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Welcome to Chuck Yates Got A Job with Chuck Yates. You've now found your dysfunctional life coach, the Investor Formerly known as Prominent Businessman Chuck Yates. What's not to learn from the self-proclaimed Galactic Viceroy, who was publicly canned from a prominent private equity firm, has had enough therapy to quote Brene Brown chapter and verse and spends most days embarrassing himself on Energy Finance Twitter as @Nimblephatty.
00;00;00;00 - 00;00;29;10
Unknown
You know, it's wild in an industry that powers the world. We still struggle to find the right answers when we need them most. That's why we built collide. Collide is where energy professionals go to solve problems faster. It's a community completely focused on oil and gas. Whether you're out in the field making deals or just trying to keep up with the industry, collide connects you with the people, knowledge and tools you need all in one place.
00;00;29;12 - 00;00;56;22
Unknown
You can ask real questions and get answers from experts who've been there. It's the future of how energy gets done. So if you're tired of scrolling through endless LinkedIn threads or waiting on that one email reply join collide today. It's free, it's easy, and it'll make you better at what you do. Go to Collider. Oh that's cold. I'd dot io and get connected.
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Unknown
Energy moves fast. Don't get left behind. I I I I I I I I fire to carry. Knowing I gotta go see it's always not a the product I take the time. Everybody welcome to Chuck Yates needs a job. The podcast the I introduce you is the most hated man on Twitter. I don't think so. No, I don't think so.
00;01;33;02 - 00;01;54;19
Unknown
That would be a Colin thing to do. I'm not going to do that. Josh Young from bison, welcome on. Thanks for having me. So let me level set this of what we're going to going to do here or at least try to do here. I went on my rant, got on my soapbox about how you can't tell the difference between a private equity fund, a VC fund, and a media company these days.
00;01;54;26 - 00;02;13;01
Unknown
You got to lead with talent. You got to are content. You got to create this to be able to fundraise today. Everybody's doing it. Nobody's doing it. Energy. You called me out on it. You're like, hey, Jack, I'm generate tons of content. It's still really hard to fundraise here. And I said, okay, well, let's get together to actually, you know, love to hear this.
00;02;13;01 - 00;02;30;05
Unknown
And I'm happy to share anything I know about fundraising. And I can't remember if your pitch or my pitch of, let's just do it on the air. So we're doing this on the air. Is that the fair setup? I think so, I think I offered to come on and I figured it would be a little more structured and a little bit more, potentially productive.
00;02;30;05 - 00;03;04;07
Unknown
And on topic, that was there. We'd be more focused. Okay. Fair to the. So here's where maybe I'll start. Just to give a little historical. Maybe people find this this interesting. But back in the day at a private equity firm, you kind of went fundraising every 2 to 3 years to raise a new fund. And the drill was pick a city, Austin, and you'd spend a day or two there and you'd go see Texas teachers, you know, the county municipal funds, etcetera.
00;03;04;07 - 00;03;31;23
Unknown
You'd see all the institutions there. You basically got 30 minutes to maybe an hour with each one of these folks. You had a pitch book that was maybe 20 to 25 pages, and you kind of went and did your spiel, and it was almost like the movie Groundhog's Day. It literally got to the point where I would memory, I would, in effect, have a story that I would tell exactly the same way.
00;03;31;25 - 00;03;54;05
Unknown
I'd say the same thing on each page, just because you're in the middle of a meeting and you can't remember what you've said, haven't said. So I knew I said these things on each page, just keep it straight, etc. and then, you know, you just kind of did that until you filled up the fund and sometimes you were able to fill up the fund and sometimes you weren't able to.
00;03;54;05 - 00;04;18;12
Unknown
But that was kind of fundraising back in the day when I was. What's it like today? Yeah. So, almost none of those folks will take meetings with oil and gas investors generally. And then especially if you're in the public equity fund space rather than the private equity fund space, they just won't take those meetings. So those don't exist because let's say you go to XYZ city.
00;04;18;12 - 00;05;01;27
Unknown
I was just in San Diego last week for, family vacation. But of course, you know, as a, owner operator of a business, you're always sort of thinking about the business. Reach out to the various relevant folks. Zero meetings to two people were interested, but they just weren't in town that week. And that's it. So, it's a different world because I guess the combination of ESG motivated divestment from oil and gas by institutions, along with, I think, a misreading of David Swenson's, sort of theory on capital allocation for endowments and pensions, where they think that the right way to generate excess returns is through allocating to index funds in the public
00;05;01;27 - 00;05;36;20
Unknown
side, and then expensive private equity funds when the reality is when everyone does that, you end up with no excess returns on the private side and substantial excess returns for active managers. So it's just a completely different world. I think where we found investment has been from, has been from family offices and sort of sophisticated individual investors who have noticed our outperformance relative to, relative to various benchmarks like the various, ETFs and other sorts of investments that people have as, as options.
00;05;36;21 - 00;05;57;28
Unknown
And I'm going to cut you off to drill down here, because this is kind of getting into the guts of of what I was wanting to talk about. How have those people found you? Do you get a phone call? And somebody said, hey, I read this about you somewhere, or you calling ten of them? And one of them says, okay, I'll read that, and then calls back and says, hey, I read your stuff.
00;05;57;28 - 00;06;16;28
Unknown
You're outperforming. How are you finding those people? Yeah, a little less on the sort of, active reaching out. I mean, there's a lot of rules around this stuff. And, you know, there's some disclaimers. This isn't I'm not offering my fund through this. And any offer has to be through, you know, formal documents and through a formal process.
00;06;17;01 - 00;06;43;06
Unknown
But, you know, as a part of that, from a compliance perspective, when you're when you're reaching out to an endowment or, investment consultant or a large family office, you can reach out to them directly. And, and because they're, they're qualified buyers that that's considered okay. If you're trying to raise money for a fund, at least in my understanding, among smaller family offices and high net worth individuals, it's not generally the accepted practice to go and cold call them or anything like that.
00;06;43;06 - 00;07;09;12
Unknown
So podcasts, TV appearances, publishing, research, which is sort of how we started our conversation, which was, hey, here's sort of how you raise money or not. And so we set up this content strategy, which was, hey, let's go spend time on TV, spend time on podcasts, you know, share some of the research that we're doing internally. Obviously not all of it, but share a portion of it and then even sharing individual investment ideas.
00;07;09;17 - 00;07;37;05
Unknown
We're not large enough where we're obligated to share anything unless we get over a certain percentage of the size of ownership of a company. But we'll occasionally share ideas, partly because the thought is we have a view that we will outperform. And so allowing people to see some of what we're doing, and some of where that outperformance comes from, was that the idea was, hey, this will make people a little more comfortable, even though we're not disclosing our whole our whole portfolio, they'll get to see some of it.
00;07;37;08 - 00;08;01;10
Unknown
So that way they can sort of see, hey, yeah, these returns were generated partially through these ideas. Here's some of the research associated with them. And so the idea is, hey, this this is supposed to in theory, get you to a point where you have a significant pipeline of investors. And the reality is, you know, it works to some limited extent, but it's not I don't think it, maybe it's because energy's hated.
