The 3 Trades That'll Win the Next Decade (Michel Mamet)
Summary
Fund Focus: The guest outlines a concentrated, global strategy across three pillars—gold, energy (with emphasis on natural gas), and industrial metals (notably copper).
Gold Thesis: He argues gold is in its third bull market since 2018, driven by geopolitical risk and rising indebtedness, with elevated central bank buying supporting the trend despite recent liquidity-driven pullbacks.
Energy Macro: Emphasizes that energy is the economy, serving as both a growth enabler and hedge, with ESG-era underinvestment setting up a favorable multi-year supply-demand backdrop.
Natural Gas Preference: Prefers natural gas over oil and coal due to a longer runway and multiple investment pathways, and has increased energy exposure this year following geopolitical shocks.
International vs Australia: Sees better value and leverage to commodity prices in international markets (notably the US and Canada) versus Australia, citing policy headwinds and weaker price transmission domestically.
Copper Exposure: Remains constructive on copper as part of industrial metals, though he notes a relatively thin mid-cap investable universe that pushes him offshore for quality names.
Policy and Majors: Points to majors like Rio Tinto, BHP, Santos, and Woodside allocating capital offshore as a warning sign for Australia’s investment climate.
Process and Alpha: Uses a macro-to-micro, highly selective process focused on aligned management and capital discipline, avoiding over-diversification and waiting for clear value catalysts.
Transcript
Trav, we have hunted down a new resource fund manager here in Australia, Michelle MameT, who has kickstarted the giraffe fund, which is gold energy resources alpha fund. Perfect for our show. We're very excited to chat with him. who've been trying to make this happen for quite some time to understand why he started this fund at this point in in his journey what the uh the crux of the idea behind the fund was the journey he's been on to date which is sort of 18 months of running this strategy before opening it up more broadly and had a lot of fun you know to date reading his newsletters and all these sorts of things so 90% up since launching the strategy 18 odd months ago um like you said launched in Australia but but kind of paradoxically has some some um yeah like views that relay down into the into the way he's allocating capital about the the attractiveness of actually allocating that capital into Australia itself. >> Yeah, you can learn a lot from the way these people set up their funds and you can see from Michelle's uh detailed due diligence, his approach, his methodical way about picking ideas and setting things up and all that sort of stuff that he's a deep thinker about all of this. So, here we go to our chat with Michelle MameT. Michelle MameT, thank you very much for for joining us. We're we're very excited to to chat. You've you're in the process. You've started this new fund that you've been investing under this strategy for for a bit over 18 months now. And the name of the fund, Giraffe, you know, speaks to to what you're you're playing at here. Gold energy resources alpha fund. It's it's the stuff we love to talk about. We're we're thrilled to to jump into it. So, I thought it would make a lot of sense to kind of hear your journey to to starting this fund and like speaking to the opportunity you specifically see in this part of the market and how you've gone about kind of setting that up. >> Yeah. No, thank you and great great to catch up. Thanks for the opportunity. Um, yeah, look, it's I mean it's pretty exciting. It feels like a long run up. You know, in many ways people say, "Oh, how exciting this is. You're about to about to launch the business." But the reality is you're working on this for about two years. So it's an extended runup feeling like you're you know you're you're almost there every every month. But um it's it's it's interesting. Um maybe I'll just sort of step back. So I um I'm I'm in I'm based in Brisbane. Um I moved out here from South Africa uh and finished off my studies at the University of Queensland a long long time ago. uh 98 I finished up here and then basically spent 25 years in the financial markets after that really in the investment banking field. I went down to Melbourne. Most of my peers in the honors program at UKQ ended up leaving the state. It was and I guess it's still the case here in Queensland that the financial markets are not very were not very deep back then and so everyone went to Sydney and Melbourne and in my case I went to work for Prince under John Wley who was a well-known Queenslander down there and he'd won all the privatizations of the Victorian government and so uh you know I thought as a young banker who wanted to get to Wall Street somehow someday no better place to go than to go and work for a business that was in the thick of a lot of transactions. Um I think they won about $20 billion of sellside mandates with the Victorian government for all those privatizations under um Jeff Kennet and um and that started off my career and so really I spent a decade at the bulge bracket end of the market um both in Australia and the US um I really wanted to get to Wall Street on that journey. For me it was really about getting to I figured if you're going to work in financial markets there's no point playing in 1% of the global economy. you might as well go to 20 or 30%. And if you're going to do that, you might as well get to Wall Street. And so that was kind of my dream. And um so I got there after about 10 years uh with UBS, went to Dallas, Houston, and then to New York. And it was really just a terrific experience um learning about the financial markets and um um and that was really in a coverage investment banking role. So there you're spending a lot of time with CEOs and chairs and executives. you learn about your particular industry vertical and you get a deep deep level of knowledge and in the US it's incredible like the specialization there is just off the charts deep like the depth around just one vertical in one sector is you know stratospherically larger than just the entire sector in Australia. So I just found the specialization and the knowledge base and the capabilities were just quite immense. It was really quite quite an all inspiring experience. Um and then I basically we had our first child in New York City and um little little uh little fellow and New York became a very difficult difficult city to raise a young kid. So we moved back to Oz and went back to Melbourne and then I joined um a couple of investment bankers that were setting up a boutique investment bank at the time. So funny Burgess who had been running global M&A for Deutsche Bank in London run the Australian business for a while. He was setting up a business called Flagstaff Partners. And at the time, I'd been I'd done a short stint as a turnaround CFO for a listed company. And he said, "Look, would you like to join?" And I thought, "Oh, this is pretty exciting. I've done a decade in the BS bracket of the market. I enjoyed it. On the whole, there's there's good and bad, but on the whole, it was an extraordinary experience." And um and I thought, "Oh, this will be a bit different actually. This will be around the M&A space. it'll be very focused, independent thinking, working with one of the best practitioners in the market and we'll build the business. And so, yeah, I did that for 15 years. Um, yeah, and then co came along and, you know, changed Victoria dramatically and that led us to be moving up to Queensland somewhat unexpectedly. >> It's interesting. There was a comment there that that I you wanted to expose yourself to to 100% of the market. not not be narrowed narrowed in but the name of graph by definition is narrowed in to gold energy and resources. So what's what's what's what's informed that that thinking? Uh yes. So G GRF is obviously the the acronym uh around gold, energy, resources uh essentially as the verticals, but the the the way I like to say it to people is it's it's broad in terms of what we focus on across the broader commodities complex, but it's narrow in the sense that we really focus really deep around a particular set of thematics. You know that the first is precious metals, which is the G gold. Um the second is energy which is the five commodities and related industries in the energy and then the third is industrial metals which is the R. Yeah know clearly I can't spell. >> So you you spoke about the intense industry specialization that you you noticed throughout your career specifically in the US there but how did you actually find your way into the the natural resources part of the market? Was that the the whole time or did you eb and flow and eventually find your way there? >> Yeah no