Iben Insights

January 2015

The Twilight Zone  (PDF)

Please see Dave's latest commentary



October 2014

When Doves Cry (PDF)

June 2014

The Saddle Ridge Hoard (PDF)

December 2013

The Wizard of Oz (PDF)

In The Wizard of Oz, Chief Investment Officer Dave Iben discusses what investors, recognizing that “we aren’t in Kansas anymore”, should now do. Certainly, blindly following the route that worked in prior environments is far from guaranteed and could prove perilous. Kopernik Global Investors have some strong views and believe we see promising opportunities. The excerpts below illustrate how risky appearances can be reasonably safe:

  • U.S. stocks have become much more expensive relative to their intrinsic value compared to non-U.S. domiciled stocks. Utilities in the U.S. trade at 1.6 times book value, versus 0.33 in Russia and 0.21 in Brazil. Railroads trade between 2.5 and 5 times book value in U.S., versus less than 1.5 in Japan (post this year’s run-up) and 0.85 for our Chinese holding (also post run-up). Phone companies trade at 20 times earnings versus less than half that for similar companies in the growth economies. Farmland in Iowa trades at $7,000 per acre versus one-tenth that level for publicly traded farmland in Argentina, Brazil, Ukraine, Russia, and Southeast Asia.

  • A half-century ago, John Templeton, one of the great investors of all time, invested in Japan. He made a tremendous amount of money even as the U.S. market went down from 1966 through mid-1982. Where others saw risk, corruption, a war loser, and a maker of cheap goods, he saw a strong work ethic, a developing middle-class, high level of education, high savings rate, and a seriously undervalued stock market!

July 2013

My Fair Lady (PDF)

My Fair Lady, (MFL) has been reprised many times over the decades. It started as Pygmalion in London, later coming across the Pond as MFL, and as many versions continued to be cast on various stages throughout the world, it was adapted for film and became a popular, award winning movie. Therefore, it seems in the spirit of things to reprise my Commentary from four months ago. As with art, life tends to recast past dramas and present them as remarkable new things. Currently, we are told that quantitative easing takes us into uncharted waters when in fact it has occurred often, never ending well. We are told that high priced securities are not risky if volatility is low. They assure us that return on capital can remain at extremely high levels even while the cost of capital is pegged at much lower levels. Central planning is in vogue and free markets are passé. Many confuse crony-capitalism with free markets. They are very different. CPI, a tortured index of prices for consumer goods, adjusted and issued by government bureaucrats, is passed off as the way to measure inflation à la 1999, and so many times previously, many prefer a strong trend and a good story to tangible value. As during past episodes, for those who trust their own analysis and are students of history, this is an excellent opportunity to profit handsomely from the resultant market anomalies.