00;08;01;10 - 00;08;28;12
Unknown
Maybe it's because public equity investments are hated. Maybe people don't like me. I'm not sure sort of where we are on that spectrum. I like Josh, so. Yeah. No no no. It again like it's fine I think I think like it's helpful in building an audience to be, polarizing to some extent. I think, you know, if you share things that are, consensus people might like you or sort of not care about you, but they also just won't engage with you.
00;08;28;12 - 00;08;47;27
Unknown
And so, you know, I would say that. And do you know what a Q score is by any chance? So we move Nielsen family literally back in the early 80s, when cable TV came to Richmond, Texas, the Yates family was selected as a Nielsen family. The ratings. And we used to have to write down everything we watched and mail it in.
00;08;48;00 - 00;09;12;21
Unknown
I mean, it was that that was the level of technology because they weren't tracking what we watched. But one of the things we learned about was the Q score. And the Q score did not measure how popular you were. It had the modifier, if you like someone, and then it measured how strongly you felt about them. And so Q score, intensity, engagement, kind of words like that, I think, all mean the same.
00;09;12;21 - 00;09;44;08
Unknown
And I think in terms of fundraising, that's the important thing. You don't need to be popular with everyone. You need certain people to really, really love you. So I think that's it. So it's basically saying I like your strategy there of of, you know, it's okay to be polarizing, etc. because I think that's right. The other thing I like what you said is, you know, the Grateful Dead for years, let anyone that showed up at their concerts record their concerts.
00;09;44;15 - 00;10;07;21
Unknown
You were they you know, most bands, almost all bands have said no to that. No, no live recordings. Grateful dead, as always said. Great. You will traffic in those, concerts and all. Do you know what the Grateful Dead's largest selling album was? Their live album of all things. You know when you get them, because you create interest by allowing it, you create interest.
00;10;07;21 - 00;10;33;20
Unknown
So I think calling your shots and putting it out there, even if you're wrong, I think people respect that. And and like that. So interesting stuff. The have you found that there's a channel that works best for you in terms of, you know, whether it's Twitter, whether it's LinkedIn, whether it's TV, is there anything you've been able to glean there or too hard to tell, too hard to tell?
00;10;33;20 - 00;10;57;07
Unknown
I think honestly, like the level of interest is so low that there's not really, you know, if you get one person that reaches out from having published a white paper or even ten people, but, you know, these people are showing up on your email list through one of these various channels or through word of mouth. The problem is, if there's not enough of them, then you can't even do the study to figure out, hey, which of these things is is good or not?
00;10;57;07 - 00;11;15;26
Unknown
And again, the goal of this isn't, I feel like I'm whining a little too much. It's more just, hey, like, there is this thing. Yeah, there's this theory thing. There's a theory, and then there's a reality, and it's it's been, you know, I've spent a lot of time thinking about it, chatting with different people. I was just chatting with a fund manager right before.
00;11;15;26 - 00;11;34;09
Unknown
Before I came here, about it. And he had a theory in terms of fund structure. He thought that if I changed it from long only, which I like, because I think that there is a really good case for oil and gas stocks to materially outperform. And I think, you know, the S&P 500 energy right now is about 4%.
00;11;34;09 - 00;11;54;21
Unknown
And it's even less if you exclude the two super majors that are in that, Exxon and Chevron. And, you know, there's a good case that that gets to 10% plus maybe it's 15, maybe 20, but somewhere in there. So I don't like shorting. His thought was, hey, if you offer a long, short product, even if you're just short the energy index or whatever benchmark, people will feel more comfortable.
00;11;54;27 - 00;12;19;16
Unknown
Not necessarily high net worth individuals, but, you know, endowments, pensions, whatever will feel more comfortable allocating because they'll feel like what they're paying for is alpha rather than beta. My thought is, hey, they have too little exposure institutionally anyway to this, so why short away that exposure for them and then the outperformance from the strategy. And again please see the actual performance and disclaimers and so on.
00;12;19;22 - 00;12;45;17
Unknown
But the actual performance has been so significant that, you know, does it really help to short a sector that you're underexposed to just to be able to get exposure to a strategy that's outperforming? Why not get both? And then if you have a problem with the fees or whatever, you can sort of figure that out. But it seems like it's not the solution for these guys is for them to have more exposure to oil and gas, and to do it through a strategy that outperforms.
00;12;45;17 - 00;13;06;08
Unknown
So that's sort of my my push back on it. But, you know, I'm, I'm sort of open minded to, to exploring sort of different potential solutions. It does seem a little odd to have to sort of deviate from a strategy that is working in order to, you know, raise more money to, to deploy into it. Yeah.
00;13;06;08 - 00;13;32;11
Unknown
And and the other thing I've found, too, is, generally speaking, you want to be an investor. You don't want to be a money man because I'm money manager in my mind. And note let me go look at my monthly fee income. How much money am I making? As opposed to I want to do a buy the best stocks that I can for my clients and that people have said, you know, hey, Chuck, why haven't you raised a fund since you left and all that?
00;13;32;14 - 00;13;52;06
Unknown
And part of it is, just fundamentally the laziest person I've met. So that's kind of one. But the second part of it, too, is I don't know that I have a really have a good, compelling strategy for a private equity fund right now. And in oil and gas. I don't know what I would say to an investor in terms of, of this is what works.
00;13;52;08 - 00;14;10;08
Unknown
But so I think the drill down, maybe what we're going to wind up talking about, you know, with most podcasts, I know what I'm going to we're going to talk about now. And I had no I have no clue where this is going, where it's going to go. But drilling down, it seems like you you've bought off on I got to be generating content to generate in bounds.
00;14;10;08 - 00;14;40;28
Unknown
And that's a big column. MacLellan thing content, your greatest source of leverage and all that. Do you think it's something in the message potentially that can be more compelling? Or are you thinking it's just the headwinds that are that are so great because I have a tendency to think we and energy don't say much, and when we actually try to say something, it's it's very much facts and figures, i.e. the least effective way of changing someone's mind.
00;14;41;00 - 00;15;04;27
Unknown
Is there a way to, in effect, have a more compelling story, something that connects on an emotional level, way more so than facts and figures? Yeah, it's a great question. And honestly, like I think I've gone sort of both directions with that and I'm not sure I think I think one of the problems with this is you want to measure these things over months and years and not over sort of short periods of time.
00;15;04;27 - 00;15;32;16
Unknown
And it's very hard to run sort of extended experiments on these things because you sort of want results. And if you have something that's compelling, you sort of want the money for it right away to be able to go invest in it. I mean, I think I've gone sort of both directions with that, with sort of sharing detailed specifics around specific investments and then showing the performance for those over time, which most of the stuff we've shared in the last few years has done extraordinarily well.
