Porter Collins & Vincent Daniel: What Are We Doing?!? | On The Tape with Danny Moses
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Welcome to the Risk Reversal Podcast. I am Dan Nathan. We have a special podcast for you today, a holiday-shortened week. I'm going to quickly run through some of the things that are on the tip of my tongue as I'm thinking about the markets here, but we're also going to drop an on-the-tape podcast, a special What Are We Doing with Danny Moses and his former partner,

Vincent Daniel and Porter Collins of Seawolf Capital. They talk a bit about volatility in the markets right now, why uranium could be the energy play of the decade and how Trump's policies are stirring up everything from oil to Fannie and Freddie. They dig into some idiosyncratic names like Sable Offshore and Pure Cycle. They talk gold, copper,

and miners and even tackle the madness that is our favorite EVs manufacturer, Tesla. You can get more of Danny Moses every week by following the On The Tape podcast over on the YouTube or in your favorite podcast store. Just search for On The Tape

with Danny Moses. Before we get to Danny Vinny Importer, let's preview the week. Tax, trade, and Tesla, I think those are some of the biggest things out there, other than Fed Chair Powell speaking, I think on Tuesday, and a few other Fed Govs.

speakers throughout the week here. That'll be interesting, again, as you think about some of the sort of chorus of Fed speakers who are maybe moving a little bit closer towards a dovish stance, encouraging the possibility of maybe more than two rate cuts this year. So that's something we'll be keeping a close eye on. I also think it's important to kind of take some stock of the stock market. The S&P and the NASDAQ on Friday closed at all-time highs. They're both up 5% on the year.

On the quarter, the S&P is up 10%. The NASDAQ is up 17%. I think it does make some sense to kind of look around at some of the other risk assets and kind of get a sense of where we are at mid-year. The 10-year U.S. Treasury yield at 4.28% is right where it was at the end of Q1. The U.S. dollar is on pace for its worst quarterly performance

since Q4 of 2022. We know what was going on back then. Crude oil closed 65 and a half. That's below the Q1 close of 71 and a half, so nearly down 10%. And you have a VIX at 1630, Q1 close at 2230. If you put all that together, you say to yourself, well, we're back in bull market mode. And some of the conditions that could be tailwinds for stocks, rates that are at least not going higher, U.S. dollar

at its lowest levels in a few years crude oil down for the count despite geopolitical sort of tensions you'd say to yourself okay we got q2 earnings season coming up in the next few weeks all the geopolitical stuff kind of dies down a little bit you know we get tax we get trade you know all these sorts of things sorted out

Maybe that's the great condition for a second half of this year. Who knows? Usually we'll get a couple curveballs here and there. Tax is going to be a thing all week. Trump put a July 4th deadline for the tax bill. I won't use the BBB thing. I just think that's a bit ridiculous. But it seems like some of the opposition within his own party for the sorts of cuts that they want

given the debt that's going to be kind of just lobbed onto the heap that we have there over the next 10 years. I think they're talking about $3.3 trillion. So let's see how that goes. I would not expect that to cause a whole heck of a lot of volatility one way or the other in the markets. The trade stuff, we have a July 9th trade deadline. We know what happened Friday afternoon with one of our closest and biggest trading partners, KBX.

Canada. They basically walked away. So the idea that we're going to get some big bilateral trade deals between now and July 9th, whether it's Mexico or the EU, which is already obviously going back and forth a little bit, doesn't seem particularly likely. The Japanese kind of made some overtures a few weeks ago, but we'll see. But there is a potential that they don't hit the tax deadline and they don't hit the trade deadline. And then maybe that combination of things could cause a lot of market volatility. But again, I wouldn't hold your breath for that. All right.

On July 2nd, that is Wednesday, Tesla is going to report its Q2 deliveries. Consensus estimates about 390,000 or so. I think some of the really, really good delivery trackers, this guy Troy Tesla, they're much below. Some are as low as, I want to say, 345,000. So you could drive a truck through consensus and where some of the bearish ones are looking right now. The implied move in Tesla in either direction over the course of the week, and again, Thursday is a half-day.

day and Friday is closed about five and a half percent on either direction. And I think it's important to note is like we have this Q2 deliveries. It's much watched among Tesla sort of investors and commentators and like here. Elon Musk on Saturday night went to Twitter and he ripped the Senate's version of this Trump budget

bill. And so again, this is up for hopefully, at least if you're Trump, you'd like this thing to pass by July 4th. The tweet was the latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country. Utterly insane and destructive. It gives handouts to industries of the

past while severely damaging industries of the future. So they're talking about of like a lot of these EV credits and the like, which have been very important for Tesla's profitability and not just the consumer credits, but it's the emission credits and the like. So, you know, it seems like a few weeks ago, that sort of dust up that Musk

And Trump had, this is kind of one of the holdovers because there is definitely a change in this bill as it relates to some of these credits and the like. So it'll be interesting to see how that gets dialed up, especially if you see Tesla's deliveries pretty weak and then you see a poor stock reaction one way or another. So interesting stuff going on there. No real earnings. There is some economic data. There is some ISMs, PMIs, weekly jobless claims. So again, not likely to be anything that moves markets

All right, well, listen, we hope you have a great week. We are going to be on the market call 11 a.m. Monday, Tuesday, Wednesday. I have Carter Worth Monday and Wednesday with me, guys on vacation. And on Tuesday, I have Danny Moses. But if you want to get all geeked up for Danny on the market call, stick around for the On The Tape podcast. It's a what are we doing episode. It's Danny, it's Vinny, and it's Porter. Enjoy.