I eb and flow. Look, I so when I joined credit Swiss, so this is a long time ago, but they had um they basically didn't have they didn't have sector teams uh when I was starting in the industry. So I know both of you guys worked at Argon and Pquari. Uh Pquari is very deep now, but um when I started it was actually generalist. So I went into a generalist pool and I worked on um food ingredients businesses uh tech sorry tech telco IPO so Telstra 2's secondary offering I should say. Um, I worked on an iron ore takeover. Um, I worked in the energy space. I worked in the utility space a lot. And so, yeah, I got spread pretty broad in the beginning. And then sort of what happened was just natural. I think I just gravitated towards the industries that had commodity exposures. I just loved them. I found them. I just I think it was the complexity was probably the thing that attracted me to it because there's just so much complexity across the industry relative to the other industries. And then the people, you know, and and then probably my colleagues to be honest, the people that you work with also has a big driver because ultimately it's about the people you work with and the clients you have. So probably a combination of all of that, Jose. >> Yeah, absolutely. That that makes a lot of sense. The the people in this industry just make it utterly fantastic. There's a a component of your background which I think kind of shines through in in how you invest. So it's a a very methodical approach. you're not taking 80 odd positions, you know, it's I think it says sort of 15 to 30 and you kind of sit at 25 right now and you do intense DD. Would love just to hear a bit more about the the process of of finding names and and how they kind of sit within the portfolio and how you go about building that portfolio. >> I basically said, look, I'm I'm going to do this approach this problem a little bit like or this opportunity a little bit like I do a strategic review for one of the big corporate clients. So, you know, we we worked with a lot of very large and small corporate clients in Australia. And so, I did what we'd call strategic review. So, just a a fresh set of a fresh review across the commodity spectrum to really retest all my thinking because after 25 30 years, my fear was I would have a number of biases that were there that I unconscious or conscious biases. And so I basically took a fresh look and where I landed on the design was that we would end up having these three pillars and they're very deliberate in terms of how we think because they essentially reflect our capital allocation approach. But that was the precious metals, the energy and the industrial metals that I was talking about. Um and and so so that's essentially how we think about where we allocate our time and resources. And then if you sort of think about each of those, precious metals is really about gold. The energy is really about gas and to a degree uranium. And then the industrial metals are really about copper. Okay? And we can talk about that in detail if you'd like. But so it's so like I said, broad but then very narrow around where we focus on the macro. Really what I'm trying to do there is look at everything with a fresh set of eyes. um and and have a really deep understanding of of medium to long-term trends. Um and you dive deep into demand, supply, new mind, construction, players, concentration positions, ge the geology, the technology, all all the sort of things that you want to understand. And where you end up landing at the end of all of that is that it really is just about increasing your confidence levels on the medium-term horizon. That's that's the way I think about it. And so after you finish after I finish that exercise, then it sort of allows me to then go deep on the companies around the and and what we sort of tend to do there is we've got a number of strategies that we run within the investments. So I broadly categorize into three three strategies. Um and we we look for opportunities around those strategies. And so it's just the usual usual approach very broad filtering. um you know get rid of opportunities really quickly, be very disciplined, be very efficient and then when things line up with what we're looking for then we sort of go through a series of gates around looking at the opportunity. Um, so yeah, it is I guess it is very method methodological really. It's the way I think and the way I've always operated >> and and the other point that that really jumps out is like by design from the beginning global and maybe maybe later we we'll chat about where Australia sits in the world in in in a bigger way but very keen from the start you were to to make sure that you can invest anywhere in the world. Why was that? I think number one it reflects my concerns around Australia and the direction it's going um in these sectors uh but probably generally uh number two um my experience you know I grew up in Africa French French family so Europe European lived in the states lived in Australia I've got a global mindset um and so that's part of it. Number three, you know, you get more ch you've got more choice. And so in the end, if you're actually trying to build a portfolio of quality, you're going to increase the opportunity set that's available to you if you're going broader. And then probably the last thing I'd say is that actually the markets are cheaper internationally because in Australia, we've got this huge pool of capital. We've got a super ocean pool of $4 trillion chasing the opportunities here. And so if you sort of look at the mix of resources companies, you got the big guys, then you got a long tail of what I call hopes and dreams, and then you've got sort of a really thin midcap space. Whereas if you look offshore, you've actually got a lot more stuff in the midcap space, a lot more depth really, and I mean quality and depth. And so um and because those markets are not over capitalized, they're by definition cheaper. And because they're not heavily resources industry or countries or industries, they're often often misunderstood and so there presents the opportunity. Um so yeah, it's a whole series of reasons. Um Jonas, it's not just one thing. It's uh and and I'd love to hear your you expand a bit on your views on on Australia and tying in with your kind of like your international context because um one one observation that you make in your writing is is that look at the majors. Are they are they allocating their capital into Australia? Like the incremental marginal dollar is that going into Australia or is or is that going offshore? So why as an investor should should you be allocating the marginal dollar? Yeah, this is I think this is a really really big problem for our country and it's not we don't talk about it enough because if our if our champions of our resources sector in our country are not investing in the country and I don't blame them by the way I'm not they're certainly not having a go I think they're very rational um why are we not all going like the alarm bell should go off and we should be going why what are we doing wrong what should we be asking them that we should improve to make the investment conditions better for us to attract their dollars because if we can't attract the domestic miners that have built our country, we got no chance of attracting the foreign capital. And uh so for me that's a really bad sign. And so when I look at um Rio, BHP, Santos, Woodside, the message is consistent and it and in fact it's not consistent. It's actually actually getting worse >> and and and the recent budget. Any any comments on on what direction that that kind of >> puts us on. >> Um well, I mean I think I'll say what everyone else has said probably. I don't know if I'll have a unique view there. I mean I it's clear the government needs to raise money. That's a revenue raising exercise. They're trying to make an argument like around the that the the negative gearing changes that it's about housing supply. Like that's complete rubbish. If you care about housing supply, don't you tackle the demand variable and the supply variable? You don't you don't change it with tax policy. That's just complete nonsense. So look, I just think it's all a bit of a lie. I think they've just got to be a bit honest with the public and deal with this properly like and treat us like grown-ups and they just don't seem to be able to do that. So um I think it's going to chase away more private capital. I think it's going to chase away entrepreneurship uh and risk capital will decline and there'll be a halt in investment in the country until this becomes clear and until until the government looks like it's acting like a uncertain citizen. >> Quickly JD, do you feel it? The lithium price is moving again. It's moving fast, but we need to evolve how