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The Fallacy of Renewable Energy: Leigh Goehring, Goehring & Rozencwajg Associates (Szn 4, Ep 10)

Published April 6, 2022

Leigh Goehring, managing partner of Goehring & Rozencwajg, joins the podcast to discuss his view that most renewable energies are ineffective at reducing carbon output and pointless as investments.

Content Highlights

  • The consensus opinion is that renewable energy will solve many of the problems of CO2 production and energy needs. This is false (3:12);
  • The “terrible energy efficiency” associated with renewables will make the world poorer (5:00);
  • What is the problem with solar and wind and why are they so inefficient? (7:20);
  • It’s no coincidence that the energy crisis started in Germany, which is now forced to import coal (12:20);
  • Vaclav Smil and the premise that there has never been a new technology with inferior energy efficiency that displaced the old technology (13:59);
  • The ulterior motives behind China’s green energy push (18:33);
  • The “great hope” for a Moore’s Law of wind mills and solar panels is a fallacy. Input prices have declined because energy prices have (21:05);
  • Where does that leave electric cars? (25:00);
  • Background on the guest (33:42);
  • What parts of the energy industry are better targets for investment right now? Look to uranium for starters, “the perfect solution to our problems” (37:17);
  • Copper is “the quintessential green metal” also facing a supply/demand imbalance. Also agricultural commodities, grains, fertilizers, nitrogen, and potash (41:26);
  • Mosaic (MOS) is one of the world’s largest phosphate and potash producers, and a stock the guest is particularly bullish on — it trades at just 5x earnings versus 25x at the peak (47:07);
  • An agricultural crisis could soon be upon us, leading to hoarding of supplies (49:58).

More Information About the Guest

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Revisiting Leo Schmidt’s Bullish Takes on Energy, Aircraft Leasing, 5G Stocks

Published April 4, 2022

Leo Schmidt, chief investment officer of River Eddy Capital Management, favored energy, aircraft leasing and 5G infrastructure development stocks in a February 2021 episode.

Among energy stocks, Schmidt liked natural gas transmission company Equitrans Midstream (ETRN). 

“No matter what you think about the price of natural gas, it needs to be moved,” he said. “And we have the cheapest natural gas in the world, except for Saudi Arabia.”

Airline leasing companies were a “fantastic idea” due to “pent-up demand.”

His picks were AerCap (AER) Air Lease Corporation (AL). 

Schmidt also said 5G infrastructure developers would be big players, with Nokia (NOK) and Ericsson (ERIC) at the forefront. 

“Interestingly, Nokia is the only one out of those three that has supply in the United States to all the legacy carriers,” he said.

What Happened

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Stock Picks to Play the Coming Inflation Slowdown (Szn 4, Ep 9)

Published March 24, 2022

With Lukasz Tomicki, LRT Capital Management

Lukasz Tomicki of LRT Capital rejoins the podcast to argue his (highly contrarian) case that inflation is due to slow and to provide stock picks that allow investors to take advantage of current dislocations in markets.

Content Highlights

  • Inflation will peak around mid-year and return to historic norms shortly thereafter (2:43);
  • Russia’s invasion of Ukraine and its impact on supply chains have certainly contributed to higher prices for commodities, but markets will adapt (7:01);
  • Another contrarian take: The Fed will successfully manage a soft landing (8:55);
  • “Russia is basically a gas station with nuclear weapons.” The U.S. and Europe can deal without Russian imports so this shouldn’t be a point of concern (14:20);
  • Stocks of two Brazilian companies that have been beaten down but have started to rebound… (20:05);
  • A company that has been directly impacted by Russia’s invasion of Ukraine is an IT consulting firm with a large presence in Ukraine whose stock has predictably been beaten up but could offer huge returns (31:38);
  • The most likely outcome in Ukraine is for the military situation to grind to a stalemate (35:55);
  • A final idea: Buy the Polish stock market through the iShares MSCI Poland Capped ETF (EPOL) (39:50).

More Information on the Guest

Not intended as investment advice.

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