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In this episode of On The Tape, I welcome my former partners, Vincent Daniel and Porter Collins, for another edition of What Are We Doing? They've been on here a few times, a big friend of the pod. We've walked through it all. We go through energy, we go through the financials, we go through a lot of special situations, Fannie Mae, Freddie Mac, Sable Offshore, PureCycle Technologies, the role of short selling, bottom up investing. Of course, we hit Tesla, hit a couple of risk guard plays out there like Rocket and Mr. Cooper. We talk about BGC and just their current thoughts on the market in general. So please,

Enjoy this episode of On the Tape. We have another edition of What Are We Doing? Since the relaunch of On the Tape, this is your fourth time, once with Carter Worth, with Bourbon and Charts. Yep. Now this is the third time you guys have come on. You're on May 14th. Guys, thanks for coming in.

Thanks for having me. You enjoying the weather, Porter? Straight from Texas. Yeah, it's great here. It's hotter here than it is in Texas. All right, so the market's hot. Let's start with that. The market's hot. Give me, guys, your current thoughts. I know you're not trafficking in the S&P 500, but a lot's gone on on the macro that you have to pay attention to that makes you decide how to look at the micro. So, Porter, maybe start with you, your thoughts on the market here, and does it really matter, the S&P 500 at this point? I mean, I have to say I'm a little jacked up these days. It's the level of volatility, noise,

I everything is just is at 11 right now and so when the volume's at 11 I like to turn it down and step back for a moment because I honestly can't process everything that's going on politically market wise you know everything and so I think that's most people do it's just it's too much that's the we said it about Trump right the uh

make volatility great again. We forgot how much vol he brought to everything. So this is a, this is spinal tap, put it on 11 type of market, right? Yes. And so I feel like nobody knows what to do. Right. And if you look at the leverage from hedge funds, the, the nets are high or nets are low, but the leverage is starting to creep up again. And

We're sitting here saying, okay, let's dial it back to things we know, things we understand, and things we can make money. And so that's kind of what we're trying to do. There's too much to take in, too much noise. And so I'm just trying to turn it down at this point. Vincent, to you. We walked in with two big themes walking into the year. One Porter touched on, which was volatility. The second one, which is,

Trump is the straw that stirs the drink. And for the most part, and we could talk about the Fed later, I know we'll probably talk into it, that hasn't changed, right? So in all this noise, I found myself last night, sadly, on X, determining whether we're going to have a ceasefire as bombs were going off all over the place and futures were moving. And I said, wait a second, timeout.

Let's get back to what we feel the most confident about in terms of what's coming next. And that's what we try to build our portfolio on is, is, is how, what do we feel most probable about? And look, the thing that has been the most probable this year, by far than anything else, if you went long grift, you have made a bloody fortune. And the more freakish the grift, the more you made money.

We're not really grift people, but we were very cognizant of the fact that that was gonna be front and center in the Trump administration. - You weren't in the Justin Sun deal recently? - I was not in the Justin's. - The SRM Entertainment? - No. - It's crazy, it's entertainment. - I was not. - So just for instance, so we know what's going on in the Middle East. It's been going on for years. Obviously, it got pretty intense the last few days.

We've all been tracking oil outside of the tensions in the Middle East for a long time. That's a big input into energy stocks. Obviously, oil shot from 65 to 80. It's amazing how efficient the market is and how the oil market is probably the one that knows the most about what's actually really happening. And it came in before anything else had happened. So we're back to 65 again. To me, with an energy, nothing's changed in terms of the stuff that you're looking at within the U.S. right in the onshore and offshore. And I caveat that by by saying I think that oil prices moving up like they just did gave

gave a re-underwriting moment potentially for the sector to a degree to say, hold on a second, I don't own any of this, these portfolio managers. So I feel like we're not going to pull back as much as oil has, much of the stocks have run. Do you agree with that? Yeah. Listen, I think on the last podcast we talked about, we had a big energy exposure. Part of it's driven by our Sable offshore position and we have a bunch of positions around it. I wish I was smart enough to sell more

you know, I've been, and I actually talked on, on Sunday morning and we were like, you know, I think we might have a window where we can monetize some of this stuff. Uh, but you taco not our set. Yeah. Yeah. Yeah. Yeah. So anyway, you know, it happened so quick.

And I think Vinnie and I rightly assumed that the government was, you know, they can't, they did this most coordinated assault ever, planes in, planes out, and they were just going to let oil free flow to the markets. Like let's have free markets handle oil. No, they were selling the crap out of oil futures. And then when Trump had his good news, it just kind of cascaded upon that. And so,

I wish we were able to monetize some of our other trades around energy, but here we are and oil's down again. And I think we underwrote them for when the market was on the lows. And so I kind of still like a lot of these longs. And I actually think that the contrarian here is probably buying oil. - Well, Sable Offshore is a special city. - Yes. - Really has nothing to do. I mean, yes, of course it has to do with the price of oil. - And we prefer idiosyncratic names within underlying themes like oil.

Let's talk about energy for a second, because I think there's a more probable, definitive investment that's out there in energy, and that's uranium. Now, why do I say that? One, Trump the other day basically tweeted or truth socialed out, I want oil down, get oil down.

sell it, right? And sure shit. - And don't you dare if you're an oil company, try to raise prices. - Correct, sure shit, that happened. Okay, so it's really difficult to actually own oil because you're going against the grain. The person, the straw that stirs the drink does not want it up. Not saying you can't go up, but he's gonna be out there every day if oil goes up $5. - Just like, kinda like shorting markets when Trump says buy the market, it's kinda hard to, you know. - Correctly. - But you'll still try.