we're actually selling the metal. >> 100% I do feel it. I can see it on the screens. The stocks are flying. But there's a real risk right now, mate, for the mining companies, the producers. The risk is that they don't know that they're getting fair value for the product that they're selling. >> You know how you get fair value? You do digital auctions. And it just so happens that our partner Metalub solves this exact thing. And companies like Liontown are all over it, mate. They are already using this in their processes to sell their product. >> 100%. You mentioned Line Town. I know in their very first auction, the first one they did, they got buyers from nine different countries. Heaps of different buyers getting inboard. That is happening in real time. You're no longer waiting on those daily or even worse weekly updates to come through. >> That's just one of the many perks, JD. There's a whole bunch of perks here. The market is growing up, JD, and digital price discovery becoming a major part of this. >> 100%. We spoke about the 2.6% cost improvement you get on your product. That is one of just a heap of perks you can get. So, go to metalsshub.com/moneyofmind and check them out. Can we dive deeper into to gold like where it is right now specifically everything that's happened with Iran and and the war going on there because >> it's had a phenomenal past three or four years if you if you pan out a little bit and it's had a very interesting past three or four months looking out. So what do you make of the the more recent movements and derived from that the the valuations that you see across the board with the equities >> since 2018 gold has been in its third bull market since the 70s and the the reasons for that are pretty well known. Um you know if you sort of really think about the two big drivers it's geopolitical and it's concerns around uh indebtedness in the financial system. Those are the two macro drivers that sit there and they're they're probably if you sit and think about what's happened since 2018. You know, we had that major catalyst in 22 with Ukraine, Russia and then that led to obviously elevated central bank buying at about two and a halfx the historic volumes of gold purchases and that really drove the first wave of the gold price rates and then that followed with the the ETF buying or the investor buying. Um, but if I sort of think about what does what does that mean? Like how how long does a cycle like this last and how long can it last? If those are the two big drivers behind the bull market. Well, the natural question you got to ask yourself is have those two drivers changed materially in a very different way since then? And I think it's pretty hard to get to a conclusion that suggests that the geopolitical landscape has settled down and calmed down and that the fiscal position of every government has improved you know so you know rather than just talking about the US you've got to think about China you've got to think about Europe maybe you think about Australia um so you know if you think about those two big drivers things have got worse not better so therefore the outlook for for for gold in the in the short to midterm looks good Um but in terms of the recent sell off look that's pretty well documented. I think um we've got a liquidity there's a liquidity shift that's occurring in the market. You know we've got the straight up almost um set of events which are pretty dramatic by all accounts. Um and um and the the consequences of that is we're having a shift like that. This comes back to energy and I'll come back to your question Travis at some point. But if you think about energy, there's two things that the world seems to have lost track of here. One is energy is the economy. If you don't have good, you know, cheap reliable energy, you don't have an economy. It's like a fundamental concept that I wish the people in Canra or in many western governments could try to get their head around. But um if you don't have that cheap reliable energy, you don't have an economy. I mean if you don't have economy, you don't have jobs, taxes or anything to offer. Um and then the point number two would be that energy is actually an interesting hedge because if you have these conflicts and say we talk about oil just as a simple example and the oil price runs up dramatically what you end up having is all the countries that are short oil or you know or not not long um see a massive escalation in their cost base and they see margin compression and so you're essentially having a transfer of value from one economy to another or part one parts of the world to the other. And so what happens then? Well, then the c countries that are not long oil are short on liquidity. So they've got to find liquidity. Where do they find liquidity in a world where they've shifted from treasuries to gold? They found it in gold. So you've had a liquidity squeeze and that's driven the gold price down. Um and that can take place in the form of defending a currency like Turkey. um or it can take place in in another form like a Middle Eastern country that used to should be benefiting from our oil prices but can't sell the crude and so now they can't sell the crude. In fact, they might have even done something like a swap uh or put some some some got some leverage in place around that potential transaction and they're getting a liquidity squeeze by not being able to sell uh product and so then they need to find liquidity. So they'll some sell treasuries, gold or uh US equities. And so it's all about liquidity in my mind. So um I think that's really the biggest driver behind the short-term movements in gold more recently. >> There's a short term and then there's maybe long-term disconnect and you touched on homes there. Um you still think the market's underpricing the impacts >> uh massively. You know, if you sort of put the the chance of a quick resolution through some major actors getting involved aside and you just look at the fundamentals in terms of what this has done not just to oil but to all other der energy derivatives and then all the energy intensive industries this is like this is off the charts you know significant like it's we haven't seen something like this if I went back I think I wrote um wrote this in in the last investor letter. If you look at the Iran crisis, if you look at the oil embargo in the 70s, so 1973, 1979, this is multiples larger in terms of impact. So yeah, no, this is this is really a big deal and the markets are just kind of cruising along. So it's quite interesting. >> How has your exposure to the energy complex changed from the beginning of the year to now? the beginning of the year we probably had um about 15% of NAV in energy and that was partly because remember there's been some compression in the gold price so that the NAV goes up to say maybe 20% as a result of that um and then so so we've gone from about 15% to 20% just through the change in the shift in the in the the um valuations across the the different sectors and then we've actually lifted our position. Um, we lifted it twice. Once after the initial attacks and then once more recently when I wrote that piece about my views on the energy market, I sort of sat there and I thought, geez, this is interesting. It's given me the chance to have a fresh look at this and I'm I'm probably um a lot more bullish than I I probably appreciated. So, we lifted a position again. >> And and around the world, where do you see the most attractive energy exposures? I mean we've got positions in in all in Australia, Canada and in the US. The international markets have discounted the crude price more significantly than I have found here. And then I also find that they've got there are better business models and better capability of really good capability and depth I should say not better. I mean we've got some great people here. Um and but but more importantly they get the leverage to the price. So like if you look at the Aussie market, you just get no price movement because every time the industry does well, the government comes in and just whacks them. And so as an investor, you actually can't get the exposure you think you're getting because the government's there sort of preventing rational market behavior from occurring. So it's tough to invest here, I'd say, in that space. If we jump back to to gold again, because I can't stop kind of thinking about where where gold kind of goes from here and and I'm so curious about this recent move, but just stepping back once more and looking at the the scale of the gold market versus, you know, other perhaps reserves that central banks have versus its overall size versus against global equities and these sorts of things. >> Do do you ever think about it in that kind of lens? like it now stands at perhaps 30 odd% of central bank