J Mintzmyer - Shipping Extraordinaire
J Mintzmyer (@mintzmyer) is a renowned maritime shipping analyst who directs the Value Investor's Edge ("VIE") research platform on Seeking Alpha. He stopped by The Business Brew to discuss the shipping industry. J is a frequent speaker at industry conferences, is regularly quoted in trade journals, and hosts a popular podcast featuring shipping industry executives. Mr. Mintzmyer also hosts regular "Virtual Investor Forums," which are a must-attend for anyone interested in the shipping and infrastructure industries. As Head of Research at Value Investor's Edge, his trades and model portfolios have outperformed the shipping sector average for 6 consecutive years and have beaten the Russell 2000 for 5 of the past 6 years. J has earned a BS in Economics from the Air Force Academy, an MA in Public Policy from the University of Maryland, and is a PhD Candidate at Harvard University, where he researches global trade flows and security policy.
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Album art photo taken by Mike Ando.
Thank you to Mathew Passy for the podcast production. You can find Mathew at @MathewPassy on Twitter or at thepodcastconsultant.com
+ Transcript
Bill: Ladies and gentlemen, welcome to The Business Brew. I'm your host, Bill Brewster. This episode is brought to you by Koyfin. Koyfin displays financial information simply and elegantly. Koyfin is one of the fastest growing platforms for financial data and analytics to research stocks and understand market trends. I discovered them thanks to their very passionate users, many of which are my friends. Imagine a Bloomberg-lite with tons of high-quality fundamental data, a powerful graph engine that can show it all clearly, and a user interface that doesn't look like it was built in the 1990s. If you're an individual investor, research analyst, portfolio manager, or financial advisor, do yourself a favor and check them out. You won't regret it. Sign up for free at koyfin.com. That's K-O-Y-F-I-N dotcom.
I'm excited to bring you this episode today. J Mintzmyer is a great guy. He's also a renowned maritime shipping analyst who directs the Value Investor’s Edge research platform on Seeking Alpha. He's a frequent speaker at industry conferences, and is regularly quoted in trade journals, and hosts a popular podcast not as popular as mine. He claims it's popular. I'm reading his intro that he wrote me why because I like J. And you know what, he deserves the opportunity to pitch himself but I digress. Anyway, his podcast focuses on the shipping industry. I want to J on the program because he's a really good guy, incredibly intelligent, BS in economics from the Air Force Academy, MA in public policy from the University of Maryland, and a PhD candidate at Harvard University where he researches global trade flows and security policy. So, the man has got brains. I think the way he thinks is really smart. I like that he is a value guy that chose a niche that he could have an edge in.
I will say at one point he quotes his returns, I have not verified these returns, you should do your own due diligence as always, do not accept his returns as indicative of future results. You should know the drill if you're listening to this podcast, but just in case you don't, none of this is financial advice. All of the information contained in this program is for entertainment purposes only. Please consult your financial advisor before making an investment decision. Do your own due diligence and figure out things for yourself. I make no representation as to the accuracy of what J’s returns are, but I will say that I will vouch for him as a person, and I enjoyed speaking with him a ton. I hope you all enjoy it. With that, let's get to the episode. J Mintzmyer, how you doing, man? shipping extraordinaire, fellow investor that suffers from the value disease, current blogger, ex-blogger, what's the deal there?
J Mintzmyer: Yeah, thanks, Bill. That's quite the title shipping man extraordinaire, whatever you call it.
Bill: [laughs]
J Mintzmyer: Yeah, value has been out of style for long, long time.
Bill: Hang out. We don't need to jump right into it. Let's tell people your bio, because your bio is quite impressive.
J Mintzmyer: Yeah, thanks, Bill. I've been following the shipping industry, what I'm most known for now for about 10 or 11 years. I started on Seeking Alpha back in the middle of 2011 just writing about value stocks. After a couple of years, I’ve realized some of these bigger stocks Microsoft, and Walmart, McDonald's was a value stock. Even Apple was a value stock for a while. I didn't really have an edge there. I saw I was looking for some sort of dislocated industry. That's how I got to be into shipping and that was probably 2012, 2013 when I picked up that industry, and 2015, 2016, I started a research service Valley Investor’s Edge and here we are today. It's been quite a ride and looking forward to chatting with you about it.
Bill: So, as an investor, do you think that in theory, it makes sense to look at dislocated industries or do you think like some of writing these compounders makes sense just from like a-- because you're a value guy at heart and I understand what you're looking for in dislocations. But for a portfolio, how do you run your portfolio?
J Mintzmyer: Yeah, of course, I got to be really careful. Of course, as I'm just talking about me.
Bill: Yeah.
J Mintzmyer: This as well and it isn't blanket advice or anything like that.
Bill: Yeah.
J Mintzmyer: Generally, as I go through the years and I humble myself in the markets, I tend to limit my speculative, or my really self-personal picks, or research picks to a certain percent of my portfolio. Shipping is where I focus. When I'm actually out there picking stocks, I stay right in my lane, which is shipping and a little bit of related energy. So, I don't pick anything. Stock, personally stock related that's not inside my lane. [crosstalk] it’s outside of my lane.
Bill: Except you had a hell of a call on Dollar Tree.
J Mintzmyer: Right. [crosstalk]
Bill: Because of a shipping view.
J Mintzmyer: Exactly. So, it was in the lane. It might be in an off branch, but it was in the lane. That's how I get into energy as well. Because if you really want to understand the shipping markets, you have to understand global energy transport and global energy markets as well.
Bill: I think Bruce Greenwald would be very proud of you.
J Mintzmyer: Oh, well, that'd be flattering.
Bill: Because when I took an executive class of his, it wasn't like a real class, but got to spend some time with him, I told him that, this is back when I bank food companies for a little while, and he was like, “Ah, that's such a good idea because it's cyclical, and people are afraid of it, you can actually have an edge in that,” that it'd be better to bank than to own the equity of in average, but they're fine to trade. But I think that like owning them is a little bit tough. Do you find something similar? The very first comment, I asked for questions on shipping and the first comment is trading sardines.
J Mintzmyer: [laughs]
Bill: I got to tell you, there's two negative biases that you're fighting against. I'm not trying to start this off confrontationally. I'm actually going to have a lot of fun with this conversation. I hope you will, too. But these are trading sardines and then the other thing that I immediately think is, can the CEOs of any of these companies be trusted? Those are the two questions that just pop into my head. So, what do you think about that?
J Mintzmyer: I'm glad we're addressing that because shipping has a terrible name to it and it's one of those things where everybody knows the legacy of shipping. When people hear shipping, they always tell me, “Oh, it's not like dry ships.”
Bill: Yeah, that's right.
J Mintzmyer: Everybody knows about dry ships.
Bill: So what happened to dry ships just for people that may not know?
J Mintzmyer: Yeah, so, dry ships, D-R-Y-S was a dry ball company originally, but it had a very, I got to pick my words carefully for legal reasons, but a very suspect governance structure, and very promotional management and such, and the stock got picked up by a lot of boiler room type operations and session in the mid-2000s. But there was a legitimate commodity boom going on. So, the company rode the wave, and we're not very responsible with it, and at some point the stock was like a 90 or 100 bagger and like a month or six months or something, and then, that was a little bit before my time. Then whoever bought the stock lost 99.999% of the company and it was taken private. So, quite a saga up and down all the time.
Bill: Wasn’t the dude doing all kinds of reverse splits and stuff like that and all kinds of things for index inclusion? He was an interesting cat if I recall.
J Mintzmyer: It was a messy business. That was dry ships 2.0 if you will. That was in 2014, 2015, 2016. Yeah, reverse splits, serial diluter, related party deals where the company was just buying assets from the CEO. All this stuff that you would never-- [chuckles] It was legal, though, because it was all disclosed. That's what people think about when they hear shipping.
Bill: Yeah, it sucks.
J Mintzmyer: That's part one. That's the governance side of it and that's part one. It's so widespread that it's almost a truism. So, if I go speak to folks about shipping, and the first paragraph out of me is not something about like, “Oh, yeah, the governance terrible.” People like to me out like this guy doesn't know shit, because, they’re like, “This guy's a sucker.” But you got to understand that there was about, I say, a dozen of these firms that came public at the top of the cycle last time around. This was 2006, 2007, 2008. What happens at the top of the cycle? You get all the worst actors, all the worst players, all the crazies governance. It's like the SPACs, the first few SPACs we had a year ago, probably had some really creative and cool ideas. But the SPACS that came out right at the end of the cycle, like what March, April of this year was the end of it, those SPACs were, I haven't done research--
Bill: Yeah, some interesting deals are getting done.
J Mintzmyer: Right, or like crypto. You have bitcoin and Ethereum. I'm not a crypto expert, but then you have Doge and Shibuya, all this crazy stuff. So, a lot of the shipping companies came public at the end of that wave and the governance was a mess, and there's no sugarcoating that. That was 2006, 2007, 2008 IPOs, the shipping companies of today, I follow about 55 of them, and this is on the US market and the Oslo market. Those are the two main shipping, where you can find shipping stocks. Of those 55, I would say at least 30 have outstanding or at least strong corporate governance and management. There's probably another 10 that have mediocre management and lots of conflicts of interest and stuff. There's 10 or 15 that are just trading sardines, and turds, and shit codes, or whatever you want to call them. I prefer to not even talk about those companies honestly. I just keep an eye on them to see what they're doing, but our service has gotten so big. We have over 500 members now, and some of these folks are portfolio managers, family office managers, and we just can't mess with those stocks. This is not responsible.
Bill: The reason that I wanted to talk to you is one, I've seen you make a lot of really good calls over the past 18 months, some of which have ended up in my inbox and I've said, I can't even deal with this. I don't know anything about it and I'm not going to start to learn anything about it. But I have watched what you've done and it's been very impressive, because I think you've been right for the right reasons. The other reason that I wanted to have you on is, I think that even if people are like, “You know what, I'm not interested in shipping companies, who cares?” At the end of the day, what's going on in supply chains right now is something that I think everybody's got to be at least interested in and shipping definitely ties into a lot of that which informed Dollar Tree thesis which played out very nicely. So, if it's cool with you, I'd like for you to set this stage of like, what shipping was going through and maybe 2018 2019, and then what COVID did to the industry and supply chains generally I’m just talk through that from just like analyst perspective of the environment more than like a stock perspective, if that makes sense.