We are what we are, right? But there is an energy source that he does believe in. He has created executive orders. He has wanted to increase production in the U.S., and that's uranium.

So in my opinion, that's the easier investment. And quite frankly, that's the investment I believe in because the supply demand dynamics in uranium are extremely favorable. There's just not enough supply for the production that's coming in the next five to ten days. It is amazing that nuclear, sorry, it is amazing how it's become bipartisan support now. One, it's clean energy, right? And you're going to need it for AI. So you got everybody's kind of aligned. You can't pick a lot of things that everyone's aligned on. And

Governor Hochul just signed to build a new plant for the first time, right? There's only been four plants built since 1991. Is that correct? Four new nuclear plants built? I think something like that. You might be right. It might be less than that. Or less. I don't know what it's been. But I think maybe on a net basis. Correct. Because some have closed. But yeah, Porter, share your thoughts. And the best way to play it, some people just play uranium. Some people play the power producers. Some people play the utilities. How do you guys play in that uranium trade? Well, here comes the hard part, right? So

You know, we've owned CCJ for a long time. CCJ, if you look at the chart, people are going to be like, I can't own this and we can't buy it here. I mean, stocks are gone crazy. And, you know, I think a lot of the, you know, I listened to Brad Gertrude's podcast. They're talking about how they play it, right? How the tech guy, KOTU has been playing it. And they've been playing it by, I think, Constellation Energy and some of these, you know, because they know that,

that's where the power is going to come from. They know that's, you know, and incrementally you can see, I think natural gas is probably a great way to play that as well. So between nuclear and natural gas, that's probably the best way to play AI. And it's, you know, I think Vinny and I are bigger converts over the past six months to AI. Like, you know, just in my life, you know, when ChatGBT came out, we, we,

Use it a couple times, you know, a week a day. And now I use it all the time. You know, our good friend Lawrence McDonald, friends call him Larry, has been on this trade as well. He was on the tape a few weeks ago. And he pitched this ranged nuclear renaissance, right, this NUKZ. And to your point, I'm not a big fan of ETFs. But in this case, to your point, it kind of encompasses everything.

All of it. The chart looks great on this thing, so that's a name we've been looking at, but I know. And the beauty of an ETF from time to time, particularly for value idiots like ourselves, is you can buy the ETF and certain things in the ETF you would look at and from a valuation perspective you might vomit. But because you bought the ETF, you don't think about it as much.

So you have the, and I agree with Larry on that point, you have the underlying theme, but maybe some of the names in that theme, and I'm thinking like Oklo or OKLO. There's a new one coming public. There's a new one coming public. And SMR. I'm probably not going to buy them. But if you have the underlying theme, and by the way, because those names capture the retail total addressable market, they don't go after our...

you know, smit cap mining names, they go after these names, at least you capture the upside. So I kind of agree with Larry. Larry was talking about how, you know, you have a $27 trillion basically NASDAQ 100 names and you're chasing basically $2 trillion. So if the tech bros are right on AI and listen, every day that goes by, there's a new CapEx deal, there's more money coming in. It's hard to say it's not happening. So if energy really is going to actually supply all of this power, then you have to own

all the energy, NatGas obviously is a big one too. And you know, you've got to put your radio. - We actually had a call with Oklo, I want to say six months ago with management. And at that point it was Vinny and I and a friend of ours

And like no one was knocking on their door. It was maybe a year ago. No one was knocking on the door. Now it's the hottest stock imaginable. And, you know, we played it for, I think, 20, 30% sold it. No, no, no, no, no, no, no. You're not giving us credit. No, seriously, on this one.

I think we played it at $8. We sold it at about $16. And we felt like we were absolute champs because it doubled. And I think it four bagged after that. Yes. That's good. Listen, you never go broke by selling early, obviously, for gains. So you just mentioned mining. Can I move this along? Because we're getting a lot in here. Go for it. The gold miners. I know you want to talk about copper a little bit today. But gold, as we sit here, it's really interesting. So the dollar's weaker. Obviously, there's

you know, the volume got turned down a little bit on it. So gold comes in, I get it. I think every sell-off in gold is a buying opportunity. I think you guys would agree. The miners still don't even equate to anything near where the price of gold is. So talk to me on copper, talk to me on gold, how you guys play in that right now. Well, it's very interesting today that the dollar is down. And I mean, I think that,

there is more substitution outside. I mean, we've always talked about the difference between the reserve currency and the reserve asset. And the whole thing was like, well, I buy gold. It's good. You know, the dollar's reserve currency status is never going away. And like, you're missing the point. That's, as you can see, the reserve asset has massively shifted towards gold. And now it's bigger than the Euro.