00;15;32;20 - 00;15;48;08
Unknown
I mean, even the stuff that hasn't done great has still beaten the index by a lot, has still, I mean, like the one that comes to mind that didn't work that well, still has doubled since I disclosed it. It just it was up six acts at one point and now it's a double. So you know right. It's not bad.
00;15;48;08 - 00;16;04;25
Unknown
And again, like I'm sure I'll share stuff that does very poorly at some point. You know, I want it to do well and I'll just be wrong on it. And I am wrong quite frequently. I mean, everyone is and endorsements. That's just part of the reality. But I feel like I've done some of the. And bison has done the same.
00;16;04;27 - 00;16;31;06
Unknown
If you're not wrong periodically. Yeah. You're right. Paid off. Yeah. Absolutely. Absolutely. It's just so so I always tell people that if there is someone that has never had a quarter below the index or whatever, they're lying to you. Absolutely. Yeah. They say real boats rock. Yeah, exactly. So, so we've done some of that and then some of the like, especially on Twitter, I'll share stuff about ESG and sort of how ridiculous, some of these policies are.
00;16;31;10 - 00;16;53;17
Unknown
There is the Inflation Reduction Act, which spurred additional inflation. There's the energy policies here and in Europe and Canada and various other places which are horrible and really sort of destructive. And I think that's part of, why I don't really want to go short oil and gas stocks. I want to go invest in these companies. I do play some with them sometimes to help them fund drilling.
00;16;53;17 - 00;17;22;02
Unknown
I'll help with acquisitions and so on, because I actually think we need more of this stuff because I think just ethically it's the world's better with more energy supply than with less. And so I'll, I'll share that. And I guess, I guess the challenges, if you try to share sort of stuff that's like more maybe emotional or ethical or whatever, along with sort of facts or hey, here's performance, here's, you know, the details around the fund.
00;17;22;02 - 00;17;48;28
Unknown
I think it's possible. Maybe the message gets garbled, but, and there is some value in sort of being very consistent and just sharing, hey, here's this set of companies we've talked about. Here's facts about this sector. And, you know, just sort of consistently doing that sort of approach. But, you know, different, different, implementations of that in different mediums.
00;17;49;00 - 00;18;14;01
Unknown
So Twitter, maybe it's sort of more mixed, basin newsletters and so on, maybe just sort of the facts and sharing sort of industry progression and again, just sort of not seeing what you, I would have thought eight years into running a strategy that's outperformed, I think we're up as of the last numbers, like 90% net of fees versus the sort of the small cap public.
00;18;14;04 - 00;18;44;08
Unknown
The actually that index is down 69%, that of, the costs of that, of that ETF. So a very, very big difference. You'd think that that would just if, if someone wants exposure to energy, which maybe the problem is people just don't want that exposure. You'd think if you're an allocator looking at getting that exposure, that that would be very compelling and sort of seeing how it's built and getting that sort of regular update would lead to fund inflows.
00;18;44;08 - 00;19;04;16
Unknown
And again, it's not that we're not raising any money. It's just you would think that would be overwhelmingly compelling. And in many other sectors and with many other funds, that does seem to work. And, you know, I think it's interesting to get your take on sort of where you think that's that's missing. Yeah. And, and again, the thing I like about this podcast is there are a great answer.
00;19;04;16 - 00;19;26;02
Unknown
I'd be raising a fund and be wealthy again and maybe go buy a jet again. But I'm not. The. So I've been thinking a lot about this. And I think, I think ultimately you have to play on kind of a base emotion and not recommending this. But just as we run through, you know, fear is a very effective motivator as a base emotion.
00;19;26;02 - 00;19;50;27
Unknown
I think potentially the environmentalists have done as good a job as humanly possible of scaring the world of climate change, etc. our inability to adapt into the world and all. I don't think it's ethical to use fear, I just don't I'm not going to do it. But if you think through that, I don't know that you can even make a case to an investor to scare them into buying energy.
00;19;50;27 - 00;20;11;11
Unknown
I mean, energy is what 5% of the S&P 500 today is somewhere around there. A CIO is not going to lose their job because they don't own energy. So I don't know that you can kind of scare folks into that. And so then you start going through well here, let's let's play on that just for a minute. So I'll try okay.
00;20;11;11 - 00;20;37;10
Unknown
And then again I agree with you. I don't I don't normally do this. It's not my way at all. I'm way more interested in sort of win win type situations. And then hey here you build this rather than here. You should be afraid of it. I think that the fear aspect is when there are outperforming sectors, especially when they're a small portion of the index, a few people do really well and make their careers out of it, and others miss it.
00;20;37;10 - 00;21;13;12
Unknown
Almost everyone else misses it. And so I think the thing to be afraid of would be if you had the opportunity to invest with Michael Burry ahead of The Big Short and you missed it, right? You don't get fired for missing it necessarily. But if you're the chief investment officer at the, let's say, 50th largest endowment in the country, and you want to be the chief investment officer at a top five endowment, because you can make like five times as much money, you'd have way more resources, more prestige or whatever, or you're the number two person at, leading endowment, and you want to be a chief investment officer somewhere.
00;21;13;14 - 00;21;39;16
Unknown
The risk is, if you miss a niche allocation to a niche manager, that's not tech, that's not health care, that's not a giant portion of the market. It I think the fear is that you miss your ability to get that promotion. The flip side is there's always career risk in any sort of allocation. I think that's part of what keeps institutions from investing, whether it's pure ESG, whether it's fear of underperformance.
00;21;39;18 - 00;22;14;11
Unknown
But I think I think the fear strategy would be, hey, you might miss your career making allocation. And the crazy part is you might miss that where you're actually not taking career risk, because if you allocate, you know, a half of a percent of your assets that you're responsible for, you might end up having that amount of outperformance such that you're able to, you know, if you did that with Michael Berry or you did that with a few of the other folks that did the big short, for example, again, a very small percentage of the overall market CDs, it's not part of the stock market allocations were tiny to it.
00;22;14;13 - 00;22;34;00
Unknown
You could have ended up really progressing in your career. If you were at a fund of funds, you could have gotten a big payday or at least suffered way less drawdowns than other fund of funds did in that time frame. And so I think that's the fear argument is like, a significant fear of missing out on something that's already proven.
00;22;34;00 - 00;22;56;26
Unknown
Right. We already way outperformed and are showing sort of where the next set of things are, where there is that opportunity for people to actually. So I'm going to turn this on its head because I would say what you just said as, emotion number two, I was going to discuss and I was going to call that greed.
00;22;56;28 - 00;23;22;01
Unknown
And basically, I don't know that I have an ethical problem playing on someone's greed. And you're going to the smaller institutions saying, hey, you want to beat the rest of these folks? You want to overexpose to energy and then start building the case, and we can go to the how we build the case. And just a little bit I actually don't think I don't think that's unethical.
00;23;22;01 - 00;23;40;05
Unknown
If you tell somebody they're going to lose their job, if they don't do this or babies are going to die or whatever, that to me is fear and that that's wrong. But I mean, you really believe energy is going up. So I would have no shame in terms of telling somebody kind of playing on their greed. Hey, you ought to be overexposed.