reserves topping out treasuries for the first time in in in in quite a while. Do you think there's an upper bound on these sorts of things? >> But yeah, definitely. So I look at how much so the sort of things I've looked at is how much exposure do family officers or institutional investors have to the natural resources sector? How much do they have to gold? Do they how much do they have to gold uh investments? So equities or derivatives of the gold price? You can look at all of those data points and you you end up in this with the same conclusion on every single one of them, Jonas, and and that is that it's under. >> And to hone in specifically on the equity valuations of of the gold mining companies, >> where are we at right now? Like a lot of them doubled late last year and they've since kind of tempered that that excitement. >> Uranium, tell me about uranium and then copper. >> Um, yeah. Yeah. So well I mean the energy thematic as a broad thematic is really about two things. One it's about the kind of the the ESG movement that took you sort of infected um the world for a period of time and you know that that that is interesting because what it did was it just created a massive underinvestment across the energy value chain outside of renewables. And so when you have underinvestment and you have continued demand for the product because most people don't know this but oil demand has grown every year for the last 25 years by I think one year. Um so you know oil demand hasn't changed and therefore gas demand growth hasn't slowed and therefore LG demand growth. If you sort of go through all of these things, you find that it was just a capital strike for a lot of the nonrenewable energy assets. And so that underinvestment creates a wonderful supply demand situation. So that's the that's the one of the big drivers behind the thinking around energy. And then the other one was what I explained earlier, the hedge, right? and the interesting interplay that you have between all the commodities and energy because if energy truly is the economy which it is and if you look at the cost curve for a gold producer or a copper producer you'll find that there's a substantial exposure to energy. So if energy goes up guess what the cost curve for everything else goes up. So um those are the two macro drivers Travis around why we focus and then sort of why gas not oil why not coal why not renewables why not uranium I guess is your next question and um gas is because it's got a long-term future far longer than I can see uh in place for oil and for coal and I don't think either of those are going away by the way I just I just think it's just a it's got a longer runway grows faster and um it's there are a number of different ways you can invest around it and um so so those are broadly sort of the reasons for gas and then for uranium we're at the early stages of looking into the sector I haven't finished the macro work that I described to you earlier so until we finish that then I don't intend to invest in the companies but um the broad thinking there is around you know just the mega mega thematics you've got energy is economy so clearly if you're going to have all these AI data center rollouts it's energy intensive if you're going They need more more energy. And number two, you know, I suspect in reality after the straits of calm down and we don't know when that is. Is that tomorrow or is that 6 months? I think you're going to find energy security is going to be front and center for everyone and that'll manifest itself quite nicely. I think in your >> the philosophy of like actually getting alpha like picking picking the you know the the outperformers in the industry. Um like you mentioned management teams but like if you look at if you look at you know mining stocks, resources stocks, there'll be um you know a hu huge huge amount of uh commodity beta involved in in their movements. But then like where where do you actually like where does that what's your philosophy on actually identifying and and getting the the alpha in any um you know with within within these like verticals that you actually choose? we essentially sort of tend to invest midcycle in the development phase. So from the development phase onwards through to production and we're really looking for in an ideal world we're looking for um very align highly aligned uh management teams or individuals. Um so people who have a lot of skin in the game, people who have been operating in that particular jurisdiction or uh play type teams that have potentially come together, people have a very clear focus on value rather than volume. Um a bunch of variables that I that I described that we see as key ingredients to successful value creation in the sector. And a lot of those variables actually aren't just in mining. They're actually just principles for business. It's just the mining sector just I think you know has probably a lower proportion of focus on these variables. >> I I I suspect part of it is because incredibly capital intensive businesses. So getting like sufficient levels of skin in the game becomes a very challenging thing when you're faced with constant equity dilution. Uh well that's one that's one piece of it. >> Yeah. Know I think I think it's as a broader comment it's and I'm >> I've seen this obviously a lot right. So >> I think in this this industry is unique because there's a high level of technical skill that's required. So whether you're a geologist or you know a process engineer or reservoir engineer whatever it is these are technical skills and um when you've got such specialized technical skills it's very hard for one person to have all the skill sets in a small company like it's it's an unfair expectation. You just can't have all those skill sets no one has. Um and therefore by definition you have to have fill it up with a team. And I've seen a lot of companies where I don't know probably sounds wrong but where you just don't see people valuing the different skill sets that are required to make a company successful. And and in fact like in the mining sector back to what you said with the capital intensity. One of the most important things in in the mining sector is actually how you access the capital. Right. It's an important step. And so if you don't have a team that's working really well with the CFO as an example or a CFO that really knows his his way around the capital markets or the capital financing options or they're not focusing on managing dilution collectively. You know, I've seen I've probably seen more companies blow themselves up and destroy value in that step alone. And so yeah, I think that I think there's a few reasons as to why that is in the mining space. M the the last commodity that we haven't yet spoken about that you mentioned is copper. And just to like quickly frame it, no surprise to anyone, but like copper is maybe the only commodity out of all the ones we've spoken about that is actually pretty widely popular. Like you you hear people in the tech world talking about the need for copper and these sorts of things. So how do you come about um you know tackling this one with a with a kind of differentiated view on on copper? What's interesting about copper is you can't really get a good exposure to it in Australia. There aren't there isn't a depth of the midcaps that I was describing to you here. And so therefore, by definition, it chases you offshore. And then when you go offshore, to be honest, there actually isn't a long list of of of companies that are in that space. You know that if I compare that to say precious metals, you know, I was mapping it out, I think a few days ago, it's it's it's about a third of my watch list and the companies I focus on and precious silver and PGMs versus copper is about a third the size. So that there just isn't a lot of depth in that market. >> It's been it's been interesting to to understand your perspectives, how you see the the world and you know your view on the commodities that we we love dearly and and follow all the time. So yeah, looking forward to catching up again in in future and hearing the the specific names you you came to chat about. >> Right. No, thanks and thanks for the thanks for the interest and thanks for the good questions. It was uh it was interesting. It was fun. Nice to meet you both. I really enjoy your show. You guys did a great job um talking about the industry and educating people about the ins and outs of it and uh well done. Well done to you. Thank you to Sanvic ground support medalshub intrlinks focus the platform by market techch exceeded capital and cost mine intelligence for making it all happenu money miners. Now remember I'm an idiot JD is an idiot. If you thought any of this was anything other than entertainment, you're an idiot and you need to read our disclaimer.
