Another Place To Hide From The Money Printer

Submitted by QTR's Fringe Finance

It’s rare that, after more than two decades in the market, I stumble across a corner of the investing world that I’ve barely spent any time thinking about.

Earlier this week, I wrote about one such opportunity hiding inside a much larger, familiar part of the market.

Today, I’m writing about another. This one came onto my radar almost by accident. An investor I know and respect from the microcap world pointed me toward an overlooked group of publicly traded companies that I had never seriously considered before. After spending much of yesterday digging through the space, I came away interested enough to keep going.

What caught my attention is that these companies provide exposure to something I’m almost always looking for: scarce, productive real assets that cannot simply be created by governments or central banks.

The underlying assets can potentially appreciate over time, generate income, provide some protection against inflation, and offer diversification away from conventional stocks and bonds.

But there’s another wrinkle that makes the setup considerably more interesting. Some of the assets owned by these companies may ultimately be worth substantially more for purposes that have very little to do with the businesses they were originally acquired to support.

And one of the biggest investment themes in the market today could be the catalyst that begins unlocking that hidden value. There are two major publicly traded names I’ve been looking at. While they appear similar on the surface, digging deeper reveals two meaningfully different investment propositions.

One offers what I think may be cleaner exposure to the hidden-value thesis. The other owns an enormous asset base and has similar optionality, but its earnings remain more closely tied to a cyclical end market that has been under pressure.

Before getting excited about that possibility, however, it’s important to understand the ugly side of the story—because there are very good reasons this corner of the market has struggled.

The industry enjoyed an extraordinary environment from roughly 2020 through 2022. Demand surged, supply and production were constrained, prices exploded, and profitability reached levels that were clearly unsustainable. Investors were temporarily looking at earnings far above anything resembling normal.

Then the cycle turned. And that’s where today’s story really begins...(READ THIS FULL REPORT AND IDEA HERE).