Hunting for Value in Mining Stocks Amid Soaring Metals Prices | Freddy Brick | Muddy Waters Capital

Freddy Brick (0:00)

We actually don't have a huge view on metal prices, which everyone probably thinks is just insane, given that we run a metals and mining fund. 2% down day on the S&P, like a lot of Bloomberg go in yellow pretty early, and people are moving away from the screens.

That's a pretty mild day in junior mining. You regularly get a plus 5% move in any of the underlying commodities or the indices. The gratification is very rarely instant in the sector.

Max Wheatley (0:29)

Hello, everyone. Welcome to Other People's Money. I am Max Wheatley, and I am joined today by Freddy Brick, partner at Muddy Waters Capital. Freddy, thank you so much for joining me today.

Freddy Brick (0:39)

Max, really great to be here. Thank you for having me on.

Max Wheatley (0:42)

It is a pleasure. I mean, normally when I am talking to the people at Muddy Waters, I'm talking to your partner, Carson, and we're talking about short selling. That's not what we're going to be doing today because you at Muddy Waters have been expanding into new markets, new strategies. And one in particular resources is extremely timely.

Obviously, gold was on an incredible run last year. It has been extremely choppy through 2026 And whenever that happens, the miners tend to give you that type of vol plus some. I know that's probably what excited you about the sector was all of that juicy vol to trade around. But I want to just start out with the big question.

Do you guys think the top is in for gold? How are you positioned aggressively in miners right now? Or are you hedging your risk?

Freddy Brick (1:28)

I'm going to massively disappoint here.

Despite being involved in the sector and haven't been involved in the sector now for about eight or nine years in various iterations, we actually don't have a huge view on metal prices, which everyone probably thinks is just insane given that we run a metals and mining fund. We do have a macro view, but we're quite focused on the junior mining sector. And so our macro view really coalesced around why a lot of assets in the junior mining sector were highly distressed and basically left dead.

And so in terms of the way we position, like look, there's no getting around it. Higher metal prices are better for the assets we own, but we typically run the book about 50 percent net, which kind of allows us hopefully to accumulate more as things draw down. And the drawdowns in this sector are pretty vicious. I got to tell you, anyone who spends time in what I call like real markets, you know, two percent down day on the S&P, like a lot of Bloomberg go in yellow pretty early and people are moving away from the screens. That's a pretty mild day in junior mining. You regularly get a plus five percent move in any of the underlying commodities or the indices. So yeah, you just got to live with that to a certain extent.

Max Wheatley (2:57)

But I got to think you have to have some view that metals prices are headed higher over time. Maybe we could zoom out and say, what about the long term macro view that you have for metals? And I think we should probably separate them from the industrial metals that I think a lot of people have heard some of the bull thesis there and then also precious metals where the bull thesis seems ever present.

Freddy Brick (3:19)

Yeah. So if we take base, we do a fair bit in copper. The copper bull thesis has been around since the last copper bull market. The reasons change, it was going to be EVs and how much copper went into every EV. I think it was six times the amount of copper for every EV is every ice vehicle. Now it's AI. Before that, it was something else.

I do believe the copper bull market, the copper bull thesis makes sense. It's just like don't know at what point it actually is going to happen. I do believe that it is harder to find bulk assets in copper. And I think if you look at the places we are discovering those assets, the hairier and hairier jurisdictions, and in the non-hairy jurisdictions, you've had a ton of red tape. Now granted some of that is being lifted, but if you look from probably first drill hole in the ground to bring a copper mine into production, you're probably well north of 10 years. And if you look at the kind of upscaling for some of the world's largest copper mines, it's not really coming through on time.