainability, a three-dimensional concept that includes economics, social acceptance, and environmental considerations.</li><li><span style="font-size: var(--content-font-size);"><strong>The problem of low-grade resources:</strong> Deploying renewables in areas where the resource grade is too low imposes macro-level costs on the electrical system and reduces its economic and environmental sustainability through the inefficient deployment of limited resources.</span></li><li><span style="font-size: var(--content-font-size);"><strong>The problem of high-grade resources:</strong> Deploying too many renewables in areas where the resource grade is high causes value deflation, lowers the revenue of the projects, and impairs micro-level sustainability.</span></li></ul></div>

Renewables as extractive industries: Renewable energy sources like wind and solar are extractive industries that depend on the “grade” of the natural resource to achieve sustainability, a three-dimensional concept that includes economics, social acceptance, and environmental considerations.The problem of low-grade resources: Deploying renewables in areas where the resource grade is too low imposes macro-level costs on the electrical system and reduces its economic and environmental sustainability through the inefficient deployment of limited resources.The problem of high-grade resources: Deploying too many renewables in areas where the resource grade is high causes value deflation, lowers the revenue of the projects, and impairs micro-level sustainability.

<ul>
<li>2023 was a challenging year, there was a lot of volatility in both long and short books.</li>
<li>We reserve the bulk of the letter for an extended discussion of our investments in lithium and the outlook for the sector in the coming years.</li>
<li>Despite dire headlines related to EVs, we remain optimistic about a lithium rebound and skeptical that supply can grow as robustly as projected.</li>
</ul>


2023 was a challenging year, there was a lot of volatility in both long and short books.
We reserve the bulk of the letter for an extended discussion of our investments in lithium and the outlook for the sector in the coming years.
Despite dire headlines related to EVs, we remain optimistic about a lithium rebound and skeptical that supply can grow as robustly as projected.


2023 4th Qtr Letter to Investors: A Deep Dive into Lithium

Research focused on providing investors with a balanced perspective on the environmental and economic realities of achieving a carbon-neutral economy for businesses within the Energy, Basic Materials and Industrial industries