J Mintzmyer: Absolutely, Bill. Right before we get into that, I want to make this answer longer that needs to be, but the part two of the anti-shipping bad governance trading sardines thing is we went through like a seven or eight year downturn after 2008. So, that's important remember to. So, number one, the crappy companies, they went IPO at the top of the cycle. Number two, you had seven or eight on average, very bad years. So, people look at these stock charts and they're like, “Oh, these stocks are terrible, the governance can't be trusted, they always lose money.” So, that's wrapping up the previous question.
Bill: When they came public, did they spend a lot like did the fleet's get too big, or did they just cash out in general?
J Mintzmyer: Well--
Bill: The bad actors, not all of the companies.
J Mintzmyer: Yeah, most of the worst actors were these small family fleets that had six or eight ships, and it wasn't so much that the family themselves were bad actors. But they met up with a Wall Street banker where he wasn't, she wasn't and convinced them that, “Hey, this is how you make the big bucks.” There's over 10,000 dry bulk vessels in the world fleet over 10,000 large sized dry bulk ships. And so, to have any scale whatsoever, if you don't have 50 to 100 ships, like you're a bit player, smaller than bit player and you had companies going public with like six ships. [laughs]
Bill: So, what is the company with six ships even do like they're just mom and pop scrambling around trying to load the boat, right?
J Mintzmyer: It's not even so much traditional shipping as you might think about it. It's more like a financial play. It's like a lease. They buy the ships, they get a mortgage for the bank, and then they charter the ships out to somebody else who holds the materials. So, yeah, it was all these little funky little stocks that had no business even being public. So, I sorry to belabor that-- [crosstalk]
Bill: No, it's all good, man. This is your conversation. I'm just riding along with it.
J Mintzmyer: I appreciate you, Bill. It's just important to get that out of the way because a lot of folks are just coming in the shipping in the last six months or a year, and a lot of folks came in last year with the tankers [unintelligible 00:12:59] it boomed and busted, and I'm sure we'll get into that later in our discussion. But Billy, that’s a good question. You said, “Hey, what was going on in 2018, 2019?” So, back in 2018 and 2019, things were finally starting to recover after that eight- or nine-year downturn I was talking about and across the board. Shipping’s, actually, like six or seven different segments and they all have their own unique supply and demand. There's like dry bulk, which is iron ore, and coal, and grains, and that sort of thing that has its own supply demand. Totally independent of the rest.
Bill: Oh, so dude, hang on. Wait. I don't mean to cut you off. Let's pin this. But so you got dry bulk, and that's on the back of this huge commodity boom. Like all the bricks in the super cycle going into 2008, and then that all explodes. I would imagine there were too many vessels in that area for a while. Is that fair?
J Mintzmyer: Absolutely. All time high rates, you had these old rusty 25 year old vessels getting hired for $150,000 a day. Then the normal rate was like $12,000 to $15,000.
Bill: Wow.
J Mintzmyer: There was this absurd rate. It was like that tanker boom we had last spring only it didn't last two months or three months. It lasted two or three years. So, that's the backdrop we had Bill. Again, this is 2006, 2007, 2008, but it wasn't just dry bulk. It was every shipping segment had a boom in 2006, 2007, 2008, but it was for different reasons. Because of that the global financial crisis brought everything down. But they each had their own trajectory of recovery, and they each have their own metrics to look at. It's not all shipping’s hot today, all shipping’s bad. Tomorrow-
Bill: Yeah, that makes sense.
J Mintzmyer: -each segment has its own thing. But we’re getting off the path.
Bill: No, yeah. Okay, so let's go back to where you're saying to set the stage. So, there's dry bulk and then what are the other categories.
J Mintzmyer: Yeah, so just real quick, I'll hit the highlights on those. So, there's dry bulk we talked about this container ships which I'm sure you're probably the most familiar with we're talking about a lot now. Those are the retail goods that come in those 20 foot or 40 foot boxes a target Walmart, Amazon. When most people think of global trade and shipping, they're probably think about containerships, then there's tankers, which a lot of people are thinking about because of what happened last year and that carries the crude oil. It's like a big floating bathtub more or less.
Bill: Yeah. Those are dope, man. How they have the water in the-- What is it? It's in the hole, right? So, that the ship doesn't get like the weight is--
J Mintzmyer: They have ballast, ballast tanks.
Bill: Yeah. That’s sick.
J Mintzmyer: [crosstalk] water. Yeah, it's interesting. You can google this if someone's listening is later, you can do like VLCC. That stands for Very Large Crude Carrier. VLCC ballast, B-A-L-L-A-S-T, or VLCC laden. Ballasts is when it's carrying the water in the tanks, it has no oil, and they ride real high up in the sea. And then VLC is laden, the thing is like sunk in the ocean. [crosstalk]
Bill: It's like drop your car or something like that [laughs]
J Mintzmyer: Yeah, that's hydraulics.
Bill: Yeah, that’s right.
J Mintzmyer: But it's an astounding difference. The laden VLCC, it's like this weird floating barge looking thing going across the ocean. When it's ballast, when it's empty, it's like on top of the ocean. So, it's kind of--
Bill: Yeah, that's dope. I've watched YouTubes on liquid natural gas exportation-importation, and that's how I learned about these ships. They're very, very cool.
J Mintzmyer: Fantastic. Well, that's a great segue, because that's another type of ship. The gas transports. There's two different types. Well, there's more than two, but the two main ones are LNG, Liquefied Natural Gas, and then LPG, which is Liquefied Petroleum Gas or basically propane. So, there's two different types. They're the main types. There's some other smaller ones, ammonia and some chemical gases, and stuff like that. Then also on tankers, there's not just one type of tanker. There's multiple types. There's different sizes, of course, and then there's are you doing dirty, which is like crude oil, that sort of thing, or are you doing clean, which is refined products with gasoline, diesel jet fuel. That's where they-- Some of them even carry like veg oil, palm oil, or something like. So, all sorts of types of transports, and then you have the offshore type stuff--
Bill: So, veg oil get like it's got to get crappy rates, right? Because that's not worth as much, right?
J Mintzmyer: Yeah, well, and it's a much smaller usually type of tanker that carries those. They're usually what's called the MR, the medium range tanker [crosstalk] the ones where the handy size tankers, is a very niche trade. You don't have the very large million barrel type ships carrying veg oil. But that's just something they can carry, and there's a lot of these little niche trades that go on around.
Bill: Just to know if they're like the stepchildren of the tanker game.
J Mintzmyer: [laughs] Well, they have their own supply lanes and that sort of thing and they're pretty small. So, that's actually not something I'm real smart on. [crosstalk]
Bill: That's okay. [crosstalk] asking questions.
J Mintzmyer: Yeah, you'll poke out my weaknesses here.
Bill: No, that's not what it's about. I think it's interesting, and you got to keep track of a lot of stuff.
J Mintzmyer: There's a lot of stuff going on and thankfully, there's a lot of excellent data providers out there that we subscribe to for our research budget at Value Industries Edge and stuff like that. Things that, for example, they track where all the ships are at. So, I can log in, and I can put in the name of the company I follow, and it'll show me where all their ships are at, and there’s all sorts of things like that, that just the average retail investor, or even some hedge funds that don't really know what they're doing. They have no idea what's going on.
Bill: Well, when I was thinking about your business, I was like, what's really smart about what J is doing is, you are an expert in a niche that touches a lot of other things, and you can be people's research budget, and almost be like, I don't want to use the word, platform, but it's what I'm thinking of like. You can be the hub for people to get information and spread the cost among a group. That's a smart business idea, man.
J Mintzmyer: Yeah, I think you actually nailed what we try to do. Folks sign up for our service, they're not getting investment advice. They're not getting like hot trades. I disclose all my trades, I disclose all my positions, but you nailed it. My job is to do as much due diligence and research as I can. Other folks read our reports and read our exclusive content, and they come to their own conclusions. I get things wrong. I'm probably wrong, at least, I don't know 30%, 40% of the time, but it's about making a lot of money when you're right 50%, 60% of the time and not losing your ass when you're the 30%, 40% if God forbid, 50%, 60% that you're wrong, you don't lose your ass. That's how it should be-- [crosstalk]
Bill: Yeah. [crosstalk] not wrong that often You don't need [crosstalk] yourself down.
J Mintzmyer: Well, I’ve to see [crosstalk]
Bill: That's my job is to talk myself down.
J Mintzmyer: [laughs] If we were having this interview in May or June of 2020, I probably be as confident about shipping and preaching the virtues of it, but nobody listened. So, it just depends. In 2021, I'm right about 92% of the time or something.
Bill: Yeah. Well, it’s a [crosstalk]
J Mintzmyer: But in May of 2020, I was wrong 90% of time. So, [crosstalk]
Bill: Yeah, okay. All right. Well, let's frame this because what really happened is, you were right, but nobody paid attention to it, and you were able to make recommendations when things were very dour and you were right. So, that's what caught my attention, man. Because I was one of those people that was like, “I'm not fucking around with shipping right now. No way, man.” But that was to my detriment.
J Mintzmyer: Yeah, it worked out really nicely. The thing that I want to point out and I know we've went off the path a little bit, but the thing to point out is what I said is, you want to make sure that you're making a lot of money when you're right, because shipping is a volatile industry. I don't fall stumble in the shipping to make 10%, 15% returns. If I want to do that, I might as well just like ETF, and maybe I pick a value fund, maybe I do that, but I just pick like an ETF of large caps, or mid-caps, or value stocks, or national stocks.
Shipping, you want to make a lot of money when the sun is shining. Make that hay when the sun is shining. When the times are bad, you want to be selected into enough companies that have strong management, strong balance sheets, you don't lose your ass. So, in 2020, we actually lost money on our model portfolios and me personally for a little bit throughout the year, but it was 6.8% is what our model portfolios were down. This year, year to date, we're up about 135% on average on our models.
Bill: Is that good? That sounds good.
J Mintzmyer: I think it's good.
Bill: Yeah, that turns out it's good.
J Mintzmyer: [crosstalk] But it turns out it's good. It's more than double in eight months.
Bill: Yeah. Good for you, man.
J Mintzmyer: The standards are changing. In 2020, it was revolution of the retail trader. So, in December or November of last year, if you weren't doubling your money like you were nobody.
Bill: Yeah, this is true.
J Mintzmyer: [laughs] But now reality is set in and now you can actually start to segregate a little bit from the--
Bill: Well, now you got to go to crypto for that.