00;23;40;08 - 00;24;05;18
Unknown
I've seen probably in my time in energy, you know, whatever it is, close to 30 years, I've seen three effective ads that I think really kind of play on the emotions and and to the, to what I'm talking about in content and and playing playing on that. The three hour one energy transfer did the most recent version of it where it's these things disappear that are made out of petroleum products.
00;24;05;18 - 00;24;31;12
Unknown
I think that actually works because it makes someone, in effect, kind of laugh, but it educates, so it plays on that. I think the second one that has been effective is the Biden pointing, I did this to gas prices. I think that made people laugh. It educated and work the third one and it plays on greed. And I actually think it was ethical when they did it.
00;24;31;12 - 00;24;57;09
Unknown
It was very effective for them. Natural gas Partners published an ad in the Oil and Gas Investor that says, we have created more millionaires in the energy business than anyone else, and it listed out all the portfolio companies they sold or whatever. And people read that and said, I want them backing me, you know? And so I actually don't think there would be anything wrong with playing on the greed.
00;24;57;09 - 00;25;23;12
Unknown
And the pitch is, hey, if you want to have the top, top job, bigger institution, overexposed to energy, and this is why you're going to beat it, and then we can go through the energy pitch, because I think the good of humanity pitch, which I truly believe. I mean, your life expectancy just doubles when you start burning hydrocarbons instead of dung and wood.
00;25;23;15 - 00;25;54;27
Unknown
It just that's where the whole like ESG global warming the world's going to end argument fails, right? Because all of these negative consequences are tens if not hundreds of years out potentially. But then there's the reality of the consequence, which is if you produce less coal, right now, then there's less coal. I mean, we saw this last year, people starved in Sri Lanka because they ran out of energy, because they were following this ESG path and there was starvation and there were people without access to, cooking fuel.
00;25;55;04 - 00;26;15;11
Unknown
Yeah. No grandmother dies if we if energy prices are expensive in the winter. And yeah, I hate to say it that way. Or the summer here in Texas. Yeah, I don't want to I don't want to play the fear card, but it's just it's true. It also if we buy energy from bad guys, wars happen and stuff like that as well.
00;26;15;11 - 00;26;52;10
Unknown
So I mean, it's not just prices, it's also where we get the, the sources from. So, you know, I can't believe all that, but I mean, playing on greed, how do we make that case to somebody? And I'll start and I'll kind of make up these numbers because I don't know. But I mean, if you are tuned to me, just kind of and I'm a smart CIOs, I know investing, I don't know, potatoes walk in and said, hey, this 15% of the earnings of the S&P 500 is this sector, and it only makes up 5% of the value that has to happen.
00;26;52;12 - 00;27;11;10
Unknown
That has to be favorable over the next 5 to 10 years. Right? Right. And I think that's true about energy. And and I think we're up to 15% or so of the, the S&P 500, you know, because I always believe you need to say something and be able to say it in a sentence or two. Now, it may take 30 minutes to go through all the details with somebody smart.
00;27;11;10 - 00;27;32;19
Unknown
But you need you need that in your hip pocket. Yeah. So I was just pulling up. Sorry for for pulling up my phone. We have, chart. And again, this is not an offering. I'm just trying to get advice, whatever, and trying to see if this fits. So, the last page of our presentation, it's a value of $1 million investment over a three year period.
00;27;32;21 - 00;27;58;11
Unknown
And, if you invested in bison in May of 2020, at the start of May of 2020 with $1 million, and again, you'd have to have been an accredited investor to do so, net of all fees, expenses, commissions, etc. that million dollars was worth $8.6 million at the end of May 2023. I can tell you there were zero new investors in bison, zero in May of 2020 because everyone was scared.
00;27;58;11 - 00;28;19;27
Unknown
Similar to now, frankly, the people are scared. Did you see my, Chuck gates needs a life podcast? I have not yet. I need to well, the, one of the things I talk about there is, you know, kind of. The week after I got fired, I was sitting there. And, you know, the way it always works when you get fired from private equity fund, what they always say is we'll buy you out of your LP interest.
00;28;19;27 - 00;28;35;25
Unknown
And if you can't agree on valuation, they said, well, at least we'll freeze your account because we recognize you wouldn't have been that big an LP if you're not calling the shots. You don't have a management fees to fund that to. And now we don't do that. For my ego. We have a problem, Chuck. That's an LP issue.
00;28;35;25 - 00;28;54;25
Unknown
And I go, well, this LP would not have been this LP without being the GP, right? Anyway, so I'm sitting there with this huge amount of capital that can be called. And so I'm looking at my personal balance sheet a couple of weeks after getting fired and I go, okay, on paper, am I right? I don't have to get another job.
00;28;54;25 - 00;29;12;24
Unknown
I can kind of do what I want. I got to go sell a plane. But all right, it was fun while it lasted. Then I went all these LP interests in the Kane funds. Let's say they're worth zero -$37 was right there in oil. So that wasn't a ridiculous thing to to look at. And I go, all right, my net worth.
00;29;12;24 - 00;29;45;08
Unknown
So okay, I'm not going to have to go get a job. If Kane called all of the capital, they could call under all of the funds and it was worth zero. All those LP, I was worth $82,000. And so I lived until I was able to sell my LP interests. Last fall, I lived basically as if I was worth $82,000, because fortunately, Kane didn't do any deals in that time, and so there were no real major cash calls, and that was fine.
00;29;45;08 - 00;30;04;02
Unknown
And so everything was great. I feel like this explains this explains your nice holiday party because, I can take a let's get a food truck I sold. It was awesome. Not 40 or so, but. No, that's that's why I was not showing up with $1 million in May of 2020, because I was sitting there going, look, we're going to revert to the mean.
00;30;04;05 - 00;30;28;23
Unknown
So. So bison up, a million turned into 8.6 million. If you put money in the S&P, you think, hey, stock market crashed because of Covid, it started to recover. Things are going to get better. Your million turned into 1.4 million if you put it in just the S&P 500. Spy ETF. If you put it in the S&P 600 energy index, which is not you don't have the commissions and fees from PSC.
00;30;28;28 - 00;30;52;29
Unknown
But basically same idea. So small cap energy ETF. But you'd think you'd have this big win on $1 million in just after oil went negative May 2020. Right. Like oil just went negative. Just rebound. It might have been ten bucks. Yeah it was it was 120 for sure. You're only at $2.6 million. So you're at 8.6 versus 2.6.
00;30;53;02 - 00;31;22;05
Unknown
Stunning difference. I mean, I was amazed, I thought in 2021, after we were up 377% net, I thought there would be like Financial Times articles, Wall Street Journal, the statute somewhere. So I don't want a statue. I just thought like, this is pretty cool. I mean, we basically had our big short moment moment and nothing happened, right? We were mentioned in the Financial Times, a secondary to, Crispin O'Dea, who, you know, it was a, up a lot less, but, you know, it felt like he was famous.