The 3 Trades That'll Win the Next Decade (Michel Mamet)
Summary
Transcript
Trav, we have hunted down a new resource fund manager here in Australia, Michelle MameT, who has kickstarted the giraffe fund, which is gold energy resources alpha fund. Perfect for our show. We're very excited to chat with him. who've been trying to make this happen for quite some time to understand why he started this fund at this point in in his journey what the uh the crux of the idea behind the fund was the journey he's been on to date which is sort of 18 months of running this strategy before opening it up more broadly and had a lot of fun you know to date reading his newsletters and all these sorts of things so 90% up since launching the strategy 18 odd months ago um like you said launched in Australia but but kind of paradoxically has some some um yeah like views that relay down into the into the way he's allocating capital about the the attractiveness of actually allocating that capital into Australia itself. >> Yeah, you can learn a lot from the way these people set up their funds and you can see from Michelle's uh detailed due diligence, his approach, his methodical way about picking ideas and setting things up and all that sort of stuff that he's a deep thinker about all of this. So, here we go to our chat with Michelle MameT. Michelle MameT, thank you very much for for joining us. We're we're very excited to to chat. You've you're in the process. You've started this new fund that you've been investing under this strategy for for a bit over 18 months now. And the name of the fund, Giraffe, you know, speaks to to what you're you're playing at here. Gold energy resources alpha fund. It's it's the stuff we love to talk about. We're we're thrilled to to jump into it. So, I thought it would make a lot of sense to kind of hear your journey to to starting this fund and like speaking to the opportunity you specifically see in this part of the market and how you've gone about kind of setting that up. >> Yeah. No, thank you and great great to catch up. Thanks for the opportunity. Um, yeah, look, it's I mean it's pretty exciting. It feels like a long run up. You know, in many ways people say, "Oh, how exciting this is. You're about to about to launch the business." But the reality is you're working on this for about two years. So it's an extended runup feeling like you're you know you're you're almost there every every month. But um it's it's it's interesting. Um maybe I'll just sort of step back. So I um I'm I'm in I'm based in Brisbane. Um I moved out here from South Africa uh and finished off my studies at the University of Queensland a long long time ago. uh 98 I finished up here and then basically spent 25 years in the financial markets after that really in the investment banking field. I went down to Melbourne. Most of my peers in the honors program at UKQ ended up leaving the state. It was and I guess it's still the case here in Queensland that the financial markets are not very were not very deep back then and so everyone went to Sydney and Melbourne and in my case I went to work for Prince under John Wley who was a well-known Queenslander down there and he'd won all the privatizations of the Victorian government and so uh you know I thought as a young banker who wanted to get to Wall Street somehow someday no better place to go than to go and work for a business that was in the thick of a lot of transactions. Um I think they won about $20 billion of sellside mandates with the Victorian government for all those privatizations under um Jeff Kennet and um and that started off my career and so really I spent a decade at the bulge bracket end of the market um both in Australia and the US um I really wanted to get to Wall Street on that journey. For me it was really about getting to I figured if you're going to work in financial markets there's no point playing in 1% of the global economy. you might as well go to 20 or 30%. And if you're going to do that, you might as well get to Wall Street. And so that was kind of my dream. And um so I got there after about 10 years uh with UBS, went to Dallas, Houston, and then to New York. And it was really just a terrific experience um learning about the financial markets and um um and that was really in a coverage investment banking role. So there you're spending a lot of time with CEOs and chairs and executives. you learn about your particular industry vertical and you get a deep deep level of knowledge and in the US it's incredible like the specialization there is just off the charts deep like the depth around just one vertical in one sector is you know stratospherically larger than just the entire sector in Australia. So I just found the specialization and the knowledge base and the capabilities were just quite immense. It was really quite quite an all inspiring experience. Um and then I basically we had our first child in New York City and um little little uh little fellow and New York became a very difficult difficult city to raise a young kid. So we moved back to Oz and went back to Melbourne and then I joined um a couple of investment bankers that were setting up a boutique investment bank at the time. So funny Burgess who had been running global M&A for Deutsche Bank in London run the Australian business for a while. He was setting up a business called Flagstaff Partners. And at the time, I'd been I'd done a short stint as a turnaround CFO for a listed company. And he said, "Look, would you like to join?" And I thought, "Oh, this is pretty exciting. I've done a decade in the BS bracket of the market. I enjoyed it. On the whole, there's there's good and bad, but on the whole, it was an extraordinary experience." And um and I thought, "Oh, this will be a bit different actually. This will be around the M&A space. it'll be very focused, independent thinking, working with one of the best practitioners in the market and we'll build the business. And so, yeah, I did that for 15 years. Um, yeah, and then co came along and, you know, changed Victoria dramatically and that led us to be moving up to Queensland somewhat unexpectedly. >> It's interesting. There was a comment there that that I you wanted to expose yourself to to 100% of the market. not not be narrowed narrowed in but the name of graph by definition is narrowed in to gold energy and resources. So what's what's what's what's informed that that thinking? Uh yes. So G GRF is obviously the the acronym uh around gold, energy, resources uh essentially as the verticals, but the the the way I like to say it to people is it's it's broad in terms of what we focus on across the broader commodities complex, but it's narrow in the sense that we really focus really deep around a particular set of thematics. You know that the first is precious metals, which is the G gold. Um the second is energy which is the five commodities and related industries in the energy and then the third is industrial metals which is the R. Yeah know clearly I can't spell. >> So you you spoke about the intense industry specialization that you you noticed throughout your career specifically in the US there but how did you actually find your way into the the natural resources part of the market? Was that the the whole time or did you eb and flow and eventually find your way there? >> Yeah no I eb and flow. Look, I so when I joined credit Swiss, so this is a long time ago, but they had um they basically didn't have they didn't have sector teams uh when I was starting in the industry. So I know both of you guys worked at Argon and Pquari. Uh Pquari is very deep now, but um when I started it was actually generalist. So I went into a generalist pool and I worked on um food ingredients businesses uh tech sorry tech telco IPO so Telstra 2's secondary offering I should say. Um, I worked on an iron ore takeover. Um, I worked in the energy space. I worked in the utility space a lot. And so, yeah, I got spread pretty broad in the beginning. And then sort of what happened was just natural. I think I just gravitated towards the industries that had commodity exposures. I just loved them. I found them. I just I think it was the complexity was probably the thing that attracted me to it because there's just so much complexity across the industry relative to the other industries. And then the people, you know, and and then probably my colleagues to be honest, the people that you work with also has a big driver because ultimately