And, you know, people are just selling dollars and as the reserve asset. And that's a bigger problem for treasuries longer term. But I just think this this train continues and you'll probably by the time we exit the trade will be ten thousand dollars. That's that's how I think about it. With miners, you guys, which ones are you playing right now? And are you looking at copper or no? Yes, we'll go. We'll get into that. And just to add to what he said in terms of gold, our kind of main theme on gold is

is debasement and fiscal dominance. That's it. So we expect because of the reduction in geopolitical risk, gold is probably going to come in. But at the end of the day, if we don't fisc our fiscal imbalances, and we're not, we're like expose, Danny, if you remember that one. We're at the point of no return, right? There's nothing we can do

fiscally without sending this country into a recession. - The fact that we pivoted so quickly is unbelievable. - Yeah, so then we turned to the miners. And our biggest mining positions, and still to this day, have been Agnico and Alamos, the big guys, and really the best in class. We haven't really added anything incremental to those names,

they've worked. I mean, if you take a look at the charts there, I don't want to go out here and recommend you have to buy Agnico. You're going to look at the chart and you're going to say, thanks Vinny for nothing. Right. However, you've been on here many times talking about it. So, but now we've started to try and dip below cap.

but also trying to gain or keep and maintain the quality of the underlying management team. And there, like a lot of the stuff we do, when we don't know, we outsource it to our best friends and ask, and then we start the process there. That plus we also look for other things. So that's how we got to Dundee Precious Metals, tickers DPM on Toronto Exchange.

We got to CDE through Silvercrest and the like, and Porter always has his smaller Pueblos that he always loved. One of our good friends, shout out to Chris Ritchie, who is the former COO or president. Anybody see Ritchie? Anybody know why Chris Ritchie bought this name? But Chris Ritchie used to cover us. I don't know if you remember this. I remember, of course I remember. And?

And he was the CEO of Silvercrest. It got bought by Core. He introduced us to the Core CFO, who was buying stock way back when it was $5, right? And Chris has gotten to know what we like, right? He knows our personality. And I go, Chris, what do you got? Do you got anything in mining land? He goes, I got a copper name for you. I go, give it to me. And he goes, it's small, Vinny, so don't get mad at me. It's a little small market cap. Why am I getting mad? $240 million US dollars. It's called Amerigo, A-R-G.

On the Canadian exchange. On the Canadian exchange. They basically have exclusive rights to the tailings, which is the excess. There's a better word for it, but I'm not going to use it. From the largest mine, underground mine in Chile. In the world. It's about 7% to 10%. The beauty of that is that

There's no CapEx. It's just straight out cash flows. And here's the biggest thing. Management's intent, this is an important thing, is to pay down what little debt they have left. It's not really hyper levered. And just simply buy back stock and pay the dividend. Currently right now, the dividend yield is 6.85%.

and they're just going to sit and buy back stock. They have this contract, this exclusive contract with them until 2037. But if you really think about what the excess cash flows are going to go to, and of course, no one knows this name. So I could sit here, this is sort of a case study, right? Where I could shout out about a name on a podcast.

And even when they see it and look at it, no one's going to buy it. And in a way, I'm sort of hoping they don't because the lower the stock price, the more compounding they're going to do in terms of an increase in book value. It's like when I pitch Glasshouse, no one's going to go buy Glasshouse. Do you? No, no, I'm not pitching it. It's fine. You're not going to mention it today.

All right. So let's let's move on to some other stuff. So we did the copper. We did the gold. We did uranium. We've done some energy. Let's let's keep moving. And now Porter obviously sends out a tweet yesterday telling everyone we're going to be on this thing. So we got like 50 questions that came to him to try to hit some of those. All right. We're going to hit them anyway. OK.

So I know tonight you're going to be having drinks, right, with Sable Offshore. You just mentioned it before. SOC, I don't know if you want to get into specifically the story about what's happening. I know it's within the energy, but it's a special set. So do any updates there? And also, I'll just throw in PCT, since they're both kind of special situations. There's been some big news there as well. Well, PCT has been, that's probably one of our shining moments this year. Aside from the gold miners, it is obviously a plastic recycling company that recycles polypropylene. Only company in the world that does it locally.

that recycles polypropylene down to the molecular level. And... That program didn't get canceled somehow? No. I just want to make sure. We're good. Okay. And so just recently they announced that they've... This is PureCycle Technologies. Yes, PureCycle. Just recently they did a... Danny's least favorite word, a capital raise. Yeah, but with the two people involved, one's my hero, the other one's a good friend. So to me that... Stan Druckenmiller, your good friend? Yeah, Stan Druckenmiller. No, Stan Druckenmiller is one of my heroes.

Rob Pauly is a good friend at Sandlin Capital. Sorry. So yes, when those two brains are together in the same thing, that's not something I'd want to have a short interest of 30% on. No, I don't understand why the short interest is still 30%. Anyway, they announced that they're doing this $300 million CapEx program to build out a factory in Augusta, Georgia, in Antwerp, and in Thailand. And so-

It's one of these companies, it's a one-of-one company that we're involved in very few growth stories. This is one of our few growth stories. And they can produce right now something like 100 million pounds. And this new CapEx program is going to build it out to a billion pounds of recycled plastic, right? What does that equate to into earnings or EBITDA? It equates to, according to them in their presentation, 600 million of EBITDA by 2030.

That's not that long off. And by the way, you've played Augusta because we know where his connections are right now. We haven't played Augusta. I've been to Augusta. Do you think that if I buy some shares, I could possibly get an invite to Augusta? Or better yet, is Vinny even going to get the look to play Augusta? Zero chance. Zero. Zero. Less than zero. Lutarski. Lutarski. All right. By the way, if you think about a Lay's potato chip bag, that's plastic, right? That's from petroleum. Right.

You could see a world where just a lot of this stuff, candy wrappers, yogurt films, all this stuff is recycled plastic. And right now, there's just very little of it. By the way, I wasn't kidding when I said, is there anything that's going to get canceled by the U.S. government where there's no more, you know, any type of this stuff that's going to happen? The good news is this is a U.S.-based manufacturer. So they are at least... That's a good point. You know, in many respects, it is probably right that...

