The Secret To Finding Opportunities In A Crowded Market w/ Jonathan Wellum

**Jonathan Wellum** (0:00)
One of the most important things is you stay consistent to your investment process, investment philosophy. If you don't stay consistent, you're gonna get pulled by the market, and the market's gonna dictate your decisions. And if the market's dictating your decisions, then when the market goes up, you're gonna buy, when it goes down, you're gonna sell, and you'll buy at the high, and you'll sell at the low. And that is always what happens.

**John Gillan** (0:21)
The war in Iran looks to be finally concluding. The SpaceX IPO is in the books. The second half of 2026 is off and running. What do investors need to know to outperform in these markets? Hello and welcome to Milk Road Macro, the podcast that knows that the New York Knicks are NBA champions and the vibes in New York City are strong enough to power a data center in space. I'm your host, John Gillan. Today is Monday, June 15th, and today we are joined by Jonathan Wellum. Jonathan is the founder, president and CEO of Rocklinc Investment Partners Incorporated, an independent Canadian investment management firm. Jonathan is a veteran investor focused on building high quality, long term equity portfolios for clients and many other things, which he'll tell us a little bit about here. Jonathan is going to help us sort through some of the hype and find the real alpha today. So if that sounds good to you, make sure you like and subscribe, share this episode with somebody who's going to enjoy it. Today's episode is brought to you by Nexo, earn interest, borrow and trade crypto and Bitget Stocks 2 with real liquidity, real dividends. And without further ado, welcome to Milk Road Macro. Jonathan, how are you, sir?

**Jonathan Wellum** (1:22)
I'm doing very well, John. I must be quite the energy there in New York City with the next of its powering data center. Wow, that's something else.

**John Gillan** (1:31)
There's been a lot of energy in the city.
It's been quite a show to be sure. Jonathan, I wanted to start with something else that happened recently in New York City that caused a lot of energy, which is the SpaceX IPO. Everyone is talking about this. The numbers are really incredible. The stock is now trading close to $190 a share, which is eye-watering to say the least. Nearing a $2.5 trillion market cap, minted the world's first trillionaire. What are your thoughts on this historic market event? What's your reaction to all this?

**Jonathan Wellum** (1:58)
It is an amazing event. I think you have to stand back and it is truly historic. I mean, a couple of things. Elon Musk is an amazing entrepreneur. I mean, you have to give this man all the credit you can possibly give someone. His tenacity, his forward thinking attitude, his vision in so many areas. You saw that in Tesla and now you're seeing it in SpaceX. The problem is that that's a lot of money.
You are paying for a lot of his aspirational vision and dreams. We need people like Elon. I'm thankful for people like Elon.
They're fantastic people. But as an investor, I still have to go back and say, okay, let's look at this business. I mean, now as you say, 2.5 trillion. It came out at about 1.8. Now it's 2.5 trillion in two trading days so far. But 18 billion in revenue last year, 60% of that coming from Starlink, which is again, amazing business, thankful for that satellite business. And that's going to continue to grow at a pretty good rate, but not at numbers that justify these valuations. And then you've got another 40% that is going to be attached to the space business. And again, I love his vision. I think it's exciting. It's all of those things, but you are paying a premium, premium, premium plus for his dreams. And so I love to listen to him. I love to listen to what he's doing. But if you're paying over 100 times revenue now for that business, it's too much. It's just too much. Now, that's not saying that five, 10 years from now, it isn't a three or four billion dollar, trillion, I should say trillion dollar company, but I think there's going to be a lot of ups and downs and much better entry points for disciplined investors. And you're also going to see more visibility and clarity on how he's going to develop some of these businesses. I mean, AI data centers in the sky is a fantastic idea, but he still has to do it. And we have to see how that's going to be executed. You know, mining asteroids sounds fantastic, but this hasn't been done before. And it's great that he's got the vision, but this could take some time. And when you're valuing a business, you're looking at the present value of the future cash flows. And if you are looking at those cash flows and they're very unpredictable, even if it's got back by great vision and an amazing entrepreneur, probably one of the best entrepreneurs in the last 100 years, you still have to discount those cash flows and be very careful. The irony here, Jon, is that if you're valuing a business where there's more risk in it, and clearly there's risk in all of these businesses that he has and hats off to him for raising the capital, then you use a larger discount rate. You actually should be discounting those cash flow, future cash flow potentials at a higher rate, which means you lower the valuation. In this case, the discount rate is practically zero. I mean, it's not zero, but it's very low.