Massif Capital, LLC’s Second Quarter 2019 Letter to Investors

North Carolina-based asset management firm Massif Capital, LLC released its second-quarter investor letter this month – a copy of which is available for download below. The fund was co-founded and is currently being co-managed by Will Thomson and Chip Russell. The company invests in basic materials, energy, industrial, power, and service industries.

Thomson specializes in portfolio management, private equity, political or credit risk insurance, and economic and strategic counseling. This Trinity College and Harvard University alumnus is also a Value Investors Club member and has participated in various investment contests where he won several awards. He managed a $2.6 billion portfolio of political and credit risk insurance policies for the Chaucer (New York) before starting Massif Capital, LLC.

Russell used to work in the energy field for over 8 years. His expertise includes corporate strategy management, risk analysis, and asset valuation. This Bates College and Duke University alumnus is the former Director of Business Development at New York-based firm Eos Energy Storage.

In their recent letter to investors, Massif Capital, LLC reported a -0.8% return during the second quarter and a 3.5% year-to-date (YTD) performance. The firm reportedly began including gold mining companies in their portfolio during the first half of 2019.

“Dear Friends and Investors,

The core portfolio of Massif Capital returned -0.8% during the second quarter of 2019, bringing the year-to-date performance to 3.5%. A detailed report on individual account performance will be provided to investors in the coming days.

Value Investors – Avoiding Mining at All Costs, But Why?

We recently had the pleasure of giving a presentation on our approach to investing in mining firms at a conference hosted by the Manual of Ideas in Zurich, Switzerland. For those not familiar with Manual of Ideas, it is a community of value investors that is run by the author of a book by the same name, a book we highly recommend to anyone who has not read it.1 As far as investor communities go, Manual of Ideas is as good as it gets. John Mihaljevic, the author of the book, has managed to create a diverse community of value investors that we are privileged to be a part of. Events are a rich mix of successful entrepreneurs turned private investors, fund managers, chief investment officers of foundations and endowments, venture capitalists, etc. We learn a great deal from the conferences and are often convinced that what the group gains from our attendance pale in comparison to what we gain. While there is a great diversity of thought and investment acumen at these events, investing in mining firms is a rarity. At the start of our presentation, entitled “Beyond Commodity Prices: Finding Value in Mining Firms,” we asked the audience “who invests in mining firms?” In a group of roughly 25 people, about three people raised their hand. This ratio seemed to hold for the broader conference audience as well, about 100 or so individuals. We take no issue with investors choosing to avoid sectors based on a lack of opportunities or not being interested in spending the time to bring a company into their circle of competence (there is after all only so much time in the day), but we found the ratio sufficiently skewed to ask most attendees we spoke with why they choose to avoid mining.”

You can download a copy of Massif Capital, LLC’s Second Quarter 2019 Letter to Investors here:

Massif Capital LLC’s Q2 2019 Investor Letter

You can also see the list of our 2019 Q2 investor letters and download them on this page.