This would have done better, at least initially, on the Kamala Harris, but it is a U.S.-based manufacturer. So I think that's meaningful. Listen, you know,

I am an environmentalist at heart. You know, I want to see more of this stuff recycled and put into good use. Do your friends in Texas know that you're an environmentalist? Yeah, I know you keep certain things to them. You do. All right, do you want to hit on Sable Offshore? Just a couple of things. Give us the current because that's another special situation. It's one of our favorite positions. And, you know, it's this. I just want to be clear. You're an environmentalist on PCT yet. Drill, baby, drill off the coast of Santa Barbara. No, I just want to make sure that I got this correct. Consistency is a bugaboo.

- Of the weak mind. - Of the weak mind. - All right, go ahead. - That's right. - All right, yeah. - And so, you know, they had this platform in federal waters off the coast of California. And Exxon, going back a decade ago, had a spill. The CEO, Jim Flores, buys it from them in a SPAC, four letter word. And in the thought process that they can independently

get it back up to speed, get the pipelines, everything going. And they've done a great job of, they've fixed all the pipelines, everything's done. And the problem now is, the problem all along has been fighting with the California Coastal Commission and the Environmental Defense Fund, which so everyone in California hates them. Oprah,

who else? Elaine Seinfeld. Elaine from Seinfeld. Julie Louise Drivers. Jane Fonda. They've all, they've all come out against like, you know, Sable Offshore and everything like that. They recently lost two, uh, lawsuits. One was, uh, it's very, I'll keep it short. One was the California Coastal Commission, uh,

to the disabled and they got a preliminary injunction against them. And the second one was the Environmental Defense Fund against their primary regulator, which is the fire marshal. And so both of them are preliminary injunctions. We seem to think that they'll get through the regular hurdles either through

normal courts, either through the government taking over the pipelines or just tankering the fuel off the platforms eventually. And so I think that for us at $20, $21, like there's just, I don't think there's a ton of downside here because there's a lot of optionality in terms of a takings clause, which so Vinny laughs at me, but I think my downside is a hundred dollars in a court situation or just naturally the, you know, the stock, if they do pump oil,

And the management says in, in April or August 1st and in a public document that, you know, that that's going to be $40. And so. Is it, is it fun to be like tweeting with Phil Nicholson? I mean, he's a shareholder too. It's not wrong to be on that side, whatever he's long. By the way, Phil's a very intelligent guy. It's, it's, it's, it's kind of, it's been fun to get to know him. And, and you know, he, he, he knows the CEO, uh,

from a board he's on together. And they obviously, he just loves the asset. And so- - It actually makes me angry and you'll get this. - I love it. - Because- - 'Cause his lefty swing is better than ours? - A little bit. - Yeah. - Just a touch. - Has his short game pretty good? - A little bit. - Oh, it's just his long game that we're talking about. - And he can talk stocks like we can. - He can. - So like imagine being able to talk stocks like we can, whether we're right or wrong, and then all of a sudden just rip it 300 down the fairway. - Yeah, all right.

All right. He's amazingly intellectual and competent about the whole thing. He's a smart guy for sure. All right. Fannie and Freddie, let's just keep moving around. These are all kind of special sits. You guys are still along the preferreds, I assume. Absolutely. And the common, no. Common a little bit, but it's more of a speculative thing. Give us the. So it just comes down to, again, follow what Trump wants. Right. And some of this stuff takes time. He has mentioned and referenced that he would like the GSEs to come out of conservatorship.

They now are starting to get to capital levels where it's possible, which way back when in 2016, that wasn't the case. They made Bill Pulte head of the FHFA. More importantly, one of Eric Trump's friends was put on the board of Fannie Mae. So again-- - That's the tell all the grift. - Follow the grift. - Follow the grift. Just follow the grift. And now follow the grift combined with the fact this is probably the most important part

is this is a way to monetize the US government's balance sheet in the form of that is residing in either warrants, equity, or senior prefs. And we all know this country needs a heck of a lot of cash to pay for all the crap that we have. This is one of the means to do it. - I wanna say this one more time for people that are out there. So the preferreds, PAR is 25. - Correct. - Fannie Mae preferreds a trading where I'm 14.

I know that philosophically speaking and maybe mathematically speaking, if the commons are worth a penny, the preferred should be worth 25 bucks. Is that fair to say? Maybe there's a slight- Academically, yes. Academically, yes. But I guess my point is that you can own the preferreds and it's a never expiring call option here.

as far as I'm concerned, at 14 bucks a risk reward, you're basically saying this right at 50%, maybe 55% chance that this thing's gonna happen. And I think you guys believe it's much more than that. Is that fair to say? - Yeah, I think worst case for us is that it's a sucker's value trap and similar to 2016, nothing happens and it goes back down to 10 or nine or eight. But by that time, they're gonna have enough capital where they probably should be out of conservatorship anyway.

And to be fair, we're sucker value investors anyway. So we own a lot of, most people will look at value traps and say, oh, you know, I don't think it's worth a lot. But the

The way we underwrite stuff is that when we originally bought the Fannie Mae prefers, it was a lot lower. And we didn't think there was much downside, but a lot of upside, right? And we put together a portfolio, a lot of stocks that very little downside, we think underwriting to a strong balance sheet, nice fundamentals. So little downside, big upside. So let's talk about that because one of the other questions we got on Twitter was obviously, what do you think about fundamental bottom-up investing, which is really what you guys have been doing? And on the flip side of that is, what do you think is short sell?

