Happy Friday!
In this week’s letters,
– Goehring & Rozencwajg Associates on commodity markets and precious metals
– Elm Ridge Management on private credit
– Rainey & Randall Wealth Advisors on LNG and the Fed
– Elevator pitches for SAP GR, KKR, and VID LN
Quarter in progress: 742 fund letters of 2026 Q1 are live on our database!
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Q1 2026 INVESTOR LETTER SUMMARIES
- Commodity markets, and energy markets especially, have always possessed a peculiar instability. Periods of acute shortage and extraordinary profitability tend to convince investors that prosperity will persist indefinitely. Periods of collapse usually persuade them of precisely the opposite. As a result, these swings can last far longer than logic would seem to permit.
- In the immediate term, it is difficult to overstate the magnitude of the supply shock caused by the closure of the Strait of Hormuz, even though the full physical effects have yet to be truly felt. Before the conflict, roughly 20 million barrels per day moved through the Strait. Since then, several bypass pipelines have increased throughput materially. Even after accounting for those adjustments, however, approximately 15 million barrels per day remains impacted.
- The most consequential question facing investors today is not whether the closure of the Strait will eventually end. It will. The more important question is what the market will look like after it reopens. The prevailing assumption is that reopening restores balance – that supply returns, inventories rebuild, and the system reverts to the surplus the IEA had been forecasting before the war.
- Our view that a reckoning was due in private credit and private equity was also based on a simple premise: success breeds excess. Private investors were rewarded with supranormal returns as they filled the gap left by regulated financial institutions after the GFC. However, the flood of new capital into the space was bound to depress those returns going forward.
- This came after a decade of ever-lower interest rates that had supported impressive performance. As a result, investors were happy to suspend disbelief. They appeared to turn what had once been a “bug” — the inability to readily sell private holdings at their quoted value — into a “feature”: not having to confront mark-to-market volatility.
- As asset-light models were tumbling, I, with a little help from some rum, boasted to friends that we had been “saying some sooth.” But then I became curious and learned that “soothsayer” derives from the 14th-century word “sooth,” meaning “truth” or “reality.” One might guess that predictions back then were taken as advance knowledge of the future, perhaps stemming from an in with the gods, rather than the kind of loose speculation we were spraying around.
Rainey & Randall Wealth Advisors
- Liquified natural gas (LNG) is also heavily impacted by events in the Middle East. Qatar is responsible for 20% of global LNG supply and at the moment 100% of this is offline due to the war. It has been reported that Iran targeted and damaged a portion of Qatar’s Ras Laffan LNG complex, resulting in roughly 17% of its.
- Oil and gas fields are not like faucets—they cannot just be turned off and on. Once they are shut in, there are engineering and geological risks that don’t guarantee their resumption at previous production levels. Restarting these fields will take weeks to months, plus another 3-4 weeks for tankers to transit through
the Persian Gulf and to Asia. - Research from the Federal Reserve suggests that energy prices accounted for only a portion of the overall inflation increase. The Fed estimates that the oil price spike added roughly half a percentage point to overall inflation during 2022..
ELEVATOR PITCHES BY FUNDS
- Another returning name we’ve owned and admired for its deep integration into corporate workflows. As the world’s leading ERP provider, its “stickiness” is immense; the idea that a company would risk its entire financial backbone on a home-grown AI alternative is, in our view, a fundamental misunderstanding of how big business operates.
- The investment thesis directly counters market fears about AI disruption, arguing that enterprises will not risk their financial backbone by replacing proven ERP systems with AI-generated alternatives.
- The fund views current AI anxiety as creating an attractive entry point for a fundamentally sound business..
- KKR just closed its flagship Americas NAX4 fund at $23 billion, meaningfully reducing near-term fundraising risk. And the firm has already notched several high-profile exits this year, including the $5 billion sale of CoolIT to Ecolab — a 15x return in three years.
- Near-term market volatility may weigh on additional exits and performance income, but KKR remains an exceptionally high-quality business poised to grow earnings at a double-digit rate for the foreseeable future. Insiders seem to agree, and despite already owning nearly a third of the company, they spent $50 million on open market purchases as the stock pulled back.
Videndum (by Rockwood Strategic)
- The company is a world-leading specialist manufacturer with strong brand portfolio including Manfrotto, O’Connor, and Gitzo, serving the growing independent content creator market (49% of sales) alongside traditional broadcast and film customers.
- The business enjoys significant competitive advantages with scale 5x larger than its nearest competitor and substantial intellectual property moat.
- Key value creation opportunities include pricing discipline, back-office synergies, SKU rationalization, and manufacturing footprint consolidation. At current valuation of 5.9x 2026 estimated EBITDA, the stock appears attractively priced.
HIGHLIGHT OF THIS WEEK
MEDIA APPEARANCES BY BSDs
Michael Burry says he’s tempted to bet against SpaceX, but passes on
- Michael Burry of “The Big Short” fame said Tuesday he has no position in SpaceX, arguing that options used to wager against the stock remain too expensive even as he questioned the company’s nearly $3 trillion market value.
- Still, Burry questioned the scale of the company’s valuation, describing SpaceX as “fundamentally a small space company, a niche telecom, a bedeviled social media company, and a Coreweave-light” generating less than $20 billion in annual revenue.
SpaceX IPO Lines Up $230 Billion Windfall For Peter Thiel And Musk Backers
- Now, as Elon Musk’s rocket and AI company goes public today at a nearly $2 trillion valuation, the fund’s stake is worth a staggering $67 billion — making that first check, and the additional $600 million Founders Fund invested over the following decade, into one of the most lucrative in venture capital history.
Rokos, Melqart Advance in Another Strong Month for Hedge Funds
- Rokos Capital Management, Melqart Asset Management and Brevan Howard Asset Management were among hedge funds that gained last month as an escalation of the war in the Middle East and optimism over a peace deal whipsawed markets.
- Chris Rokos’ eponymous hedge fund returned 3.7% in May, taking gains for the first five months of the year to 14.2%, people familiar with the matter said, asking not to be identified discussing private information.