J Mintzmyer: Ah, yeah, you got to get into Dogecoin or something. But anyways, Bill, we've been all over the place. It's been great. To circle back a little bit 2018, 2019, things were starting to recover. The sector is really starting to tighten up. It's all about supply, demand, and shipping as in the world, but especially for shipping, because if you have one extra ship, if you have there's an old parable of sayings, but you have 99 ships at hundred cargos, it's a boom. But you got the vice versa. You got hundred ships and 99 cargoes it's a bust. That's mostly true. One or two cargoes or one or two extra ships in a key transport lane can make the difference between 10,000 a day, and 50,000 a day. Just one or two ships in one lane or one basin. So, this is a very volatile industry.
2018 and 2019, things were getting really tight. We were looking forward at that time, because we've been doing this service since 2015. 2018, 2019, we're in the accumulate zone and we're saying, look, not only our supply and demand turning up, not only are we primed for a secular, not just a cyclical turn, but also a secular turn, because of all the upcoming regulations on carbon emissions, on high sulfur fuels, all those sorts of things. All those regulations are going to push out all this old tonnage, it's going to make it difficult to operate these vessels. Oh, by the way, supply demands already tightening. So, we were licking our chops and stuff, and we're trying to get into these firms. [crosstalk]
Bill: Let's assume I'm a five-year-old real quick and don't know what tonnage is. The regulations are going to push out old tonnage, what does that mean in five-year-old speak?
J Mintzmyer: Yeah, the old ships got to get strapped. They got to get recycled. They can't compete. They're too rusty, and slow, and stinky.
Bill: Okay.
J Mintzmyer: Yeah, that's really it. Ships are designed depends on what type of ship. But most ships are designed to do between 20 and 30 years of service. The International Maritime Organization is very strict on their classifications, on their surveys. International shipping is very safe. It's one of the safest industries out there, which is surprising. But you look up like, people are scared of flying. Because I think flying is dangerous or whatever. Shipping is even safer really than flying. There's very few accidents, there hasn't been like a major oil spill in a very long time. There's been some small ones. But ever since the Exxon Valdez and stuff like that, there's been a lot of very, very strict standards on these ships. So, look, they're designed to do 20 to 30 years under the strict regime. When times are really good, they're definitely pushing that 30. Maybe, there's even 31 and 32-year-old out there.
But when times are bad, a lot of that stuff gets scrapped as young as 15 or 20 years old. So, that's what I'm saying, Bill, is back in 2018 2019, we're saying, “Well, we've been through a decade almost of downturn, but with these new environmental regulations coming out, those old ships burn too much fuel. They're not going to be able to compete.” So, the old ships are going to go to the scrapyard. Well, once those ships go to the scrapyard, remember, I told you I was probably exaggerating, I said two ships, but 20, 30 ships, huge difference. [crosstalk]
Bill: I'm on a thought process and I don't want to forget it. So, what's your depreciation schedule on a ship?
J Mintzmyer: That depends on each individual company.
Bill: Yeah, that makes sense.
J Mintzmyer: That's something an investor should look into, because one of the things, remember I told you the top of the cycle, the scummy companies. These companies would have depreciation schedules, which were like--
Bill: Yeah, you tell people it's like 30 years and then your ships got a 15-year life.
J Mintzmyer: Yeah. So, they weren't quite that bad. But yeah, it'd be like the tanker. For example, all the tanker firms, it was a 25-year straight line depreciation. It's like BS. Most tankers get scrapped at 21, 22. Container ships, I think it was 30 years, LNG was 35. The depreciation is pretty optimistic. [laughs]
Bill: In your service, I'm assuming you're doing valuations off NAV, right?
J Mintzmyer: Yeah. Price to book and price to earnings are almost worthless metrics and shipping. They're just so easily manipulated by for example, depreciation, bad accounting values of the vessels. Maybe, they bought the vessel at when prices were really high. So, the book value is really high. But that just means you got ripped off. [crosstalk] have book value, right?
Bill: Yeah, that's a good point. Yeah. You just ever shitty at capital allocation, low price to book, it makes sense. So. how volatile is NAV on these things?
J Mintzmyer: It depends on how active the sales and purchase market are for bulkers and tankers. Dry bulk number iron ore, coal, tankers, pretty explanatory. Those are pretty liquid S&P markets. There's a lot of ship deals getting done. The last month alone, there's like 30 or 40 transactions done. So, those values are pretty updated and pretty accurate, and they tend to follow the long-term shipping rates. You think, it's efficient market. If you think about what NAV really is, it's the market's estimation of present value free cash flow. It's what the market thinks that ships worth, which is based on everybody's inputs on NPV, basically Net Present Value. So, those values are pretty good. I have a lot of confidence in those. Some of the other more niche sectors like LPG, liquid petroleum gas, LNG even, or even container ships, right now, container ships are very active, they're very liquid. But you would ask me NAV two or three years ago for container ships, I really can't. NAV, it depends on who you ask.
Bill: Okay. That makes sense.
J Mintzmyer: You go to the broker, you say, “Hey, what's the NAV?” You're like, “Well, are you the buyer or the seller?” [laughs]
Bill: Yeah, that's fair.
J Mintzmyer: Look, there's a big bit out.
Bill: Widespread. Okay, that makes sense. Okay, so, 2019, you're on the back of some of these environmental regulations, the markets tightening, things are getting better. Continue.
J Mintzmyer: We're just loving life. 2019 before this year, 2019 was the best year in Value Investor’s Edge history. It was a long-storied history of four years.
[laughter]
J Mintzmyer: It was the best year and I have to pull up the thing later to say what the returns were, but it was a pretty darn good year, I think the average portfolio return was 72% in our models.
Bill: Wow.
J Mintzmyer: I even said in our annual review letter, I'm like, “If we never have a year, I never have a year this good and the rest of my life, I might be okay with that. It's damn good year.” We're just riding high. We're going into 2020 all environmental regulations are coming into check, global trade is booming, the US-China trade war has petered off. It wasn't really a thing anymore. We're loving life, man. Nothing can stop us.
Bill: Yeah, except COVID.
J Mintzmyer: That of course, we all had to start pulling out our Atlas and figuring out where Wuhan was. So, that was [crosstalk]
Bill: Okay. What are you thinking in an industry with that much operating leverage? I think there's a lot of operating leverage. Maybe that's the wrong assumption, but it seems like it's the right assumption, and then the world stops like, what are you thinking?
J Mintzmyer: Yeah, it's accurate. There's a lot of operating leverage and some companies there's a lot of financial leverage. When the world stops or pauses or whatever you call it, you get out of the ones that have a lot of financial leverage. But here's the thing, Bill. Shipping stocks all started tanking and crashing, and I kind of riff on or trash on the efficient market hypothesis sometimes. I like to talk crap about it and say that I don't believe in it, because otherwise why would I pick stocks. But shipping stocks or shipping investors or people into shipping stocks were way, way ahead of COVID. Like I'm telling you-- [crosstalk]
Bill: [crosstalk] you saw the disruption in China early?
J Mintzmyer: We'd have to go back, and really look at it, and think about it, and hire up some consultants and academics. But I think it was like January 27th or 26th or something like that when Wuhan started being talked about right there was some sort of mysterious flu going on. I think it was like late January.
Bill: Yeah maybe, mid-January. But yeah, mainstream for sure was later on it.
J Mintzmyer: Yeah, late January, and it wasn't until, oh, man, early March that it was obviously a global issue.
Bill: Yes.
J Mintzmyer: Is that fair as I-- [crosstalk]
Bill: Yeah, I do think that's roughly right.
J Mintzmyer: Yeah, almost all shipping stocks immediately began tanking in the middle of January.
Bill: Wow.
J Mintzmyer: Back when COVID was like it can-- It was almost like a conspiracy theory. Remember how there's all the weird Twitter videos and what CCP is up to and what's going on over here? Remember, they had the truck going down the street spraying foam on sidewalks and just weird stuff, man. Shipping stocks were just tanking. By the time it was obvious, and I'll be the first to admit. I would have never thought we were going to be in an 18-month pandemic and still barely even past it. But by the time it became obvious that COVID was a real thing for the global environment, which was what you saying really, March maybe? Is that right?
Bill: Yeah.
J Mintzmyer: I'm not branded as-- [crosstalk]
Bill: I wonder, do you follow Dan McMurtrie on the Twitter machine?
J Mintzmyer: I do not.
Bill: @SuperMagatu. Yeah, he's the homie, but he wrote a good thread about what was going on. I wonder if because he has insight into Asia through some fun that he has in some contexts. I wonder if shipping, I'd be interested to see the intersection of those two timelines. That's wild. That's a cool leading indicator.
J Mintzmyer: It is and it's funny because it's such a small-- The shipping is all the market caps of all the shipping stocks put together, especially, back then when they were a little smaller, I'm rounding but I'd say maybe $5 to $10 Billion is all the shipping stocks put together. On the US ones, there's some big ones like Maersk and stuff. They're European, big Asian ones. But if you just look at the US, maybe $10 Billion is probably about right. So, you're looking at a $10 Billion market versus the S&P 500 which Of course, like-- [crosstalk]
Bill: Yeah, this small one is telling you what's really going on. That is wild.
J Mintzmyer: Exactly. This $10, $20 Billion market is wildly predictive and efficient, and this huge trillion dollar market is sleepwalking. Although, you could also argue that COVID wasn't so bad for stocks, so maybe the big market was right and shipping market was wrong. But anyways, you get where I'm going with this. Look, by the time it became obvious to me and I'm into shipping, man. I would say probably you got to be careful humble-- [crosstalk]
Bill: I've talked to people. You don't stop talking. I've talked to people about you and they're like, “That dude is as plugged in as it gets.” The only question that I've had is, I've wondered if you're too plugged in to see the industry for what it really is.
J Mintzmyer: Oh, okay. Well, you know, some people say right. [laughs]
Bill: No, no, that's not what I'm just-- Sometimes, if you're that involved in something, it's hard to get yourself out of it, but I don't think you are. The reason I'm talking to you is, I've read your stuff, you sent me articles, I think you're an intelligent cat, so, that's why I wanted to have you on.
J Mintzmyer: Oh, that's nice, Billy. But some people say, I meant for me like pumping up my ego.
Bill: Oh, no.
J Mintzmyer: They say the Value Investor's Edge is the best in the world.
Bill: [laughs]
J Mintzmyer: You'll never find one better. Some people say--
Bill: People are saying.