it's about the people you work with and the clients you have. So probably a combination of all of that, Jose. >> Yeah, absolutely. That that makes a lot of sense. The the people in this industry just make it utterly fantastic. There's a a component of your background which I think kind of shines through in in how you invest. So it's a a very methodical approach. you're not taking 80 odd positions, you know, it's I think it says sort of 15 to 30 and you kind of sit at 25 right now and you do intense DD. Would love just to hear a bit more about the the process of of finding names and and how they kind of sit within the portfolio and how you go about building that portfolio. >> I basically said, look, I'm I'm going to do this approach this problem a little bit like or this opportunity a little bit like I do a strategic review for one of the big corporate clients. So, you know, we we worked with a lot of very large and small corporate clients in Australia. And so, I did what we'd call strategic review. So, just a a fresh set of a fresh review across the commodity spectrum to really retest all my thinking because after 25 30 years, my fear was I would have a number of biases that were there that I unconscious or conscious biases. And so I basically took a fresh look and where I landed on the design was that we would end up having these three pillars and they're very deliberate in terms of how we think because they essentially reflect our capital allocation approach. But that was the precious metals, the energy and the industrial metals that I was talking about. Um and and so so that's essentially how we think about where we allocate our time and resources. And then if you sort of think about each of those, precious metals is really about gold. The energy is really about gas and to a degree uranium. And then the industrial metals are really about copper. Okay? And we can talk about that in detail if you'd like. But so it's so like I said, broad but then very narrow around where we focus on the macro. Really what I'm trying to do there is look at everything with a fresh set of eyes. um and and have a really deep understanding of of medium to long-term trends. Um and you dive deep into demand, supply, new mind, construction, players, concentration positions, ge the geology, the technology, all all the sort of things that you want to understand. And where you end up landing at the end of all of that is that it really is just about increasing your confidence levels on the medium-term horizon. That's that's the way I think about it. And so after you finish after I finish that exercise, then it sort of allows me to then go deep on the companies around the and and what we sort of tend to do there is we've got a number of strategies that we run within the investments. So I broadly categorize into three three strategies. Um and we we look for opportunities around those strategies. And so it's just the usual usual approach very broad filtering. um you know get rid of opportunities really quickly, be very disciplined, be very efficient and then when things line up with what we're looking for then we sort of go through a series of gates around looking at the opportunity. Um, so yeah, it is I guess it is very method methodological really. It's the way I think and the way I've always operated >> and and the other point that that really jumps out is like by design from the beginning global and maybe maybe later we we'll chat about where Australia sits in the world in in in a bigger way but very keen from the start you were to to make sure that you can invest anywhere in the world. Why was that? I think number one it reflects my concerns around Australia and the direction it's going um in these sectors uh but probably generally uh number two um my experience you know I grew up in Africa French French family so Europe European lived in the states lived in Australia I've got a global mindset um and so that's part of it. Number three, you know, you get more ch you've got more choice. And so in the end, if you're actually trying to build a portfolio of quality, you're going to increase the opportunity set that's available to you if you're going broader. And then probably the last thing I'd say is that actually the markets are cheaper internationally because in Australia, we've got this huge pool of capital. We've got a super ocean pool of $4 trillion chasing the opportunities here. And so if you sort of look at the mix of resources companies, you got the big guys, then you got a long tail of what I call hopes and dreams, and then you've got sort of a really thin midcap space. Whereas if you look offshore, you've actually got a lot more stuff in the midcap space, a lot more depth really, and I mean quality and depth. And so um and because those markets are not over capitalized, they're by definition cheaper. And because they're not heavily resources industry or countries or industries, they're often often misunderstood and so there presents the opportunity. Um so yeah, it's a whole series of reasons. Um Jonas, it's not just one thing. It's uh and and I'd love to hear your you expand a bit on your views on on Australia and tying in with your kind of like your international context because um one one observation that you make in your writing is is that look at the majors. Are they are they allocating their capital into Australia? Like the incremental marginal dollar is that going into Australia or is or is that going offshore? So why as an investor should should you be allocating the marginal dollar? Yeah, this is I think this is a really really big problem for our country and it's not we don't talk about it enough because if our if our champions of our resources sector in our country are not investing in the country and I don't blame them by the way I'm not they're certainly not having a go I think they're very rational um why are we not all going like the alarm bell should go off and we should be going why what are we doing wrong what should we be asking them that we should improve to make the investment conditions better for us to attract their dollars because if we can't attract the domestic miners that have built our country, we got no chance of attracting the foreign capital. And uh so for me that's a really bad sign. And so when I look at um Rio, BHP, Santos, Woodside, the message is consistent and it and in fact it's not consistent. It's actually actually getting worse >> and and and the recent budget. Any any comments on on what direction that that kind of >> puts us on. >> Um well, I mean I think I'll say what everyone else has said probably. I don't know if I'll have a unique view there. I mean I it's clear the government needs to raise money. That's a revenue raising exercise. They're trying to make an argument like around the that the the negative gearing changes that it's about housing supply. Like that's complete rubbish. If you care about housing supply, don't you tackle the demand variable and the supply variable? You don't you don't change it with tax policy. That's just complete nonsense. So look, I just think it's all a bit of a lie. I think they've just got to be a bit honest with the public and deal with this properly like and treat us like grown-ups and they just don't seem to be able to do that. So um I think it's going to chase away more private capital. I think it's going to chase away entrepreneurship uh and risk capital will decline and there'll be a halt in investment in the country until this becomes clear and until until the government looks like it's acting like a uncertain citizen. >> Quickly JD, do you feel it? The lithium price is moving again. It's moving fast, but we need to evolve how we're actually selling the metal. >> 100% I do feel it. I can see it on the screens. The stocks are flying. But there's a real risk right now, mate, for the mining companies, the producers. The risk is that they don't know that they're getting fair value for the product that they're selling. >> You know how you get fair value? You do digital auctions. And it just so happens that our partner Metalub solves this exact thing. And companies like Liontown are all over it, mate. They are already using this in their processes to sell their product. >> 100%. You mentioned Line Town. I know in their very first auction, the first one they did, they got buyers from nine different countries. Heaps of different buyers getting inboard. That is happening in real