00;31;22;05 - 00;31;36;12
Unknown
So they want to do an article about him. And they mentioned that bison was up, a lot. And people didn't care. And that was the moment for me. So when oil went up a lot last year and people were like, you have to sell. I mean, a number of people got mad at me. I would not sell there.
00;31;36;18 - 00;32;01;01
Unknown
And not my not my investors, but other energy folks that were people on Twitter with big followings who decided I was evil when I was not selling their and the real answer in terms of not selling, there was a combination of valuation where the companies didn't get to a reasonable mid-cycle valuation, where it made sense to sell if they were private businesses, you just wouldn't sell for the price that they were trading at in the public market, at least the ones that I owned.
00;32;01;03 - 00;32;30;25
Unknown
The other answer was, look, people aren't they just don't care. They still don't care. You sell when everyone's excited, you don't sell when people don't care. And there's a there's one other, there's this chart I found actually. So one of the great things about Twitter, you know, there's lots of not so great things, but one of the great things about it is you get access to just absolutely incredible, you get access to incredible, thought leadership and, just brilliant idea.
00;32;30;25 - 00;32;55;21
Unknown
Some of the best content creators in the world or on Twitter sharing their content because, you know, that's how they get sort of the widest, rights audiences. There's a great, Twitter contributor. His name is Brian for all the. And we put him at the top of our last white paper, which is we show a chart going up where it says can't wait for a pullback and then afterwards going down.
00;32;55;21 - 00;33;23;18
Unknown
It's too risky to invest now. Yeah. And again, like people, people have written books about this. They've done articles, they've done long podcast or whatever. But this just small image is so powerful when you think about the psychology of doing nothing, which is what most people do when there are great opportunities. And, you know, the psychology around energy investment so far has been on this full negative track up and down.
00;33;23;20 - 00;33;54;21
Unknown
And my thought is that there's a wonderful opportunity, especially on the way down. There's a great opportunity to go buy because no one's buying. There's tons of stuff that's gotten just absolutely thrown out. Maybe not the stocks that Warren Buffett's buying or the stocks that are on the front page, the Wall Street Journal or that, you know, 100,000 people on Twitter are talking about, but there's a whole set of companies that are at absurdly low valuations, and there's a great opportunity to go buy them in a in a frame where everyone has this.
00;33;54;21 - 00;34;15;05
Unknown
I missed it mindset, or it's a too risky mindset. And when you look at tech, it's sort of been the opposite of that. Right on the way up, everyone was like, oh, this is never going to end. And then on the pullback for TAC, it was, hey, this is the future and it's now a discounted opportunity. And I mean, you look at companies like I'll pick on Carvana.
00;34;15;05 - 00;34;43;16
Unknown
I don't have any exposure to it, but it looks like it's insolvent and it's up hundreds of percent off. It's low because people are believing in this as the future. I mean, it's an insolvent used car sales business with a broken business model with, I believe their management had some sort of historical regulatory issues. And you have people believing in it and large funds with big allocations, going in and raising additional money to go buy this stock in this company that's basically insolvent.
00;34;43;19 - 00;35;09;16
Unknown
And yet those same allocators are not interested in energy stocks at two times EBITDA, one times EBITDA. You know, 20% plus free cash flow yields, huge discounts, liquidation value. After after there's been this pullback. So let me throw two things at you because you got me thinking about this. So I think one of the single most effective ads of all time was the old iPod.
00;35;09;18 - 00;35;38;26
Unknown
And it was a thousand songs in your pocket. Boom, I get it. You know, it's simple. It's, it's a kind of concise, concise message. Another great job of marketing was Nolan Ryan, and I believe this the details of this may be wrong, but the big picture spirits right went eight and 16 and led the National League in ERA and but went eight and 16.
00;35;38;28 - 00;35;58;25
Unknown
And he was a free agent. He was fighting with the Astros. The Rangers said why don't you come up to Dallas and meet with us? He camps, he takes a tour. They took his previous year, the eight and 16 year, and they said, here is what you would have done if you were a Texas Ranger on this day.
00;35;58;25 - 00;36;23;13
Unknown
You lost 2 to 1. We scored seven runs that day. So you would have been our starter. And they calculated that his record would have been 24 and six. And they said you would have won the Cy Young Award. You know, you would be that much closer to 300 wins. You're in the Hall of Fame, all that. And I always hate when you when you look in the rearview mirror on stuff.
00;36;23;16 - 00;36;54;00
Unknown
But they did that. Where I'm going with this is if you, instead of saying bison went from million to 8.6, if you are actually able to, whether it's a CIO of the whole portfolio or whether it's the private capital manager, if you were able to say, my suggestion is that 12% today should be allocated to energy. And I know that's way more than where people are targeting some people are firing.
00;36;54;00 - 00;37;17;12
Unknown
Do you would have had this of a return across your portfolio. And if we could make some reasonable assumptions and show a 9% versus 7%, that's your job. You if you did 9%, so to seven look at that. So so we put you know in frame it in that in that way so that the person could go you're right.
00;37;17;12 - 00;37;39;27
Unknown
If I had 12 months of 2% outperformance I could get a better job. I like the idea a lot. We pulled together something sort of similar to that, but not as directly framed. I do try to avoid giving specific investment advice, even in institutions, because we're not really just running a fund rather than trying to advise them on sort of the broader allocations.
00;37;40;04 - 00;38;01;07
Unknown
But, there's an endowment that reached out, which was exciting and hadn't reached out, when, when we agreed to, to do this a month or so ago. But it's still, you know, it's early stages. We spoke with them once in, June of 2019. And so we pulled together a similar chart to that, three year trailing chart.
00;38;01;10 - 00;38;23;26
Unknown
But it's starting in June of 2019. We didn't send this to them. I may never do anything with it. I might just reference it in a call that we're going to do, with them soon. But over that time, since that time, basis up 191% net and the S&P 500 is up 43% and the S&P 600 energy is down 2%.
00;38;23;26 - 00;38;44;10
Unknown
And various other energy indexes are down. Or have materially underperformed. And so the argument there is, hey, guys, we don't know exactly how much you allocated to energy around when you were talking to us. We don't know what your current allocation is to energy, but there was this enormous opportunity to invest at the time we last spoke, and it didn't go anywhere.
00;38;44;16 - 00;39;10;15
Unknown
And what we'd like to do is not have the next four years be lost, because we think that there is a similar or maybe even better opportunity now than there was in June of 2019. And here's the foregone return. So essentially what you're saying less about, hey, you should allocate this amount versus that amount to energy. But here's the foregone return and you can figure out for yourself, would you have allocated 20 million or 100 million or whatever to the strategy?
00;39;10;22 - 00;39;34;05
Unknown
I don't know, I can't tell you that. I'm not sure what's right for you, but anywhere in that range, one we've shown we've been able to manage that size of, separately managed account or that size within our fund. And here's the enormous excess return that's been missed by not having allocated in 2019. Let's not make that mistake over the next four years.