[laughter]
J Mintzmyer: It is known. No, but look--
Bill: Who's saying? Many people. All the people. What are you talking about? [laughs]
J Mintzmyer: All the people. Yeah, right. [unintelligible 00:32:28] Twitter and I'll be ready to go.
Bill: No, that’s funny.
J Mintzmyer: By the time myself and I would say our team because it's not just me at Value Investment’s Edge, but by the time we really wrapped our heads around COVID and we're like, “This is going to be bad. This is going to be painful, guys. It isn't just Wuhan, China. This isn't just CCP conspiracy theories. This is a global pandemic.” By the time we came to that conclusion and again, hindsight, maybe look like idiots, but every single shipping stock on average was already down 50%, 60%. So, it was like by the time you actually came to the conclusion and did your research, you're like, “Well, shit, why would I sell now?” So, there was really no chance to sell and the thing is, all these shipping stocks are down 40%, 50%, 60% and the S&P 500 hasn't moved an inch yet. It was what 2% down or 3%.
There's a couple of weeks where it was really volatile every day, but didn't really go anywhere. It was up and down was like a roller coaster. Then I think it was like mid-March with the lock downs and we had the hedge fund guy that went on TV start crying and then like [laughs]
Bill: Ackman, I think this is fake news, man. But whatever, he did call the bottom through his tears. But yes, anyway.
J Mintzmyer: [laughs] So, anyways, by the time Ackman was on TV and crying, it was time to buy shipping if anything was too late.
Bill: I got to say in his defense, he said, I am unwinding my hedge and I am getting long. He did actually telegraph everything he was doing. He just had to actually listen to the interview. But anyway, I digress.
J Mintzmyer: Yeah, it's like Nixon versus JFK. You're going to listen to them read the transcripts.
Bill: Yeah, that's right. You actually--
J Mintzmyer: [crosstalk] watch the--
Bill: Yeah, he's a bit of a Rorschach test. He's got a lot of haters. I get it. Whatever.
J Mintzmyer: I didn't come out here--
Bill: You should have been buying shipping by the time that Ackman was crying. That's the end of the day.
J Mintzmyer: Yeah, and you shouldn't have sold shipping in January 16th based on the first tweet that emerged. It was literally, there was just random tweets coming out about nothing really confirmed.
Bill: Probably when Ackman was buying the CDS swap.
J Mintzmyer: Probably was. He probably talked to the same guy. Maybe his CDS swap was tied into shipping somehow.
Bill: I don't know.
J Mintzmyer: [laughs] I don't know, man. But that's what happened. At that point, the damage was done. So, I got a lot of folks and like, “Oh, we don't peer here, do we sell here?” I’m like, “First of all, I can't give you investment advice. But second of all, we know all these companies inside now.” The balance sheets have never been stronger. Yes, we're facing uncertainty. Yes, it's a global pandemic. But the leverage has never been lower. The governance ratings on average have never been better. I have basically personal line, maybe not a phone call, but definitely an email with every single one of these companies. I've been in the industry for almost 10 years now. So, I know what's going on over there. Things are fine. Yeah, there's going to be a bumpy call. Yeah, like Q2 20 financial reports going to suck. But none of these companies are going to have financial problems.
Of the 55 shipping companies that we loosely follow, and I say about 40 that I would say are decent companies, the other 15 are like watch out for those. But of those 40 companies we follow, not a single company did a single diluted equity issuance, had a single credit default, had a single adverse action, nothing. So, it was like the stocks fell, but for no reason.
Bill: Well, they didn't have enough liquidity to get through the cash burn, I presume, right? So, they had to issue a fair amount of debt or is that not correct?
J Mintzmyer: No.
Bill: Wow.
J Mintzmyer: It was like balance balances were never-- The balance sheets were so strong coming into this thing. The market was so-- it wasn't bloom, it wasn't like it is now. But the market was so good in 2019, and starting out really good in January 2020 that the liquidity was high too. Now, if COVID would have been like Q2 20 for a year or two straight--
Bill: Yes.
J Mintzmyer: --But we all know that it was not. It was only bad for three months.
Bill: Yeah, I wish that you had been like, “Look, idiot. Open your eyes, these balance sheets are good, stop.” But there's only so much you can do. You can only lead the horse to water, right?
J Mintzmyer: Emotions are high. In times like that, when stress and panic is high, and blood pressure's high, and losses are flowing through the portfolio, people lean on gut reactions and common sense. Common sense is that in a global pandemic, you don't want to own a shipping company. So, I don't fault anybody for wanting out at the bottom, and I don't fault anybody today for saying, I don't want to get in right now. September 2021, it feels like the top because they look at a chart. I don't fault anybody for that for that I just got-- [crosstalk]
Bill: Yeah. But I do think, and I'm going to plug you here for a second, that people that are listening to what you're saying, there may be some insight that they can glean whether or not there's a stock investment from the service that you provide. Because Dollar Tree says that supply chains are going to be fucked up through 2023. That's a long time. So, presumably, you've got some information that may help some people, myself included. Maybe we can work something out. We'll see.
J Mintzmyer: I hope so. That's the pitch I make to a lot of folks, too is it's like, “Look, you might not care about these shipping stocks besides maybe a quick trade. But they can apply to a lot of other things.” Shipping, the global logistics is what makes the world go round as we realized and we hear that Christmas might be late, Christmas might be canceled. So, now people are paying attention. But yeah, you mentioned Dollar Tree, and that's a perfect example of like the crossover. I give crack because we're on a podcast here. I got to give credit to a guy named Nick First. He writes on Seeking Alpha. He's actually the first guy who brought up Dollar Tree. He brought it up way ahead like in February or March. He was like, “All right, shipping, what's the first or second order of this thing.”
What's the next the third order? He's like, “Well, we got to look for retail companies are going to get screwed. So, he actually sourced the idea. I won't take credit for that. I traded it. well, but he came up with the idea. So, I started following Dollar Tree. I put on a small short, I'd say low five figures-ish, small, short into Q2 results, which was I think in June. They did the results, and I was actually like, I looked at the earnings report and I'm like, “Shit, this pretty good result. I'm going to lose money on my short.” But somehow, I got lucky, Bill. There's a saying, it's better to be lucky than good. Somehow, I tripled my money on those puts. It sounds like, “Well better lucky than good. I'm getting the hell out of here. Dollar Tree looks like their business is strong.” But then I said, “No, wait a minute, I'm going to read the transcript of the call, I'm going to listen to the conference call.”
I listened to the CFO get on there and the CFO saying all the numbers, and he's talking about how shipping expenses have increased. But then the CEO gets on, and he starts making some comments about like, “Oh, yeah, it's short-term disruption shipping, it'll be back to normal at that time. But I'm like, “This guy doesn't know what he's fucking doing.”
Bill: [laughs]
J Mintzmyer: This guy's got his head in the sand. Then I'm like Dollar tree--
Bill: Don't delay it.
J Mintzmyer: Yeah, you write it down on your little notepad, and it had a strikethrough on it, right?
Bill: Yeah.
J Mintzmyer: [laughs] Then now, you are just circled that thing. [laughs]
Bill: [crosstalk] Do not forget this. [laughs]
J Mintzmyer: Do not forget the Dollar Tree. I go back into my world, my Sandbox of shipping, and lo and behold, it's time for Q3 earnings. I look at the price chart, it's back above where it was before Q2, I'm like, it's time to lay the short big. And I mean big for--
Bill: Yeah, whatever. But yeah, that's how you did it. Yeah, that's cool.
J Mintzmyer: Yeah, the CEO has no idea what he's doing like this is going to be bad. He gets on the conference call and total change art the guy found, Jesus, he was on the conference call like, “Oh, you said yourself it's going to be screwed up till 2023.” We had the charter a ship ourselves, this is going to be a mess, it's going to add to our expenses, and he was optimistic. He's like, “Forget the other side.” But he was much more realistic. He’s is like a leader like I could get behind that guy like, “Okay, he's found Jesus.” The stock went from what 105 to 91.
Bill: Yeah, that was a tough report.
J Mintzmyer: Yeah, and that was like in two days, and I actually covered my short too early. I only made three and a half times my money.
Bill: No, guy, I’m not going to cry for you.
J Mintzmyer: We're actually down way more. [laughs] It went down way more though. I actually covered it. I'm not sure Dollar Tree anymore. I don't think Dollar Tree is a great short for a year or two.
Bill: Yeah, it was just an event.
J Mintzmyer: I think it's just a business. Yeah, it was an event. But that's an example Bill of like, how you can plug and chug some of the shipping stuff into other sectors?
Bill: Yeah, for sure. When COVID occurred, why are supply chains so messed up right now?
J Mintzmyer: Yeah, that's the million-dollar question. A little bit of history on that is that after global financial crisis, all the governments worldwide basically pulled back on their capital spending. The US had the stimulus. We had the shovel ready jobs and all that. But that petered out after a couple years. Ever since then, Europe's been in austerity mode. We had the Greek crisis, the Italian crisis, and all that stuff. The United States has been wrangling politically over dollars and stuff. But the port spending and infrastructure investment has been significantly under done the United States in Europe for 10 years straight. Another facet of that is, all the new port technology is all automation. It's all about replacing workers with computers, and automated forklifts, and cranes, and loading equipment all of it. If you go to YouTube and search like Singapore containership pub or something like a container ship, Singapore, just put that in, you'll get these videos that show the automated terminals, and they're like a modern Marvel. They're amazing.
In the United States, every time they try to install automated equipment, you get the union's up in arms. So, political. Domestic political economy. Lots of pressures against that. In China, the container ports work 24/7. 24/7, 365. In LA Long Beach, they get Saturdays and Sundays and nights off. We don't take it seriously. We didn't invest in it properly for 10 years straight. But it worked Bill, because everything was on time, or just in time shipping and logistics was like the hot thing. Everything was just in time. The ship was pull up with the cargo on schedule, on manifest, they'd unload the cargo, they put it in the warehouse, they put it on a train, the train would take it to another warehouse, they put it in the truck. Nobody really gives a shit about this. But that's how like your stuff shows up at Walmart.
Bill: Yeah, for sure.
J Mintzmyer: It's a 25-step process. It doesn't just show up there. But everything was just in time. So, there's just enough warehouse space. There was just enough capacity at the port, there is just enough freezer space in the back of Walmart to hold your TV dinners. Everything was automated and just in time. Well with COVID, you shut everything down for two or three months, more or less. So, you got this huge log jam, all the ports are closed, China's quarantined, US ports are halfway shut down, ships are getting rerouted, all this crazy stuffs going is happening. But Americans are still living their lives. They're still eating food, they're still buying. In fact, they bought more than ever.