We're going to get into some of those, obviously, shorts now. But you guys do bottom-up work. Sometimes it takes a while for anyone else to notice, right, because they're not covered by any analysts. Everyone's focused on the top 50 names that are kind of out there. So your patience level of the process of discovering a name, working on the name, speaking with management, right, and getting to know, and then talking to other investors that might be like-minded. Talk me through that a little bit about maybe give an example of a recent name. You just mentioned Copper, you know, the

Coppermine is a name, but there's other examples maybe of how you guys kind of perform your process. And I'll just say this, that the opportunity set with, I'm not saying how bad research is on Wall Street, but how compromised it really is. 75% are buys, 20% are holds, and 5% are sells. We understand that game. But therein lies the opportunity, right, for names that aren't trafficked. I mean, I'll touch the shorting part. Shorting is very difficult. I mean, the funny thing is Vinny and I have actually had one short file bankruptcy this year, which was

which I won't talk about it, but those are nice, right? Those are, you know, and so that does happen. And we like to short really broken, sometimes the smaller cap companies, they don't get the same lifeline that larger caps do. And so when things really go down or the debt's too much, that's where we really like to find our sweet spot.

I just think if you're a normal course hedge fund, they're not looking for necessarily zeros. They're looking for, Hey, how can I hedge my book? How can I go down 20% or how can I, you know, create noise to have the stock go down and all that kind of stuff. We don't really do that. Uh, we just look for broken business. We keep it simple, right? Everything we do try to keep simple.

I would just say on the long side, we speak about this ad nauseum. You had Mike Green on. Talk about the impact passives and target date funds have had on it. And I really am a big believer of his analysis. And as a result of his analysis, as well as what we see in the big, large hedge funds, I call them vol targeting funds,

The market's different, right? It just is. So the majority of the market that we're looking at, I don't even really think about what do you think about the market? I kind of laugh. Tom Petty. Well, and basically I was going to give a quote from Tom Petty, which is, sorry, Danny, but the good old days may not return. And the rocks might melt.

And the sea may burn. I think it's truly this time is different. And the analysis. What? It's learning to fly, learning to buy. But ain't got wings. Learning to buy.

- Right, they ain't got the wings. Coming in short is the hardest thing. - And so like the analysis you do. - Must be good, Danny. - Thanks. - The analysis you do on those names that are impacted by those dynamics is less useful. I won't say useless, less useful than where we play. Now where we play, there are no fucking flows, right? There's no one there. So you have to do a lot of work. - That's the case in emerging markets and everywhere. Like anywhere besides the S&P 500,

they get all the flows. - So I could hear someone in the back, which is probably Dan Nathan, saying, "Well, why the hell do you do this?" And the reality is, the reason why we do it is because we see tremendous outsized opportunities

doing it this way. And we also kind of like to live uncomfortable lives. So, so, and we don't mind doing it. So in that regard, we just feel so long as we're good at this, as long as we continue to do well at this, that's where we think the opportunities lie. It's tough. Shit takes time. You need duration, but the opportunity set is plentiful. And then you have to really, as Porter said, and it's one of the issues we have is avoiding the value traps.

That's the important thing because we know stocks can sit there no matter how cheap they are. They could sit there for four or five years and not do anything.

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So let's talk about one of those shorts that's, you know, currently in the news every day. We don't talk about it every time you come on, to be fair. No, we didn't talk about it last time. Tesla, which I know it's down a little bit today. It's obviously run up on the launching in Austin of the RoboTaxis, whatever. What are you guys currently doing in it? I know you're never going to be big on the short side just because you just can't because it doesn't trade on fundamentals. But that's part of the other problem is shorting stocks that don't trade on fundamentals. It's not a stock. It's a meme coin. It doesn't trade on fundamentals. Like the car business is awful. The RoboTaxi business is terrible. It doesn't exist, actually.

And so there's no fundamentals.

So what do you think it is out there? Who is buying the stock then? I mean, obviously we have daily call option buying. No, I'm being, I'm not, I'm not, honestly, this is not a rhetorical. I'm just literally saying who in their right mind is just getting swept up in the ETFs and the Qs and the SPIs and it just goes up because of that? Because for that stock to have been up yesterday on a horrible launch, awesome. Like, listen, you can play Behavioral Finance 101. You can do a lot of stuff, but none of it really makes sense. Danny, you know my people don't do therapy. Yeah, right, right. Well, you kill people if they do that, yeah. Okay.

Yesterday, I needed a therapy session. Yeah. Right? Was it yesterday? Yeah, it was yesterday. So how did I fix that, Vinny? What? He shorted time. Right. So he knows. Vinny was Apple- And it really takes a lot for Vinny to get Apple. Our friend Eric and Vinny are sitting there talking, and they're like, I don't understand what's going on here. It makes no sense. So the only way we deducted it, so you asked to answer your question. Obviously, retail. There's a big...

Retail name. And retail doesn't really have valuation as a factor in their analysis as much as we do. But I think there's something more. I do. I think there are quants that have figured out and jimmied. No, jimmied the options market. Knowing that they could take advantage of

Panic. And brokers and that they need to true up their books. And as a result, this, as Porter says, is really not a fundamental stock, which is sad because it's probably the best fundamental short in the game right now. I think most of that move yesterday was in 15 minutes and it was all like option related. You know, it's amazing is that when I read the analyst reports that are bullish on it and so forth, they're not really point out. So they point out what Tesla's doing. Never do you hear about, yeah, you hear about Waymo, but you don't have this company way.