time. You're no longer waiting on those daily or even worse weekly updates to come through. >> That's just one of the many perks, JD. There's a whole bunch of perks here. The market is growing up, JD, and digital price discovery becoming a major part of this. >> 100%. We spoke about the 2.6% cost improvement you get on your product. That is one of just a heap of perks you can get. So, go to metalsshub.com/moneyofmind and check them out. Can we dive deeper into to gold like where it is right now specifically everything that's happened with Iran and and the war going on there because >> it's had a phenomenal past three or four years if you if you pan out a little bit and it's had a very interesting past three or four months looking out. So what do you make of the the more recent movements and derived from that the the valuations that you see across the board with the equities >> since 2018 gold has been in its third bull market since the 70s and the the reasons for that are pretty well known. Um you know if you sort of really think about the two big drivers it's geopolitical and it's concerns around uh indebtedness in the financial system. Those are the two macro drivers that sit there and they're they're probably if you sit and think about what's happened since 2018. You know, we had that major catalyst in 22 with Ukraine, Russia and then that led to obviously elevated central bank buying at about two and a halfx the historic volumes of gold purchases and that really drove the first wave of the gold price rates and then that followed with the the ETF buying or the investor buying. Um, but if I sort of think about what does what does that mean? Like how how long does a cycle like this last and how long can it last? If those are the two big drivers behind the bull market. Well, the natural question you got to ask yourself is have those two drivers changed materially in a very different way since then? And I think it's pretty hard to get to a conclusion that suggests that the geopolitical landscape has settled down and calmed down and that the fiscal position of every government has improved you know so you know rather than just talking about the US you've got to think about China you've got to think about Europe maybe you think about Australia um so you know if you think about those two big drivers things have got worse not better so therefore the outlook for for for gold in the in the short to midterm looks good Um but in terms of the recent sell off look that's pretty well documented. I think um we've got a liquidity there's a liquidity shift that's occurring in the market. You know we've got the straight up almost um set of events which are pretty dramatic by all accounts. Um and um and the the consequences of that is we're having a shift like that. This comes back to energy and I'll come back to your question Travis at some point. But if you think about energy, there's two things that the world seems to have lost track of here. One is energy is the economy. If you don't have good, you know, cheap reliable energy, you don't have an economy. It's like a fundamental concept that I wish the people in Canra or in many western governments could try to get their head around. But um if you don't have that cheap reliable energy, you don't have an economy. I mean if you don't have economy, you don't have jobs, taxes or anything to offer. Um and then the point number two would be that energy is actually an interesting hedge because if you have these conflicts and say we talk about oil just as a simple example and the oil price runs up dramatically what you end up having is all the countries that are short oil or you know or not not long um see a massive escalation in their cost base and they see margin compression and so you're essentially having a transfer of value from one economy to another or part one parts of the world to the other. And so what happens then? Well, then the c countries that are not long oil are short on liquidity. So they've got to find liquidity. Where do they find liquidity in a world where they've shifted from treasuries to gold? They found it in gold. So you've had a liquidity squeeze and that's driven the gold price down. Um and that can take place in the form of defending a currency like Turkey. um or it can take place in in another form like a Middle Eastern country that used to should be benefiting from our oil prices but can't sell the crude and so now they can't sell the crude. In fact, they might have even done something like a swap uh or put some some some got some leverage in place around that potential transaction and they're getting a liquidity squeeze by not being able to sell uh product and so then they need to find liquidity. So they'll some sell treasuries, gold or uh US equities. And so it's all about liquidity in my mind. So um I think that's really the biggest driver behind the short-term movements in gold more recently. >> There's a short term and then there's maybe long-term disconnect and you touched on homes there. Um you still think the market's underpricing the impacts >> uh massively. You know, if you sort of put the the chance of a quick resolution through some major actors getting involved aside and you just look at the fundamentals in terms of what this has done not just to oil but to all other der energy derivatives and then all the energy intensive industries this is like this is off the charts you know significant like it's we haven't seen something like this if I went back I think I wrote um wrote this in in the last investor letter. If you look at the Iran crisis, if you look at the oil embargo in the 70s, so 1973, 1979, this is multiples larger in terms of impact. So yeah, no, this is this is really a big deal and the markets are just kind of cruising along. So it's quite interesting. >> How has your exposure to the energy complex changed from the beginning of the year to now? the beginning of the year we probably had um about 15% of NAV in energy and that was partly because remember there's been some compression in the gold price so that the NAV goes up to say maybe 20% as a result of that um and then so so we've gone from about 15% to 20% just through the change in the shift in the in the the um valuations across the the different sectors and then we've actually lifted our position. Um, we lifted it twice. Once after the initial attacks and then once more recently when I wrote that piece about my views on the energy market, I sort of sat there and I thought, geez, this is interesting. It's given me the chance to have a fresh look at this and I'm I'm probably um a lot more bullish than I I probably appreciated. So, we lifted a position again. >> And and around the world, where do you see the most attractive energy exposures? I mean we've got positions in in all in Australia, Canada and in the US. The international markets have discounted the crude price more significantly than I have found here. And then I also find that they've got there are better business models and better capability of really good capability and depth I should say not better. I mean we've got some great people here. Um and but but more importantly they get the leverage to the price. So like if you look at the Aussie market, you just get no price movement because every time the industry does well, the government comes in and just whacks them. And so as an investor, you actually can't get the exposure you think you're getting because the government's there sort of preventing rational market behavior from occurring. So it's tough to invest here, I'd say, in that space. If we jump back to to gold again, because I can't stop kind of thinking about where where gold kind of goes from here and and I'm so curious about this recent move, but just stepping back once more and looking at the the scale of the gold market versus, you know, other perhaps reserves that central banks have versus its overall size versus against global equities and these sorts of things. >> Do do you ever think about it in that kind of lens? like it now stands at perhaps 30 odd% of central bank reserves topping out treasuries for the first time in in in in quite a while. Do you think there's an upper bound on these sorts of things? >> But yeah, definitely. So I look at how much so the sort of things I've looked at is how much exposure do family officers or institutional investors have to the natural resources sector? How much do they have to gold? Do they how much