Bill: Yeah, that's right.
J Mintzmyer: Because they're getting stimulus checks, and they're like, “Oh, this is my office now. I actually don't go to work. I actually have an office here. So, I need to buy a desk. I need to buy a new monitor.” Oh, by the way, I'm playing more video games that I've played in my life, I need to buy a new graphics card, all this consumerism started happening. Because people weren't traveling, people weren't going on vacations, people weren't going to the bars and the restaurants. So, they were replacing that by buying goods.
Bill: Yep.
Bill: So, we completely depleted the nation's inventories of everything. Whether the washing machines toasters, computer monitors keyboards, whatever it was all depleted. And you got this logjam of ships. Well, then the economy opens back up and we're trying to spin everything back in the shape, but we're in the system that was running at 98% capacity on just in time. Now, you're trying to shove trying to think of some non-cheesy metaphor, I don't know, but shoving like a hot dog through a garden hose or I don't know, whatever it was long hard to get the-- [crosstalk]
Bill: Yeah. No, it's really hard to restart it. Really hard.
J Mintzmyer: Exactly. So, everything's getting delayed. Oh, by the way, every six weeks, there's a new random event that happens. The ever given jamming up the Suez Canal. Oh, by the way, like that happened. So, yeah, it's been crazy.
Bill: Those a wild story to see because as somebody that knew nothing, I was like, “Okay, this is probably like a big deal, but I have no idea how big of a deal it is,” and you probably knew immediately. This isn't great.
J Mintzmyer: Yeah. I got to be careful with that stuff, because of course, no loss of life, no loss of serious loss of property, and so, you don't want to celebrate other people's misery. But a lot of shipping investors were very enthusiastic and excited about that ship and probably-- [crosstalk]
Bill: So, why is that? [crosstalk] Dude, just somebody that doesn't understand why is that good? Day rates go up and what like stuff is just stuck on a ship in that, that's a good thing that would seem like it would reduce your turnover.
J Mintzmyer: Yeah, first people like, “Oh, that's bad for shipping.” No, so shipping is all about supply and demand. Supply the boats, the vessels, the ships, and demand. Demand is measured in something called ton miles. So, how much cargo are you carrying and how far do you need to take it? There's actually a third dimension to that. It would be ton miles times speed. How fast you move your ships? That's like the Newton's law or whatever like shipping. Shipping demand. So, if you think about what happens when--
The Suez Canal was constructed to be a time saver. You don't have to go all the way around Africa. You can just cut right through the mid. Panama Canal was constructed to be huge time saver, and you have to go all the way around South America, you can cut right through Central America. So, if you think what happens to global demand measured by ton miles times speed, when the Suez Canal is completely jammed, it's pretty significant. Any ship that's going east-west, or west-east, either has to wait for one, two, three, four days, two weeks like nobody knew. Or, it has to go all the way around Africa which [crosstalk] a week. Yeah, that’s week each way to the voyage. So, most ships didn't go around Africa. They're like, “No, we're not doing that.” But they had to wait. Because the cargo is already ticketed, it's already going somewhere. They can't just turn around and head home. So, they just sit there in a queue. Well, the queue gets longer and longer and longer, and more and more jacked up, and so, it had an effect. The canal, I think was jammed for, was it four days, five days. It had an effect that is still being realized today. It had a two month or three month cascading effect on global supply chains.
Bill: Yeah, that's wild, I think that people don't like and I maybe I'm internalizing, but I actually do think I've been really-- I haven't been able to put numbers on it. But conceptually, I've been pretty decent at thinking through the supply chain. People like, why stuff so messed up? It's like, because you can't just start this stuff again, everything was run so efficiently that when you break a system that's not built with any slack in it, it's very, very hard to get that system back up and running at an efficient rate. I understand that much. I don't know how to quantify how hard it is, but that I know.
J Mintzmyer: That's exactly right, and it was fortunate for us that nobody was really getting into this stuff a few months ago, but I'm glad you're able to pick it up and understand it so fast. The problem is a lot of people are like, “Oh, it's the stocks already doubled or the stocks already tripled. I’m too late.” So, I think a lot of folks shot themselves in the foot in maybe March or April of this year, because-- [crosstalk]
Bill: Well, I'm guilty of that as well. So, I'm not going to pretend that I'm beyond that. But I understand what's going on.
J Mintzmyer: Yeah. The point or segue I was making is when you have access and does not have to be our service. Our services a little more pricey, but when you have access-- [crosstalk]
Bill: Well, many people say, yours is the best service.
J Mintzmyer: All people say, Bill.
Bill: [laughs]
J Mintzmyer: Nobody says, it's not. But look, if you have access to a service like ours, you can see the valuation numbers of these companies, you can see the operating cash flow there pulling in, you can see the demand forecast for the next couple years, and you can understand like, “Oh, yeah, the stock doubled or tripled, but the cash flow is so massive that the enterprise value is barely even moved.” That's the thing that happened for us in March or April is, a lot of folks such as yourself started understanding. Oh, wow, this is like a big deal. But they looked at a stock like they pulled up The Analysis Corporation, TAC, and they looked at that stock and they're like, “Oh, man, that thing's already a seven bagger. I'm too late.” Well, it's tripled since then.
Bill: Really?
J Mintzmyer: Yeah, now it's like a 19 bagger or something.
Bill: Wow.
J Mintzmyer: Yeah.
Bill: I'm so glad I ignored this. This one, I'm not going to add to my list of misses, but I will add to maybe next time be radically open minded.
J Mintzmyer: [laughs]
Bill: I guess the question that I have put to you and I'll put to you now is, okay, great. There's all this free cash flow today. Why does it come back to the minority shareholders? Why doesn't it just get spent on boats or wasted somewhere or whatever? Why do I benefit from that cash flow?
J Mintzmyer: Yeah. No, that's a solid question. Good one to ask. That's why you want to make sure that the management team is aligned with you and the management team is responsible. You want to look at a company, like I mentioned The Analysis Corporation, and you want to look at their 20-year track record. What happened last time when markets were good? Did they pork it away or they learned a lesson? What are their returns policies? What are they saying? I can talk to or call or email most of these folks, and most of them are fairly transparent and straightforward. But you can see like, what's their dividend policy? So, I think that is probably one of the biggest critiques. It's a valid one at some point. That's one of the biggest critiques against a company like The Analysis Corporation. It's like, “Well, yeah, but their dividends only 50 cents a quarter and that's certainly $2 a year and the stocks in the 80s, that's a pittance. When am I getting my reward?”
What I would say to that is, right now, the company is only one year removed from being a very tough financial situation. The stock was only four bucks a year ago, and Analysis Corp right now we're recording on September 9th. So, it's like at $85-$50 right now. If I pulled the one-year chart of The Analysis Corp, it was $4.98 a year ago. So, that's a 17 bagger. So, right now, yes, the dividends only $2 a year, but the guy at the company, the owner, the CEO wants 30% of this company. He's like, “Yeah, I get it. But that's $2 dividend. The stock was five last year. Let's get some stability under us first. Let's pay off all our debts. Let's make sure that we have no outstanding obligations. Let's make sure that everything's rationalized, and then we'll talk about huge dividends.” It's-- [crosstalk]
Bill: That pisses off the IRR driven guys. But it's definitely the right thing for the business long-term.
J Mintzmyer: Exactly. That's what I think what a lot of folks get bent around the axle about is, I've never seen so many arm share CEOs or CFOs, or whatever [crosstalk] haven't shipping. Everybody thinks they know more than the shipping CEO and CFO. Again, Bill, last decade, not very good for shipping, and it was a lot of scummy, shammy managements. So, when people think that they know better than the company, but they're basing that off realistic evidence. But it's also a bit of recency bias, it's what they saw the last decade. A lot of people just want the company to dump out all of its cash immediately and stop investing in shipping, and that's like asking American Airlines to never buy a new airplane.
Bill: Doug Parker is not going to do that. He's addicted to new airlines. But that's an example that I happen to have a lot of beef with. I don't know if you know this, but I followed the airline industry pretty cool.
J Mintzmyer: Oh, man. I picked the wrong example.
Bill: Yeah. I hate American Airlines.
J Mintzmyer: Okay. Well, it's a customer. I'm with you. 100%. I don't know anything about-- [crosstalk]
Bill: You know what, I don't like about them, man. They ran a levered buyback strategy on an airline and he ran with leverage out the ass, and he was like, “We're never going to lose money again.” Was COVID foreseeable? No. But I think, I blame him for giving that industry a bad name, and he's welcome to come on the pod and we can debate this fact, and I'm not trying to throw shade. I objectively think like, all these things when you're like, look at the leverage of the airlines. Look at all the buybacks. Do that all and adjust American out of that and tell me how it looks?
J Mintzmyer: Wow. That's very interesting. I'm not qualified to comment on that. But I as customer--
Bill: You hit me in a pain point.
J Mintzmyer: As a customer of American Airlines, they are definitely not on my top list. Definitely the top three have the wrong list to beyond.
Bill: You might [crosstalk] some leverage to be fair, but these airlines were not crazy. They're asset heavy, they're not going to have no debt. That's insane.
J Mintzmyer: Yeah. No, airlines is, I don't want to spend too much time on airlines. Because that’s not my thing.
Bill: We can do it. I'll go nuts.
J Mintzmyer: I guess, we can talk longer, but airlines are an interesting little example of an industry that arguably way better off now after COVID, and after filling their coffers with government aid, and after right sizing or downsizing their staffing force. I think there's Substack like Delta has 20 times more cash today than it did before COVID or something like that.
Bill: It's possible. They get a lot more debt, but--
J Mintzmyer: It's wild.
Bill: Yeah. I don’t know. You got to do your own research. Fake news out there. So, how is COVID, how are the labor forces dealing with COVID right now on the ships, or is there a ton of testing on it and is it causing problems still?
J Mintzmyer: That's definitely something that slows everything down, and just to get, I'm not really qualified to talk maritime policy. International maritime policy here, but one thing that really frustrated me, it really grinds my gears, if you will during 2020 and end of this year is that, the international community was very, very slow at recognizing maritime workers, fares as essential workers.
Bill: Oh, that sucks.
J Mintzmyer: I'll go right out there and say that we're not going to say anything medical, but after medical, I'll go right out there and say that there's nobody more important and more essential in our economy than those who run the supply chain. But without supply chain, civilization is over.