00;39;34;05 - 00;39;59;03
Unknown
So first step to failure is probably having me as your moral conscience, but as as your moral conscience for for right now at least, I actually don't have a problem. If you come in and you say, I think an institution should be 15% allocated to energy today because you believe it, I'm okay. If people tell me that, you know, you can say, that's not my job.
00;39;59;03 - 00;40;17;18
Unknown
I don't want to do it. I'm okay if you come in and say it, if you really believe it, which I think you would. And I don't know if it's 15% you believe or 20% I would do. I would do some due diligence. So I'll just pick on my alma mater, Rice University. I would potentially look at rice.
00;40;17;18 - 00;40;42;18
Unknown
And if you believe any institution should have 15%, maybe rice should have ten. And you should say that normally I'd say 15. But so many of your donors are energy people. You've got more exposure there than you realize outside of the portfolio. And they would look at you and say, yeah, you're probably right. So I do a modicum of work on that, but I don't think there's a problem with you telling folks how much, energy they should be exposed to.
00;40;42;18 - 00;41;04;16
Unknown
Could you believe it? I mean, you know, yeah, I should be thoughtful guy. And quite frankly, if I'm managing the Yates family office as the CIO, I actually would like to hear why. You know, you you come in and say, I think it should be 20%, and here's why, you know. Yeah, yeah, I think, I mean, one that's a very difficult question.
00;41;04;16 - 00;41;43;17
Unknown
And I think it's always easy to answer in retrospect what percent you should be allocated to different things. And it's very hard, I think, on a prospective basis to know that sort of exact number. I think generally speaking, these institutions are massively underinvested in energy. Rice is the exception. Rice and maybe also University of Texas, where their exposure is so large from their endowment where rice, I believe, owns large tracts of mineral land similar to the mercy of Texas, the university system, where they actually probably shouldn't have exposure to outside of that because they have, a large percentage of their total assets exposed.
00;41;43;17 - 00;42;11;06
Unknown
It's fascinating when you get to talk. And I'm a big, huge Allison Thacker fan who's the CIO at rice so cannot give enough props to to Allison. But it's fascinating to hear her talk because she is she says, I'm in the forever business, and that's my job in the endowment is people leave me a bit of land and I literally potentially will own it 300 years from now, you know, and she thinks in those terms and it's really kind of fascinating because most people think quarter to quarter, maybe year to year.
00;42;11;06 - 00;42;27;26
Unknown
But she's like, I'm in the forever business. Rice is going to be here 300 years. So maybe it's my problem that I would go to rice and, I think we met with them a couple times years ago, but and they should have shared their, their allocation problem because of the large, mineral lands that, that they owned.
00;42;27;29 - 00;42;46;13
Unknown
But I wouldn't want it's not that I think that people should go allocate disproportionately beyond what I think is appropriate to bison or to energy in general. It's that I think there is massive underinvestment, massive divestment where there is this opportunity. And I think that should be part of the case you make when you talk to us.
00;42;46;14 - 00;43;07;22
Unknown
I will set rice side. Obviously, the question if we're going to talk about. Right. So real quick, John Lawrence who's the energy investor. There is probably a sophisticated and energy investor. There is in an endowment pension fund. He's really sharp and great. Great guy. Well, set rice aside. I actually think that's, you know, because we're playing on the greed of a CIO or a private capital.
00;43;07;24 - 00;43;26;09
Unknown
Manager. And we're going to somehow look at his or her performance metric and they're going to go, wow, I can get a better job if I have that. I think it's okay to say you should be more allocated to energy, because, again, you really believe that and I believe it. I mean, I would feel comfortable saying it, you know.
00;43;26;10 - 00;43;53;03
Unknown
So anyway, just a thought. Yeah. Yeah, I hear you. I think I think that's a good angle I haven't really thought about. I, I'd been thinking about it more that generally any allocator I'm talking to, you should have more energy exposure. And without quantifying it, I think they probably should have exposure to bison. And so without that exposure to bison, they've missed this incredible outperformance relative to their general energy sector exposure.
00;43;53;03 - 00;44;28;14
Unknown
There's only a few funds that have done what bison has done or better. And they're all in the private equity space where, you know, generally past returns may not be indicative, but particularly in private equity, where especially in oil and gas, the dynamic there has shifted substantially and is probably partly what you're alluding to in terms of not being sure where you would go if you raised money today in private oil and gas on the public side, I think it's a little bit different because the dynamic is always shifting in public, but it's always the same in the sense that if you can go buy a business at a fraction of its liquidation value,
00;44;28;14 - 00;44;51;23
Unknown
at a very low valuation multiple, where the value is growing through, observable activities that have already been happening and are likely to continue, you're statistically likely to outperform over time. And so there's sort of this formula. So I'm going to cut you off real quick. I want to make a point here is I think you need to make that point more simply.
00;44;51;23 - 00;45;12;10
Unknown
And if you could do it in a story and I'll make up this story just so, and because I know this is this is somewhat true, is, you know, hey, we've seen this story before. Tobacco became un investable over this decade. It wound up being the best performing. It was up ten x. The rest of the stocks were whatever.
00;45;12;13 - 00;45;34;20
Unknown
And if you had 2 or 3 more of these simple examples from history of where something and whether it's 15% of the earnings, 5% of the market value, just where you can find some analogies just to give something, something give somebody something they could relate to. I think that is more powerful way to say that than what you just said.
00;45;34;23 - 00;45;54;24
Unknown
Yeah, I think I'm getting that. I think there's two separate things, right? There's what you're what you're talking about as an allocation to energy. Yeah. And then there's the if I let's say I'm sold on it, which again I think many people aren't. So I think it makes sense to think about selling on energy and then selling on a particular mechanism for getting energy exposure.
00;45;54;25 - 00;46;22;20
Unknown
Yeah. And so I think I think where I'm mostly focused is on the mechanism for energy exposure, because I think I think it's just there's so much value when everyone's given up and either not investing at all in the sector or just allocating to private equity and then to index funds, which is the institutional approach to energy. It's either divest from oil and gas or invest in index funds and private equity.
00;46;22;22 - 00;46;55;02
Unknown
When everyone's done that, there's a wide open field. There's almost no professional investment management where they're actively picking small cap stocks. So my answer to you before was here's here's why. Small cap public oil and gas exposure on the active side should do well and why the past returns might actually be indicative. The tobacco thing is, I think the energy sector answer, which I think I need to do a better job with also, and frankly, probably should lead with right where it's like, hey, you hate this.
00;46;55;04 - 00;47;22;11
Unknown
Yeah. You think this is going away, right? Great. Buy it. Well and and here is just history of private equity and kind of where I drew on that. In effect Ken Hirsch and David albums of MGP created the private equity oil and gas model. And the first, I don't know, 1012 years of their existence. They went into the private capital bucket and they didn't sell MGP, they sold energy.