do they have to gold uh investments? So equities or derivatives of the gold price? You can look at all of those data points and you you end up in this with the same conclusion on every single one of them, Jonas, and and that is that it's under. >> And to hone in specifically on the equity valuations of of the gold mining companies, >> where are we at right now? Like a lot of them doubled late last year and they've since kind of tempered that that excitement. >> Uranium, tell me about uranium and then copper. >> Um, yeah. Yeah. So well I mean the energy thematic as a broad thematic is really about two things. One it's about the kind of the the ESG movement that took you sort of infected um the world for a period of time and you know that that that is interesting because what it did was it just created a massive underinvestment across the energy value chain outside of renewables. And so when you have underinvestment and you have continued demand for the product because most people don't know this but oil demand has grown every year for the last 25 years by I think one year. Um so you know oil demand hasn't changed and therefore gas demand growth hasn't slowed and therefore LG demand growth. If you sort of go through all of these things, you find that it was just a capital strike for a lot of the nonrenewable energy assets. And so that underinvestment creates a wonderful supply demand situation. So that's the that's the one of the big drivers behind the thinking around energy. And then the other one was what I explained earlier, the hedge, right? and the interesting interplay that you have between all the commodities and energy because if energy truly is the economy which it is and if you look at the cost curve for a gold producer or a copper producer you'll find that there's a substantial exposure to energy. So if energy goes up guess what the cost curve for everything else goes up. So um those are the two macro drivers Travis around why we focus and then sort of why gas not oil why not coal why not renewables why not uranium I guess is your next question and um gas is because it's got a long-term future far longer than I can see uh in place for oil and for coal and I don't think either of those are going away by the way I just I just think it's just a it's got a longer runway grows faster and um it's there are a number of different ways you can invest around it and um so so those are broadly sort of the reasons for gas and then for uranium we're at the early stages of looking into the sector I haven't finished the macro work that I described to you earlier so until we finish that then I don't intend to invest in the companies but um the broad thinking there is around you know just the mega mega thematics you've got energy is economy so clearly if you're going to have all these AI data center rollouts it's energy intensive if you're going They need more more energy. And number two, you know, I suspect in reality after the straits of calm down and we don't know when that is. Is that tomorrow or is that 6 months? I think you're going to find energy security is going to be front and center for everyone and that'll manifest itself quite nicely. I think in your >> the philosophy of like actually getting alpha like picking picking the you know the the outperformers in the industry. Um like you mentioned management teams but like if you look at if you look at you know mining stocks, resources stocks, there'll be um you know a hu huge huge amount of uh commodity beta involved in in their movements. But then like where where do you actually like where does that what's your philosophy on actually identifying and and getting the the alpha in any um you know with within within these like verticals that you actually choose? we essentially sort of tend to invest midcycle in the development phase. So from the development phase onwards through to production and we're really looking for in an ideal world we're looking for um very align highly aligned uh management teams or individuals. Um so people who have a lot of skin in the game, people who have been operating in that particular jurisdiction or uh play type teams that have potentially come together, people have a very clear focus on value rather than volume. Um a bunch of variables that I that I described that we see as key ingredients to successful value creation in the sector. And a lot of those variables actually aren't just in mining. They're actually just principles for business. It's just the mining sector just I think you know has probably a lower proportion of focus on these variables. >> I I I suspect part of it is because incredibly capital intensive businesses. So getting like sufficient levels of skin in the game becomes a very challenging thing when you're faced with constant equity dilution. Uh well that's one that's one piece of it. >> Yeah. Know I think I think it's as a broader comment it's and I'm >> I've seen this obviously a lot right. So >> I think in this this industry is unique because there's a high level of technical skill that's required. So whether you're a geologist or you know a process engineer or reservoir engineer whatever it is these are technical skills and um when you've got such specialized technical skills it's very hard for one person to have all the skill sets in a small company like it's it's an unfair expectation. You just can't have all those skill sets no one has. Um and therefore by definition you have to have fill it up with a team. And I've seen a lot of companies where I don't know probably sounds wrong but where you just don't see people valuing the different skill sets that are required to make a company successful. And and in fact like in the mining sector back to what you said with the capital intensity. One of the most important things in in the mining sector is actually how you access the capital. Right. It's an important step. And so if you don't have a team that's working really well with the CFO as an example or a CFO that really knows his his way around the capital markets or the capital financing options or they're not focusing on managing dilution collectively. You know, I've seen I've probably seen more companies blow themselves up and destroy value in that step alone. And so yeah, I think that I think there's a few reasons as to why that is in the mining space. M the the last commodity that we haven't yet spoken about that you mentioned is copper. And just to like quickly frame it, no surprise to anyone, but like copper is maybe the only commodity out of all the ones we've spoken about that is actually pretty widely popular. Like you you hear people in the tech world talking about the need for copper and these sorts of things. So how do you come about um you know tackling this one with a with a kind of differentiated view on on copper? What's interesting about copper is you can't really get a good exposure to it in Australia. There aren't there isn't a depth of the midcaps that I was describing to you here. And so therefore, by definition, it chases you offshore. And then when you go offshore, to be honest, there actually isn't a long list of of of companies that are in that space. You know that if I compare that to say precious metals, you know, I was mapping it out, I think a few days ago, it's it's it's about a third of my watch list and the companies I focus on and precious silver and PGMs versus copper is about a third the size. So that there just isn't a lot of depth in that market. >> It's been it's been interesting to to understand your perspectives, how you see the the world and you know your view on the commodities that we we love dearly and and follow all the time. So yeah, looking forward to catching up again in in future and hearing the the specific names you you came to chat about. >> Right. No, thanks and thanks for the thanks for the interest and thanks for the good questions. It was uh it was interesting. It was fun. Nice to meet you both. I really enjoy your show. You guys did a great job um talking about the industry and educating people about the ins and outs of it and uh well done. Well done to you. Thank you to Sanvic ground support medalshub intrlinks focus the platform by market techch exceeded capital and cost mine intelligence for making it all happenu money miners. Now remember I'm an idiot JD is an idiot. If you thought any of this was anything other than entertainment, you're an idiot and you need to read our disclaimer.