Bill: Yeah. You’re right.
J Mintzmyer: That’s essential, and I think after medical, seafarers are by far the next most essential good to our economy without a doubt. The international community didn't come around to recognize that for a long time. So, you had a lot of folks on ships that due to the hodgepodge of different countries having different rules and different regulations couldn't go home. They couldn't get switched off, they couldn't get refreshed by new crew, they weren't eligible for the first waves of COVID vaccines. So, there's definitely a soft part in my heart for all the seafarers out there. I know a lot of the more responsible companies have been raising their wages, have been offering bonuses and some of that stuff, and I would encourage as a shareholder in all these companies as much as possible to compensate these folks fairly. Especially, when we're in the middle of a boom.
In the future, it really needs to be looked at from-- Again, I'm not a global maritime policy expert. I'm a shipping investor. But I would want hopefully, the United Nations, IMO to really look into this in the future like how do we strengthen our global supply chain infrastructure and how do we make sure that the seafarers if this happens again, God forbid, that there's not so much chaos next time around?
Bill: Yeah, no doubt. You're right. If we go to the Twittersphere spurred some questions.
J Mintzmyer: Absolutely. Let's do it.
Bill: All right, cool. So, let's see, what are the most common red flags that you would look for in a shipping company or this could be any equity for that matter, but shipping specifically?
J Mintzmyer: Yeah. I think the very first spot you want to start off with, you got to open up their annual report. If the US listed firm, you go to the SEC-- I go to the SEC Edgar index. That's where you look up the SEC filings. You type in the company symbol, and if it's a foreign located firm, headquartered, you'll have a forum called a 20-F. 20 dash F. That's what they put out. If it's a US firm, you'll have what's called the 10k. So, I think more folks are probably familiar with the 10k. I would do a Ctrl-F on a document and put in related party. In the newer forms, you'll have a little hyperlink, it'll take you there. But these companies by law are mandated to disclose all the related party transactions. If you don't, it's big-time fraud. We haven't had really a case in shipping in 20 years of any sort of fraud. All this stuff that's been done, it's all been disclosed. So, people could read these filings-- [crosstalk]
Bill: [laughs] I don’t know that is that a ton of comfort, but I agree with you, at least it's out there.
J Mintzmyer: Well, yeah. But it drives with-- [crosstalk]
Bill: I agree with you. I’m just laughing to laugh.
J Mintzmyer: [laughs] Very anti-dry ships, but it's like Ctrl-F related party transactions, and you fall off your seat, and then you get back on your seat, you start reading and you have fallen off your seat 17 times before you get through the document. Yeah, it was bad. So, that's the very, very first thing I look at. Before I do anything else, if you read those related party transactions and it's either like, you can't understand what's going on or if it's like some spooky scary sounding stuff, is take the stock off your radar. Maybe, it's a trading sardine. It's over a day trade or something. But that's not an investment.
Bill: Yeah, Well, it sounds like there's enough out there that you don't have to mess around with that stuff.
J Mintzmyer: Yeah, I don't think you really need to. But there's been a few good trades, and we do a little bit of it, not too much, because our services really too large. If I go out there maybe not me personally J Mintzmyer, but if I say to people, “Hey, this stock small $100,000,000, $50,000,000 million dollar company looks interesting, that's a lot of folks looking at a company that's just not responsible. We don't really do that, Bill. But yeah, that's step one. Step two, step three, you really got to figure out where the cycles at. If it is the tankers, if it is a container ships, what's the supply and demand look like, and that's easier said than done. But it doesn't have to be in the nuances, Bill. You don't have to be like myself, J Mintzmyer, our macro guy, James Catlin, you don't have to be 17.3% demand growth expected over the next five years.
You don't have to be that far in the weeds. But our times really good, our times really bad, are they getting better, are they getting worse, what direction is the arrow going? That's the next step there. Then I guess, step three is just classic value investment research. What is the balance sheet look like? What is the return on capital been the last 5, 10 years? That sort of thing that any value investor should basically be doing with their companies.
Bill: So, following up on point number two, it sounds like from our conversation that starting in 2018, 2019, the industry got healthier, right now, things are wonky, you've got a little bit of traffic jams. What do the next five years look like and how do environmental regulations-- I've read that the environmental regulations are going to hurt the older ships in the fleet. What does this all look like? How many ships are going to be delivered? Have you put on your where we are in the secular trend? Forget about a short-term cycle.
J Mintzmyer: Yeah, absolutely. That sort of dynamic, you'd want to make sure that you're correctly bracketing and bucketing your six or seven different segments. When I look at the order book for LNG carriers, liquefied natural gas, it's a lot different than what I see for dry bulk. It's a lot [crosstalk] what I see for tankers. It's a lot different than I see for containers and so on. Then you want to look at the delivery timings or how many ships are coming next year on 2022? How many ships are coming next year in 2023? It's all very granular and detailed data, and that's where we subscribe to other folks who compile that for us. You could take months or years to compile all that stuff. We subscribe to something called Clarksons Shipping Intelligence and highly recommend that one. VesselsValue is another one I subscribe too. These are not entry level services.
Bill: Yeah. Well, I used to have [unintelligible 01:00:50] What are they? They’re going to be like, I don't know, 50, 60 grand a year or something like that.
J Mintzmyer: It depends what package you pick out, but anywhere from high four figures to low five figures a year, yeah, in there.
Bill: Okay.
J Mintzmyer: You can read news reports and get a rough idea of how big the order book is or how big the demand projections are. But if you want the granular, this is no shit like the quarter or sometimes even the month that this ship is expected to hit the water. you got to pay for that data. But that's what you look at like I said, you want to look at the six different segments and figure out where we are in each one. But not everybody has that much time. Right, Bill? It could be a lot of work. So, maybe you just start with one segment. Maybe you're just like, “Hey, everybody's talking about tankers. Let's look at that one.”
Bill: Yeah. Well, making money takes time. Unfortunately, this is a difficult game. It'd be nice if it wasn't.
J Mintzmyer: Yeah, right. We'd all be billionaires so.
Bill: Are you constructive on tankers? I got to ask my man, Relic Phillips is asking. He's a big fan.
J Mintzmyer: I think now is one of the best times we've had in the last two or three years to be buying tanker stocks. But you have to be buying the ones that have a solid balance sheet and have a management team that you trust, that you're okay with being there, it might take a year or two to turn around. I'm not quite as optimistic about a near term recovery as I was back in February or March. That just has to do with how long COVID is dragging on and out. Tankers are the one segment where COVID and a global economic slowdown associated with that really matters. Because we have to see the oil consumption, we have to see the jet fuel consumption.
The other stuff, LNG, LPG that's used for heating, that's used for power production, container ships that's used for retail goods. So, as long as we don't have a global depression of sorts, those can recover and do okay even during COVID. Tankers, we have to get past COVID in terms of jet fuel demand and overall oil consumption.
Bill: Hmm, that makes sense. You wrote up ziggurat recently called the Asset Light. Can you explain to me how a shipping company is Asset Light? It seems like it's all off balance sheet, yeah?
J Mintzmyer: More or less, it's sort of-- I got to be careful with my analogies because he nailed me on American Airlines.
Bill: [laughs] No, I won't do it, again, man.
J Mintzmyer: But it's an Asset Light model, they're leasing in all their ships. They don't actually own. I think they own one ship out of 118.
Bill: All right, yeah. That makes sense.
J Mintzmyer: That's Asset Light. They can be a little bit more responsive to this cycle. So, I guess just you brought that up, there's a pro and a con to it. We'll talk about the con first, because I think that's all most people focus on is the cons of it. The con is that, whatever lease you sign up for, you're stuck with it. Whether it's a two-year lease, a three-year lease, a four-year lease. Right now, rates are at all-time highs. So, the leases you're signing aren't very favorable. If the global shipping stuff like the supply chain stuff, Bill, if that gets fixed by mid-22, well, they just signed a bunch of three, four, or five year leases, and that's not going to be good. That's the negative, that's a con.
But the pro of it is that, they can structure a lot of those leases almost like a laddering structure, where each quarter they can renew or cancel a bucket of those leases. If there's a huge technology or regulation change like some of the stuff we've alluded to, or you know we get to 2025, or something in the future and they say, “Oh there's this new technology. That's carbon neutral or carbon free or whatever.”
Bill: Yeah, they can pivot quick. Quicker.
J Mintzmyer: Yeah, they have these long-term obligations. Very quick within a year or two. Whereas all these other companies that own these 20 or 30 year assets, a try selling an asset when the markets bad, [laughs] I don't want to do that.
Bill: Yeah, that makes sense. All right. Now, I'm going to satisfy my own curiosity. How many people are over a Value Investor’s Edge?
J Mintzmyer: So, membership wise--
Bill: Like employees. What's your personal business look like? What's it been like to grow it? Are you enjoying it? Let's talk about you for a second.
J Mintzmyer: Oh, yeah. All right and who doesn't like to talk about themselves-- [crosstalk]
Bill: Yeah.
J Mintzmyer: Pour another cup of coffee here.
Bill: [laughs]
J Mintzmyer: I'm glad you brought up the Value Investor’s Edge thing because it's not just like the J Mintzmyer show or whatever. We have a team over there. One of my long-term business partners who contributes a lot to the service has contributed a lot to a lot of the good calls we made. Couldn't have done it without him. James Catlin. He's a macro guy. He does all the high-level supply and demand analysis for us. Of course, he leans on heavily the data services that we pay for, but he interprets them. They provide the hieroglyphics and this guy translates them, and I decide what to do with that translation. So, we're a team. He does the high-level macro stuff, and I do the micro. He does top down, I do bottom up. So, that's the dynamic duel there.
We have a very good associate researcher that has worked with us now for about a year and a half. He was an intern for a while, and now he's a full associate researcher at [unintelligible 01:05:39]. Yeah, really good guy. He's in his final year of university in Spain, and he's doing a bang-up job. He does a lot of the continuing, I would say continuing coverage of shipping companies. So, I've already been there done that, written the models, designed, everything is going on, met the management dialogue. I run a podcast not as illustrious as yours, but it's very focused.
Bill: Some say this is the most illustrious. They consist of just me.
J Mintzmyer: They all say this, Bill.
Bill: Yeah.
J Mintzmyer: They all say that. I've heard them all.
Bill: Many people are saying. In my own mind at least.
