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The Coming Credit Crunch and Death of Unicorns: Leo Schmidt (Szn 4, Ep 11)

Published April 18, 2022

Leo Schmidt of River Eddy Capital Management rejoins the podcast to discuss the coming credit crunch, its impact on stock market sectors, and where to invest to protect one’s portfolio.

Content Highlights

  • So-called “unicorn” companies, or the darlings of the VC crowd, and others that cannot generate cashflow, will face a tough reckoning (3:17);
  • Undermining this is “a complete change of psychology” in terms of velocity of money (6:27);
  • What if the Fed reverses course? It’s not so simple (8:52);
  • Oil is a short: “Oil is the ultimate liquid commodity” but there is a place for pipeline stocks… (11:38);
  • What stocks can thrive in this type of environment? Look first to medical company spin-offs (19:13);
  • Another area to look: Business development companies, or BDCs. This is a risky part of the market but there is at least one BDC making first-lien loans, which are the safest part of the capital structure… (26:23);
  • Quick epilogue on China’s latest Covid lockdown. There are ways to play the move away from supply chain issues that result (35:58);

Quick Highlights From Our YouTube Channel

MoreThe Coming Credit Crunch and Death of Unicorns: Leo Schmidt (Szn 4, Ep 11)
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Szn 4, Ep 6: The ‘Bad Times Are Already Here,’ With Acquirers Funds’ Tobias Carlisle

Published March 2, 2022

Tobias Carlisle of Acquirers Funds rejoins the podcast to discuss the stock market’s latest dramatic reversal, this time over Russia’s invasion of Ukraine, and why investors may be a bit too bullish at present…

Content Highlights

  • How to take the huge reversal last week with Russia-Ukraine? (3:11)
  • Every war starts with “the boys will be home by Christmas,” but most tend to drag on longer than anticipated. Sometimes a lot longer… (5:13);
  • Growth stocks have been in correction territory for some time. Are they in a bear market? Probably… (8:52);
  • The interest rate cycle has not started tightening but inflation has the Fed caught between a rock and a hard place (15:53);
  • Energy and energy stocks are still cheap. Then there are defense contractors. Lockheed Martin (LMT) has benefited from Russia-Ukraine and Carlisle is a holder… (21:25);
  • Facebook aka Meta (FB) is also cheap (23:20);
  • Non-fungible tokens, or NFTs: Dead as Disco (30:12);
  • The aim of investing is to survive the bad times and they are “probably here” (37:18).

More From the Guest

MoreSzn 4, Ep 6: The ‘Bad Times Are Already Here,’ With Acquirers Funds’ Tobias Carlisle
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Contrarian Calls, Revisited: Theron de Ris’ Bullish View of Energy, Precious Metals, Royalty and Streaming Stocks

Published January 31, 2022

Theron de Ris of Eschler Asset Management was bullish on energy, precious metals and royalty and streaming companies in the mining market in November 2020. 

Precious metals were in an up-trend but 2020 was the “first year we’ll be seeing some institutional interest develop,” de Ris said at the time.

Additionally, “gold is kind of a bet against bad government decisions and falling trust in the system.” Royalty and streaming companies were poised to come along for the ride as these were “basically financing companies” to “bring mines into production” with the benefit of a cut off the top line, usually into perpetuity. 

Among these, de Ris’ favorite was EMX Royalties (EMX).

MoreContrarian Calls, Revisited: Theron de Ris’ Bullish View of Energy, Precious Metals, Royalty and Streaming Stocks
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