W-A-Y-V-E, which is already in cities deploying. It's invested by NVIDIA's in there, Uber's and all these guys, all these people are, you know, investors in this name. Yet here it comes and it's a better technology and it works. Danny, now you get me. This doesn't even work. You get me under again. There was also a law passed in Texas.

which is going to prohibit the use of robo-taxis if they're not level four or level five, which was passed. So here we are sitting, and we're short Tesla. Here we are sitting there thinking- We're not short a lot of Tesla. Right. But it's more sport at this point. But it's more sport. And we were praying to get paid, right? Thinking we were going to get paid.

And it actually does the exact opposite. And that was the perfect, and by the way. That's why you don't short stocks, by the way. This is why you don't short stocks. And people could say, no, no, Vinny, you missed it. The Robotexy thing was a success. If the Robotexy thing was a success, Uber would have been down. It was not down. It was up, right? So as a result, I think this is just more the market structure and you have to respect it.

And then it's just the cult of Elon, right? And people convince that he's a genius, convince that he can do no wrong. I think he made a big error when he did with Trump. He even admitted he had made an error. So we'll see. All right, let's shift now back to the macro a little bit before I go to some more names and just the Federal Reserve in general.

- Treasury, Besant, stuff that's going on there. And also, Benny, obviously want to get to the stablecoin market since you've covered Visa and MasterCard your entire career and that's a flavor. But let's start with the kind of the Fed here. Porter, you and I were going at it a little bit on Twitter yesterday. - Let's do it. - Yeah. - Kalshi's odds, you know, 14%. The pal doesn't make it to the end of 2025. Forget his term, which is May, 2026. I love, we're going to wage your arrow. - $1. - $1? - $1. - You're going to give me a hundred to one or just $1 even money? Why would I do that? Why would I do that? - It's a trading places bet. - Okay.

Listen, I don't know whether he's going to, all I know is he's going to keep facing pressure. And whether he should. There's no way he resigns. Okay. Or forced out. No way. You're not going to give him odds?

You said zero chance. The odds are seven to one. We'll bet like we'll bet like Koushi. If if if you win, you win. You win. Eighty seven cents. If I win, I win 14. Fine. We'll be done on that. OK, what he's doing. So he testified today in front of the House. He's in front of the Senate tomorrow. Of course, there's a chance that he can. There's always a chance he can cut in July. I believe they will be cutting rates this year. They're cutting the Fed fund futures. Didn't really change that much today. It's like a 24 percent chance of a cut in July. It doesn't really matter to me.

to me. Matters to me more is the long end of the curve, which they don't control, right? So that's more Besson and what he's going to be doing with treasury issuance and so forth. So, you know, you can talk about Powell if you want. I think it's nothing. I mean, I think he's going to cut at some point and it doesn't matter if it's July or September. I actually think he's going to cut because the job market's far weaker than people think it is. And, you know, the way inflation is calculated,

it's a lot of rents and rents are rolling down. House prices are weak, housing's weak. And so I think that's one of the, that's the reason he fundamentally cuts. - So if that's the case, are stocks overvalued? Because you're basically saying that it's, if the economic weakness, S&P 500, if it does trade on earnings, which, you know, it's certainly very good. - But does, does, does-- - I'm just saying.

- Is the weakness not in the AI stocks? It may not be, it may be in the other-- - Do the hyperscalers even care? - No, they probably don't. - Like, you know, we just talked about how robo-taxis are gonna take over the world. I mean, if all the cars are robo-taxis, well, I mean, AI's here, we're gonna need more chips.

Vinny, thoughts? Besant, Treasury, what he has to do, what's in front of him, and then also we'll roll that into stablecoins and the use of Treasuries to back these coins. Well, I think we're going to get a big old bag of tricks from Treasury Secretary Besant in terms of, because we always ask the question like,

who's gonna buy all this debt, right? Because it's coming. And if we, we have to raise the debt ceiling if we're gonna pass this big beautiful bill which we did not talk about. But we're gonna have to raise this debt ceiling. - Well that's part of the bill, so yeah.

And once you raise it, there's going to be issuance, right? We haven't had net issuance. And once you do that, there's going to be pressure on rates and they're going to people need to buy it. So I think Besson's trying to figure out a bunch of ways and means for people to buy it. One is the SLR, which they're going to need more than the SLR for the banks, for banks to buy it. This other thing is this net

neat little concept called stablecoin, right? Which is this alternative new payment system. - Ponzi? - Yeah, yeah, it actually is. - It's not a Ponzi. - It's not a Ponzi as much as it is, it's a fixed currency peg. - Yeah. - That's exactly what it is, right? And in order for you to put money in a, whether it's Tether or USDC or other stablecoin,

the processor or the administrator has to match that, take your money and match it dollar for dollar and keep that. So as this grows, they have to buy guilt-like securities, which includes treasuries and the like. So one of the reasons, and probably some other stuff, maybe gold, we'll see. One of the reasons why they were so hell-bent, you know what's amazing? We could pass nothing in Congress

Yet the Genius Act is going to fly through. Bipartisan support, 70% to 80%. Well, why? It was because they got some damn good lobbyists. And if that happens... And no one really knows what the hell it is anyway. I agree. Well, but you just had an IPO, which is...