J Mintzmyer: My own humble-- [laughs] nowhere near couldn't even approach the shadow of your podcast.
Bill: [laughs]
J Mintzmyer: We call it Value Investor's Edge Live. So, what we do is, we bring on the CEOs or CFOs of these companies, and they're live. I think this one's actually--
Bill: Oh, that’s dope.
J Mintzmyer: [unintelligible 01:06:31] [crosstalk] stupid. You can edit me out.
Bill: Yes, correct.
J Mintzmyer: So, these ones are live and I almost do it a conference call. So. folks in Value Investor's Edge can hop right on this conference call live. [crosstalk]
Bill: Oh, that's cool. What platform do you use?
J Mintzmyer: Right now, I use GoToMeeting.
Bill: Nice.
J Mintzmyer: If I do it slides, I use GoToWebinar and that works well for us. We have about 500 members, which I don't know anywhere from 30 to 100 depending on how hard the company is. 30 to hundred that attend live. If you don't attend live, I put up the recording later. I commissioned a transcript of it as well.
Bill: Yeah, that's dope.
J Mintzmyer: Yeah, it's been it's been successful for us, but look, that's something we offer this part of the team. So, Clement assists me with that and he does some of the earnings modeling. Now, I have to actually hats off to Clement. He actually quarterback if you will, a lot of our Q2 estimates.
Bill: Nice.
J Mintzmyer: I guessing check and trust and verify. But no, he nailed it. He's done a fantastic job for us. He's a third guy. I work with a guy named Michael Boyd, who does energy, basically exclusively energy infrastructure. So, I wouldn’t know--
Bill: I was wondering how you cover down energy, too.
J Mintzmyer: Exactly. Because that's not really my wheelhouse. So, if I want to know about the latest LNG plant developments or how this new pipeline in Texas is going to impact crude oil exports, I call Michael. I'll call him up, I'm not 1995. [laughs]
Bill: Yes. On the landline.
J Mintzmyer: [laughs]
Bill: I hit him on his beeper first. [laughs]
J Mintzmyer: Fax me the solutions. So, Michael Boyd does all our energy stuff, and then I've hired a couple guys that do background things, like make sure our analytics platform works well, and make sure the IT side of the house works well. So, it's really a team.
Bill: That's cool.
J Mintzmyer: Yeah. So, thanks for-- I'm glad we got to talk about that.
Bill: Are you currently in school? Yes. Is this Harvard that you're at or where are you at Harvard?
J Mintzmyer: I'm currently at Harvard. I attend the Harvard Kennedy School. I'm a second year PhD student there.
Bill: And your PhD of what?
J Mintzmyer: It's going to be public policy, but it's focused on international relations. So, it's almost like political science, if folks aren't as familiar with public policy.
Bill: So, why are you doing that?
J Mintzmyer: Yeah, so, I'm very interested. It's backs us up a little bit. So, I just started talking, I guess from a dollars and cents capitalism perspective like, “Oh, I like shipping, because it's inefficient market, and I can make money at it.” But bringing that back a little bit further, ever since I was a little kid looking at trains, you don't romanticize it a little bit. I've always been curious about global supply chains and global trade, and like what's that box has Costco on it? But that's not Costco like the store that my dad takes me to. It's spelled differently Cosco. What is that? What is Hong Jun? What is HMM? What are these things and where do they come from? So, that's always been a curiosity of mine.
Then as I went to my undergrad, I studied economics and I learned a little bit more about international trade and trade agreements. My master's program at the University of Maryland was international security and economic policy. So, it was a really neat blending of the two facets. My project course, we didn't call it a thesis or a dissertation, but my project course was my assignment or what I picked to do was study the Trans-Pacific Partnership. That was really hot and like [crosstalk]. 2014.
Bill: Oh, wow.
J Mintzmyer: Yeah, it was before President Trump got elected and put it straight into the shredder.
Bill: Yes. So, you were happy that all your work went to nothing.
J Mintzmyer: Yeah, I wasn't really wonky, and then really sad. But yeah, so that is my underlying academic background.
Bill: Do you have opinions you're willing to share about the TPP or not really?
J Mintzmyer: Yeah. We can talk about [crosstalk]
Bill: I'm just curious. You studied it way more than I did. Did you like the idea of it or what do you think?
J Mintzmyer: Yeah, I think the idea of it is something that most people when they start thinking about what it is and wrap their heads around it. Most people agree on the ideas. I think a lot of folks got a little bit concerned about whether or not we were sacrificing too much in terms of giving up some of our tariffs, and protectionism, and stuff like that. The original strategic nexus of the Trans-Pacific Partnership was to sort of contain China. President Obama gave this very landmark speech, and he said, we're going to pivot to Asia. He said, there's going to be two parts. It's going to be military, we're going to decrease our focus on Europe in the Middle East, we're going to increase our military presence in the Asia Pacific region. He said, economically, we're going to focus there as well. Trans-Pacific Partnership was the policy oriented by trade nexus of that pivot. What Trans-Pacific Partnership did was it brought in, I think it was a total of 17 countries in that region, which was basically who is who of that region besides China.
We hammered it out for three or four years. This started middle of the Obama administration, and it was in the final stages at the end of the Obama administration started the Trump administration. Unfortunately, the messaging wasn't very good back home, domestically. I don't think a lot of Americans understood that this was strategic, that this was meant to cement United States as a key player in Asia and box out or contain China. I don't think a lot of Americans realize that. A lot of Americans thought like, “Oh, this is an Asian NAFTA.” Our farmers are going to not do so well, or wherever there's a lot of misinformation going around. So, it was ironic, and I can talk about this a little more, because he's the past Commander in Chief and past president. But it was ironic that President Trump was so focused on addressing China. I think it was absolutely correct that he was focused on addressing China and trying to address those trade deficits.
But on day one, and it was a political promise I get it. You want to keep your political promises. But on day one, he shredded the most important policy tool that we have the toolbox to address China. So, maybe that's all I should say for now. That's my-- [crosstalk]
Bill: Yeah. Well, that’s interesting. It’s a cool thing to have deep insight into. I would venture to bet that not many do.
J Mintzmyer: It's a very niche topic. That's why like I'm at the PhD level here. I'm studying the intersection between global trade flows and security policy. So, what are these trade flows mean for our military your long-term state department strategy and how should we address them. So, it's very correlated to all that previous stuff.
Bill: That's dope, man. So, how did you get into investing?
J Mintzmyer: It's good question. I just really basic, man. I think back to high school, we did a stock picking contest or something like, “Oh, these are stocks.” [laughs] I grew up in a very like frugal, old fashioned blue collar middle class family where stock market was rigged, and it was a casino and that's what I was taught as a kid. So, it wasn't like a childhood fantasy or anything. I didn't really get into it until college really. I was 18 and we were in the middle of the meltdown back then 2008, 2009, and I think I put like thousand bucks. It was like a big deal to those $1,000 was like a lot of money. I put $1,000 into my first brokerage account, and I bought. They say like beginner's luck or beginner's curse or whatever it is, the very first stock that I bought was Ford.
Bill: Oh, yeah?
J Mintzmyer:. It was like two bucks a share? I think it was like 250 and I put like 500 into it, and then it was like $1.80 I doubled down.
Bill: Nice.
J Mintzmyer: I got very lucky, unfortunately.
Bill: Yeah. I say nice. Because I know the outcome.
J Mintzmyer: Yeah, well, my domicile half at 450 and a half at six, but I went on to be $14 a year later. [laughs]. But that was my first taste at how markets worked and I got lucky, and it was like, “Oh, this is fun. That's cool. Oh, I can actually research.” It's not like a casino like I was taught [laughs] It's actually like a like informed market. Like oh, wow.
Bill: That's cool, and then you started writing when?
J Mintzmyer: it's about three to four years later. So, when I had the first bite of the apple and taste of that, I dove in headfirst, man. I was at the Air Force Academy at the time. So, life there was very rigorous between military and academics and that sort of thing. But I had the bug, man. I had to get into it. So, I must have bought 15 or 20 beginning investing books. Like Peter Lynch even bought a book that had all of Warren Buffett's annual letters and Intelligent Investor, you have to mention Intelligent Investor.
Bill: Yeah, you do. You can--[crosstalk]
J Mintzmyer: It’s like talking about religion and [laughs] not mentioning the Bible. Yeah. Whether or not how many lessons I got out of that book. [laughs]
J Mintzmyer: Well, there's two chapters you really need to read. But everybody needs to read on, my guess.
J Mintzmyer: Yeah, if you haven't read that book, you don't know what you're talking about.
Bill: That's right.
J Mintzmyer: But now, I must have read 50 [crosstalk]
Bill: I put my camera sitting on right now.
J Mintzmyer: Oh, gosh.
Bill: My story is, my grandma's friend sent me two books. Two of them were Bogle books and one was the Intelligent Investor. He must have had like a sixth sense of humor because I read the Intelligent Investor, I did like it, and then here I am trying to figure out this world of active investment. I got to tell you it's a really fun pursuit. It's one of the most interesting pursuits in the world, but we'll see at the end of it all if it was worth it.
J Mintzmyer: Yeah, well, hopefully we won't see the end of it all so to speak. But no, yeah, but yeah, given enough time there's only two things are certain. Yeah, it's one of those things where it started out as a hobby. But it's a hobby that has transformed itself into a very successful business, and the trading itself has been very successful as well. So, that's a blessing. I don't take that for granted, and but there were some tough years, and there are some tough moments and tough lessons learned getting here. Oh, you'll like this one, Bill. You love this. The first stock I ever shorted was American Airlines.
Bill: Ah, good man. Probably, it was your timing any good or no?
J Mintzmyer: So, let's talk about that. This was so long, I don't think I'm [unintelligible 01:16:11] it was like 2010 or 2011. It was a long time ago. It was right after the GFC and their balance sheet was a wreck. But they gotten enough bailout money to stay afloat. But they had it 5,000% debt to equity or something crazy. So, man, I didn't know what the hell I was doing. My entire brokerage account was like 10 grand. So, I was long a few value stocks. I hadn't really gotten the shipping yet I was long. I think was like Best Buy and Microsoft and I was in GameStop before GameStop was cool.
Bill: [laughs] I think every value investor looked at GameStop were touched at some point. It was Greenblatt's scanner forever.
J Mintzmyer: Oh, wow. Some of my first articles on Seeking Alpha going back to 2012 were actually on GameStop. I saw I was part of the first, I think it was like 20 bucks and went to 50. I was one of that.