00;47;22;14 - 00;47;47;06
Unknown
Here's why you need energy, because that private capital bucket, in effect they were competing against buyout biotech venture, all the other things that the private capital bucket did and they had to compete on energy. It was only then when the allocation became sad that you went in and said, Cain versus in cap or quantum or whoever, and it was fighting about you know, each individual manner.
00;47;47;08 - 00;48;03;28
Unknown
Manager, I think we're back to the world where you got to go fight for energy first. So I think that probably needs to be added to the pitch. And then, yeah, you're right. I mean, going in and saying you should do us instead of private capital because you get pissed off. Guess what? You get your money back.
00;48;04;04 - 00;48;29;26
Unknown
Whatever you're you're redemptions are better than private equity. Yeah, well, it's not just that. I mean, the, the dependance there are some key, right. There's liquidity questions around private capital, but there's also other aspects where a lot of oil and gas, private equity is it's really growth equity investing and growth. Equity investing is very different from value investing because in growth equity investing you're deploying capital.
00;48;29;28 - 00;48;54;25
Unknown
And the hopes of building a enterprise or building an asset that's, you know, worth more incrementally more than the capital that's been put in in order to build it, hopefully by multiple times and sometimes that successful and sometimes that's not. But it's most similar to venture capital. Public equity investing, particularly with a value framework, is completely different.
00;48;54;25 - 00;49;25;16
Unknown
It's more about making your money on the buy and just being careful enough on purchasing something at a large enough discount, at a price where no one would ever agree to sell it to you if they were a private market participant and actually owned that private business. If you buy cheap enough and you do a good enough job of selling when when share prices go to a point where they're more rational and you do a good job of holding well, share prices are irrational.
00;49;25;18 - 00;49;55;18
Unknown
There's sort of excess return that can be generated from that. The reason that difference matters so much is that there is a whole set of conditions under which private equity works, and absent those conditions, private equity doesn't work and can potentially fail quite gloriously. Public equity investing works over sort of a much broader range of conditions. The upside might not be as large across sort of general public equities versus general private equities, but not just the liquidity.
00;49;55;18 - 00;50;24;21
Unknown
The actual outcomes end up being sort of, more tilted to the positive and sort of more consistent. Let me give you the insider baseball way to pitch that when you're talking to a CIO or whoever, it's what these private equity guys have done to incentivize the management teams, have given these massive back ends to all the management teams, literally, these management teams above two x, above two and a half x will get 50% of the profits.
00;50;24;23 - 00;50;45;05
Unknown
Guess what? When you're at a 5050 split A, you're above two X management is drilling at $10 million. Well, and that's 5 million of their dollars. Guess what they choose to do? They go sell. And any private equity firm that tells you, oh, yeah, we control the sell. No you don't. If management walks in and slides the keys across the table, guess what you're like.
00;50;45;05 - 00;51;11;06
Unknown
All right. Sounds like we're selling. Yeah. And so I think you're exactly right. The private equity has been more venture capital. I mean, we owned it. We were early stage assets and oil and gas. The problem is venture capital works with a basket and ten X's and 12 X's. And you just fundamentally can't get that an oil and gas private equity because you've incentivized the management team at two X to start thinking about selling.
00;51;11;09 - 00;51;32;18
Unknown
Yeah. Yeah. Absolutely. Yeah. And so so that that's your insider baseball pitch to the CIO. That's why it doesn't ultimately work. And so then you know what private equity firms do at that point. They go, wow. This volatility in my returns don't work. Doesn't look very good. We had 12 companies. We're going to merge them down to six.
00;51;32;18 - 00;51;54;03
Unknown
And we're going to merge all the companies so that we have 1.8 to 2.2 times our money. So the fund is A2X. But at the end of the day they just created less volatility by merging the companies. Every private equity guy says now we merge the companies to save Gina and the synergies. No. You're building your track record.
00;51;54;05 - 00;52;15;26
Unknown
I mean you're you're getting rid of the volatility when you show the number of deals. I have seen a private equity firm firm's returns for all the companies, and they don't have companies listed. But I have a press release where they announce, you know, fund seven has created this company. You're like, well, where is it? You find footnote, you go back 37 pages and you find out they were merged.
00;52;15;28 - 00;52;49;12
Unknown
Yeah, I think, I think there's a bigger thing that happens than that. And again, that's, that's what happens from the private equity fund managers perspective. From the allocators perspective, there's this gross misunderstanding of what's going on. I think it's perpetuated by investment consultants. But I'm not I'm not exactly sure. Where private investments are considered stable and public investments are considered volatile because they get public statements monthly, because they're and you mark to market and private equity does not mark to market.
00;52;49;17 - 00;53;14;05
Unknown
So you had people thinking that their investments were of a certain value in, let's say, June of 2020, where their public equity investments were marked down 80% from the prior year. Their public, their private investments might have been marked down 20%. But of course, it was nonsense, right? Like the public ones weren't there. Intrinsic value wasn't down 80% and the private ones were likely down way more.
00;53;14;10 - 00;53;32;23
Unknown
And so Mark to market is wrong and Mark to model is wrong. And the reality is that the intrinsic value of businesses is sort of a complicated thing to calculate. But you're right, I think these CIO bonuses are based on volatility. And if I can get four marks a year versus 365 marks during the year, that's going to be better for me.
00;53;32;27 - 00;53;54;13
Unknown
Exactly. Yeah. So I think I think that's a really important consideration. It's been a reason why I think allocators have preferred private equity and private credit to public equity and public credit. But I think when you suppress volatility, you end up with negative outcomes over time. And I think the reality of getting to see monthly, hey, here's what the marked market is.
00;53;54;16 - 00;54;22;20
Unknown
I don't think the market is accurately pricing these stocks at any given point, but at least there is some, there is some outside factor, some controlling factor in terms of what those marks are besides what my personal belief is or whatever. My, you know, auditor is going to let me get away with. Yeah. No, that that would be the, the holy grail of money management if you could somehow, public stocks but publish four valuations a year disconnected from share prices.
00;54;22;20 - 00;54;43;23
Unknown
Yeah. Right. Which is I mean, actually, I've seen this happen sometimes where private equity funds will divest to public companies and then not always mark their, values to the share price volatility. So that's been very interesting to see. It's not that common but you see it sometimes. But it's like, hey, if they can do it I mean I've never done that.
00;54;43;23 - 00;55;02;21
Unknown
I have no interest in doing that. I'd rather just, you know, there's a reality and you just deal with the reality. And sometimes it's really painful. I just never I never merged companies. And I always showed the complete track record, and. And you got fired? Yeah, I got fired. Exactly. And people would people would look at it and go, there's a lot of volatility here.
00;55;02;21 - 00;55;23;24
Unknown
And I go, I go, yes, but think about it this way. You know, particularly when you look at fund six, I have Silver Hill, I have I have adventure that are all crushing it. Where would you want me to spend the next dollar? This company that I lost half my money on, I could have spent more money there and probably gotten it to break even.