Bill: Oh, yeah?
J Mintzmyer: I was part of that way back when-- This was like 2011, 2012--
Bill: You’re the OG Roaring Kitty.
J Mintzmyer: OG, man, only I only made three times my money, not 300 times over.
Bill: [laughs]
J Mintzmyer: So, I didn't get called before Congress.
Bill: Well, that's a good--
J Mintzmyer: I didn't know what the hell I was doing, but I figured out you could short stocks. Like, “Oh, that's cool. I can look for bad ones.” It's hard enough to figure out the good ones and figure out what people are going to think is the good one. Because that's really what you're trying to do. You're looking for good companies, but you're trying to be the first one who finds a good company. So, shorting was like blew my mind. I was like, “Oh, this is holding paradigm.” So, I'm going to short American Airlines, they're going to go bankrupt, I know it. So, I shorted some stupid amount of my portfolio like 30% was short American Airlines, and I naked shorted. I don't even know what the options were.
Bill: [laughs]
J Mintzmyer: I didn't even know options were a thing. It's like 2010. So, I didn't know what puts and calls is. I was short the stock direct. I think I went short at seven or eight bucks, and it went from seven to nine and like us is painful, and went from nine to 10, I got a nasty email from my brokerage. What is the margin call?
Bill: Oh, no.
J Mintzmyer: [crosstalk] My account was nine grand or something [crosstalk]
Bill: Oh, no.
J Mintzmyer: Basically, I got an angry email from them, and I remember that it was $11.30 is where I ended up covering my short and I mean it, dude. It was like I lost two grand. But back then that's a lot of money. That was a lot of trips to Qdoba.
Bill: Yeah. That’s right. You’re like, “Shit, I've got to eat ramen for a while. This sucks.”
J Mintzmyer: I can't go to Five Guys this Sunday. Shit. So, that was a big deal to me, man. And you know it was insult to injury, Bill. You know what happened next?
Bill: Oh, it had to go down.
J Mintzmyer: The next month they went bankrupt. It was not three weeks later, I shit you not three weeks later, they went bankrupt.
Bill: Oh, that’s brutal.
J Mintzmyer: The stock that it comes like an OTC BS stock, it was 22 cents.
Bill: That’s brutal. Well, you learn a nice lesson in risk management, I guess.
J Mintzmyer: Yes, sir. I lost two or three grand instead of 300 grand or something.
Bill: Yeah. I had a conversation, I'm very conflicted because of what happened to my cousin with Robinhood. I was talking to Tom Sosnoff from Thinkorswim, and it was a hard conversation for me to have because he talked about how much he liked crypto assets, and how much he liked the derivatives, and how he didn't think that stocks were efficient that they cost too much. So, he was like, “A stock is 600 bucks,” and I was like, “Yeah, but it's got 30 bucks earnings under it.” But it made me realize that he was talking about it from an inventory merchant perspective, because he's a market maker. I wish that I was quicker on my feet in that interview. I had COVID but I think I was just had a dumb moment because it ended and I was like, “Man, I mess that up.” But it made me realize like he was one of my first introductions to investing or trading, and where I've come from that is so far.
Without that initial introduction, I'm not even sure like, his way works for people. It's not the way my brain works, but it works for some people. I do think lessons you learned and me learning a little bit of an expensive options, education. In the introduction to financial markets is probably a good thing on average. I do wish some of these brokerages took a little more of their responsibility in house instead of just letting externalities into the world. But I don't know. That story is fun to laugh at now, and look at where you are. That's awesome.
J Mintzmyer: Yeah, it turned out well in the end, but to bring our points back together, Bill, I would say that it's so important for folks to get that practice. It's real money, it's not practice. But to get that exposure early, it’s not like voting, you vote early and often, you get that trading experience early and often. You start as young as you possibly can, and if it's too late for that, because the clock, it's not where you want it to be, start small. Maybe, if you have hundred grand that you want to invest in, maybe put 90,000, not investment advice. Don’t quote me. But maybe you put 90,000 in an ETF or something of the market, and you put 10,000 into the stuff that you're actually trying to trade. You'll learn your lessons and they hurt a little bit or they feel good if you do well, but you do that for a while. I mean a while is several years at the lowest. It's not three months. I think that's what got a lot of people last year, Bill in 2020 is, a lot of folks came in, they have the right intuition. They're like the markets tanking it's crashing, it's collapsing because of COVID, COVID is not going to be here forever. I'm going to come in, I've never touched the stock market. I'm going to come in and I'm going to start investing. I think most of these folks had the right idea. But it's like getting into drugs you know?
Bill: Yes.
J Mintzmyer: It was almost like meth or heroin, man.
Bill: Yeah, and then it starts to go up and you're like, “Oh shit.”
J Mintzmyer: You think that you don't realize that, “Oh, this is lucky,” or “Oh, this is a thing you think oh, I've got the touch.” I think I hate to see it but a lot of those folks got just demolished in early 2021. It's sad to see it but it's because they didn't take enough time to learn the mechanics of what was really going on. So, maybe a little bit of Dutch shredder, CJ going on here, Bill, but I think it's a valuable lesson.
Bill: Yeah, one of the reasons I'm going to run the time episode, this will run after it and whatever. If you are a listener, sorry, for how you're hearing this conversation but that's how the schedule works. Sorry. It's not immediate. He always had, one of the reasons that I wanted to highlight him is he always lead with education and he was always like trade one freaking contract at a time when you're young. If you want to put on a put spread by one, you don't need to and his point now is like everybody trades too big, everybody wants to get rich way too quick. I think about that a little bit with concentration because I pray to the altar of Buffet, but I also am smart enough to know that he's way smarter than me and I'm smart enough to know that a lot of the people that I talk to on this program are way smarter than me. So, I either need to be hyper disciplined on where I play, or be less concentrated, or some middle ground that don't really know what it is, but trade small. That's my take away.
J Mintzmyer: Yeah. You never go wrong.
Bill: That’s the only thing that I will tell people as advice and then go find a fucking financial advisor and don't listen to me.
J Mintzmyer: Yeah, absolutely. Look into those related party transactions and incentives [crosstalk] related party.
Bill: That's right.
Bill: But look into your financial advisor too, and maybe picking someone good. Yeah, absolutely, Bill, and even something that I would say to folks on Value Investor’s Edge is I'm like, “Guys I've been--" This is something I would say even six months ago I'd say this or even today I would say this. “Hey, look, I've been doing this in shipping for 10 years. I have a proven track record going five or six years on Value Investor’s Edge of pretty strong returns,” but look I do 30% or 40% of my own money in this stuff and I do 50%, 60% and either it's blue chips, or it's index funds, or cash, or it was by house for a while right was a big portion of my assets a few years back. So. even myself with as much of a track record as I have, with as much confidence as I have, it's we're talking 30% or 40%, and the rest of it is the index. I think you can never go wrong with that advice of education first, and then starting small and building yourself up those building blocks. You can never go wrong with that.
Bill: Yeah, that's dope, man. Well, I've had a great time talking to you. I'm glad that we did this. Where can people find you and where should they sign up for Value Investor’s Edge?
J Mintzmyer: Yeah, absolutely, Bill. It's been great to be on tonight. So., the easiest thing is it's free, it's as far as Twitter is @mintzmyer. So, hopefully, you’ll this spelling of it there. but M-I-N-T-Z-M-Y-E-R. I know the myer is not spelled quite correctly.
Bill: [laughs] Well, that wasn't really your choice. You were sort of born into that.
J Mintzmyer: Ellis Island shenanigans. So, yeah, @mintzmyer, you'll find me on Twitter about 12,000 followers there, and I'll put out high level commentary and notes once in a while. I won't be tweeting at you at 3 AM.
Bill: [laughs]
J Mintzmyer: I'll have some stuff for you there. As far as the research platform, that's probably where 90% to 95% of my stuff is behind the paywall. That's just the way it is. 5% to 10% is what you see on Seeking Alpha what you see on Twitter. Behind the paywall, you can either, there's a link to it on my Twitter or I made it easy every redirect link, you can go to www.mintzmyer.com. I thought that was a cool website. [crosstalk] I had to buy it. So, go there, it'll redirect you to the landing page, and you can learn about our service and learn a little bit more.
If you have any questions, at Twitter, send me a message. I try to respond as much as I can on Twitter. There's 12,000 followers, and some days are more hectic than others. But if you tweet at me, I'll do my best to respond.
Bill: All right, we'll drop you in the show notes. One last question and then, I'll let you get out of here. What do you think Twitter has done for your marketing the level of conversation? How is it similar to Seeking Alpha? You grew up on Seeking Alpha and were there when it was early. How do you see those two things?
J Mintzmyer: It's a really good question. I think any person who is sharing their research or doing any sort of thing like that needs to have a handle on social media, and I'm honestly behind the curve. I was ahead of the curve on Seeking Alpha right up in there for 10 years. So, when I was a baby, and I was partnered with it. But Twitter, I was late to the game. I got there about really about two years ago is when I started taking Twitter seriously. So, even a year ago, I had a couple of thousand followers, and now, it's 12,000 something, So, Twitter has been good for us, the engagements great, it's fun to meet a bunch of new folks that don't even really know what Seeking Alpha is.
I have a presence on LinkedIn, but I just haven't really got the same traction there. [crosstalk] In Facebook, I had a page there for a while but it's just not the right environment. I don't have a single-- I should mention this weird fact about Value Investor’s Edge. Most people in Value Investor’s Edge are professional acquaintances. I don't sell this research to high prices probably, but I don't sell this research to friends, and family, and stuff like that. So, Facebook, I don't go on Facebook and post about stocks. That’s where you see like AMC and GameStop and stuff. I don't do that stuff. It's just on Twitter.
Bill: Yeah, that's cool. Well, thank you for stopping by, man. I hope people got something out of it. We could have gotten into the weeds, but I figured that if people like what they heard, they should subdue your stuff, and then they can find out the actual weeds.
J Mintzmyer: Yeah, well, I appreciate you, Bill and if things keep going like they are now if the trend keeps persisting, I'm sure there'll be something in a few months, we'll have to circle back and talk about. I don't know whether it'll be another port getting shut down, or another ship getting stuck in the canal, or another crazy spike in rates, but there'll be something to talk about exciting and I'm glad you're looking at it.
Bill: Well, I'd enjoy it. So, until then, take care of yourself and thanks for stopping by, man.
J Mintzmyer: Excellent. Thanks, Bill.