00;55;23;26 - 00;55;42;12
Unknown
Or do you want to go drill another? Well in the Delaware Basin, where Silver Hills drilling an 80% rate of return? Well, so guess what? I just sold that. Just let's let's cut bait and let's go and let's focus the money. And I think that was one of the things that kind of was getting accepted out there of, hey, it's okay.
00;55;42;12 - 00;56;08;02
Unknown
So long as the amount of money they lose a small small enough. That's a defined part of the the business strategy. But yeah, it's, it's a it's a real thing. So so on that note, actually, it's very interesting in the public equity investment world, there's a lot of pressure against what they'll call concentrated investments. But the reality is if you manage a portfolio effectively like you're describing, there aren't that many companies that are in generate ten axis for you.
00;56;08;06 - 00;56;30;01
Unknown
And if you can allocate additional capital to a company, even if the stock price has gone up substantially, if it's likely to generate a better return for you than buying some other thing that's down, you should do it. Yeah. And you know, I think that's something that people actually institutions don't seem to have as much problem with that, fund of funds and, certain others don't like it as much.
00;56;30;03 - 00;56;55;16
Unknown
But that's something that's, I think, very important to be able to hold stocks as they go up and not necessarily sell them just because they've gone up. And then being able to actually invest more into businesses that are working really well, it's it's very hard. It's that first part of psychology. So it's easy to talk about the second part where, you know, it's too risky, on the comedown, but I think the I missed it on the way up.
00;56;55;16 - 00;57;21;23
Unknown
Psychology is really tough to to overcome that and to go in and put in more money at a higher valuation. Yeah. So if we're going to I'll try to summarize our conversation today. And you see if I got it is I would think that potentially, you know pushing pushing more just allocation to energy could be something to go think about.
00;57;21;23 - 00;57;42;12
Unknown
If I were you the other thing is if I can translate Bison's performance into something more specific to the person sitting across the table to me, I'll, Nolan Ryan, you're not going to be eight and 16. You're going to be 24 and 4 or 24 and six, whatever it was. And you're going to win the Cy Young.
00;57;42;14 - 00;58;01;23
Unknown
I think, potentially that could be helpful, too. And then and this is the hard thing. So I have no idea where to go about this. And probably tough. We're obviously not going to come up with it talking about. But literally if we could just have the punchline of a thousand songs in your pocket, if you could have that.
00;58;01;23 - 00;58;25;02
Unknown
I do think that helps, because the one thing I will say that we really haven't talked about is what I found was the simpler I made the message over time, the more money, people just got it easier. And it was. And and I had a friend send me a 30 page business plan to go raise money for some stuff, and I told him the same thing.
00;58;25;02 - 00;58;45;10
Unknown
I'm like, look. Simple, simple, simple as I got. I mean, my deal was literally we do early stage assets in oil and gas, and we have these engineers that can apply technology we see all over the country to certain places quicker than the industry, and that's why we do them better than anyone else. And it was like, okay, I get that, you know, it was that simple.
00;58;45;10 - 00;59;01;02
Unknown
Now you can spend two hours going into the detail of how it actually worked. So anyway, I told him he came back with 15 pages, said, all right, cut it in half. So we're on our iteration. To his credit, he's gotten down to one page and I go, that's going to help you raise more money. The simpler it is.
00;59;01;05 - 00;59;30;12
Unknown
Let me try that. Yeah. And then, I don't know, I'm literally just making up right now. Yeah. Yeah okay. So so there's almost no active managers in publicly traded small cap oil and gas anymore. And by being an active manager focusing on this, we're able to find stocks that are not just cheap but also have embedded assets and other other catalysts that allow the stocks to do better in downturns and do better in up cycles.
00;59;30;12 - 00;59;53;03
Unknown
And so we're able to actually find cheap stocks by doing the work and being there when almost everyone else isn't. I'm a professional basketball player, playing with high school kids. I'm in the, what is it, the kiddy pool? Yeah. Only adult standing in the kiddy pool. Yeah, yeah, that's borderline creepy. Oh, let's just, just with my 18 month old working for sponsor.
00;59;53;06 - 01;00;19;25
Unknown
Yeah, but, no, I mean, I. Yeah, no, I like that literally. If you could, if you could say if you could say something to the effect of something with a lot of sophistication in a, in an amateur and amateur ish type market, I think if you had one sentence like that, the light would go off. Yeah. And even make it non-energy and make it less numbers and facts of, you know, free cash flow and that sort of stuff.
01;00;19;25 - 01;00;37;28
Unknown
It's just, you know, I'm, I'm just, you know, it's hokey to say I'm Einstein working with high school kids or, you know, whatever, whatever the the thing is, I think if you can figure out a punchline to that, I think a light goes on. Yeah, this is kind of be cool. I had no idea where this was going to go.
01;00;37;28 - 01;00;53;07
Unknown
I think you should do more of these. I think you have a lot of wisdom you've accumulated over the years and, you know, wear a pink t shirt and, you tell people in suits, it's like the the girlfriend likes me in pink, so I've seen myself wearing more. I mean, they do make, pink, button ups.
01;00;53;07 - 01;01;09;25
Unknown
Do I hear, How dare you say no? It's okay. I'm going to fess up to this, and I can't believe I am, but, you know, you and I have become a pretty good friend. So good for so. So I am getting on a plane tomorrow to go to London. I'm going to meet the girlfriend's parents for the first time.
01;01;09;27 - 01;01;31;18
Unknown
I spent three hours at Saks Fifth Avenue yesterday with a personal shopper, because she didn't think my wardrobe was appropriate to meet her parents, and I bought new clothes, so I will be dressed appropriately for the girlfriend's parents. Well, yeah. There you have it. I don't know if I would have gone to Saks to do that. That's,
01;01;31;20 - 01;01;54;26
Unknown
That's not in London. I was not given a choice. Oh, I yeah, I see this was not your decision. I see I'm way behind. I really need to watch your, how I met. Yeah. What is it? Chuck Yates needs a wife. And I'll give you the disclaimer just real quick. The first half of it is, unfortunately, my sense of humor peaked when I was 13.
01;01;54;26 - 01;02;13;26
Unknown
So it's silly, it's goofy. It's even kind of crude to some degree. That's just me. But the second half is actually pretty serious. And so anyway, you know, I mean, what got me thinking about doing this was your interview with, Ken Hirsh. Right. The, co-founder of of NTP. I really liked your your interview. I thought it was super interesting.
01;02;13;26 - 01;02;32;16
Unknown
And, you know, we did, podcast interview. And then also I came by when you did your marathon, fuser of honor, to help support to help support you at the end of that. But I think, I think there's just things that you learn by doing well, doing something for a long time. And, it's pretty cool to get your perspective.
01;02;32;16 - 01;02;47;29
Unknown
So thanks for thanks for doing it. Oh, that's. I did. Did you ever see the movie Groundhog Day with Bill Murray? I did, yeah, the scene in there where he's talking about, God, well, not like the God, but God. I think God just knows so much because he's been around so long. There's a lot to be said for that.
01;02;47;29 - 01;03;18;16
Unknown
Absolutely cool.