which is opening up people's eyes. Circle, C-R-C-L. I think you've taken maybe a small shot on that one. Well, I mean, the market cap's now bigger than the entire circulation of the USDC. That does. Don't let facts get in the way of a good story. Please continue what it means for Visa and MasterCard. No, but what it means initially is that there might be an incremental buyer of treasuries that Besant needs. Now, if you speak to growth people, their perspective is almost the entire payment system is now going to be on this stablecoin platform.

system and stablecoin is going to take market share from other payment systems such as visa and mastercard it might it might it's going to replace it no it's a bit of a stretch right um because there's a lot of nuances associated with stablecoin says i'm doing more work but that is the reason why visa and mastercard are down right now over the last two three weeks

And you don't see that as, so if you're an Amazon or Walmart and you want to start issuing a stable coin and offer your customers a either discounted price versus what it would be if you use Visa MasterCard, it's really just a prepaid gift card or something like that to a degree or you can use quote Walmart. I don't even know, but I'm just saying like, I just can't believe that we've gone in four or five years from Tether to

being a complete unverified thing. Which it was. To actually growing into something that's legitimate over a period of time. That's hard to believe. It shows you the power of the growth. Right, it really does. It really does. So you're not currently, I know you guys have been in and out of Bitcoin using the ETF, iBit or whatever you might be doing. I don't know where you guys are at this point. You know, Bitcoin's a hard one for me. You know, I much prefer gold over Bitcoin. You know, I think in the near term,

the flows into Bitcoin are going to keep going. When the flows stop, it's over. I mean, there's nothing else but flows, right? So I just, but I think that the central banks are going to keep buying gold. I think that, you know, we have a nice palladium size in the palladium.

or platinum, which is, I think now a substitute for gold. So if you go and get a jewelry, right? Much cheaper to buy a platinum ring than a gold ring. - Or a lab diamond. - Yeah, or a lab diamond. Platinum and a lab diamond, so there you go. - There you go, platinum and a lab diamond set. Perfect, Porter, you see that? - Yeah, that's great. - You tell my wife what she should be making these days. She's actually making that.

All right, so let's go into a couple other names I want to get into here, which are Mr. Cooper, which you guys, when that deal was announced that Rocket was going to buy Cooper, I talked to you guys that day, and this was a few months ago. And you know what's amazing to me, one of the things in this world, and I know there's risk ARB funds that are out there that are supposed to be putting out. It feels like there's not a lot of activity, especially some on the smaller scale. It's not a small deal per se, but small. So we talked about it, Vinny, you can't even get a position or you couldn't get it on the long side. There was like a...

something like a 37% are that if you just went long, Mr. Cooper and the deal were to close. So it was stock deal that if rocket did nothing else, that's what you make. It's now closed. The deal hasn't closed yet. Give me your updated thoughts on that. It's really interesting company because you have all the pieces and obviously with rate cuts were to come, you now have an offsetting hedge automatically within that same company, correct? This is my old neck of the woods, right? Which is mortgage banking. And

It really couldn't be a better marriage of two companies that do roughly the same thing. They're both in mortgage banking. However, Rocket was significantly better. - Probably the best name ever for anything amazing. - Rocket is best in class in originating a mortgage. Mr. Cooper is best in class in servicing a mortgage. So combining the two, you're creating a best in class franchise. That's one of the reasons why I liked it so much. The ARB has closed.

We are not buying it here at this moment. However, I would be buying it on dips. We'll see. I was a little concerned or nervous that this wouldn't close because if they were paying attention,

Post deal, they were gonna have about 20 to 25% market share of the mortgage servicing market. So I was a little bit worried about the Justice Department, but I-- - For all the worry about Justice Department, I haven't heard it, I mean, US Steel happened, like nothing's, like that part of a theme, you know. - Well, it's also a grift pay to play. They might have to pay someone off and all of a sudden buy some Trump coins. - I mean, there's no SEC, there's nobody.

watching. Well, I know it's a supporter within that. Give me your, and we're going to go into BGC, which now, you know, Letnick has sold basically his shares, which I think is a positive for people that own the stock, obviously. But give me a thought on the banks here in general. Is it a nothing to do the regionals right now in the, in the large banks, they seem a little expensive to stay away. Not long, not short. And then within that, I know BGC is really not part of that group, but it does trade those products. So BGC, thankfully, uh,

we got, we got Howard Lutnick away from the, you know, the situations, shares are all set up. I mean, I think that, you know, we, we started into a very cheap stock. A stock made a nice move from, I think five to nine something or whatever. We bought it. Now we've marked time for call it a year plus and the earnings have grown into it. So it's now the same valuation in which we bought it. And yeah,

And it's a play in volatility, and volatility especially in energy and commodities, which they specialize in now, is off the charts, and rates, and currencies. And so I think it's a great play. No one's going to buy it. Everyone hates Slutnik. There's not a person on, maybe his wife and his kids like him, but no one else likes him.

We pitched to people everyone's like never in in planet. Never will I buy my stock? So anyway We still have a big position. I think it's great. It's fine And I think it's going higher and what about the banks just the big banks and kind of the regionals? I think I think the feds gonna cut rates I think the so that therefore the the yield curve were steepened, but I think that the I think that

you know, they have their assets sensitive most of these banks. And so they do better when then yields are higher. So I think I have no real thoughts on them here. They just sort of yes or no. I think one of the more interesting things to me is

is student loan repayments within finances is the student loan repayment. - Which just restarted. - Just restarted and see how that affects the economy. I think it actually is a big deal because they're gonna start, they're talking about garnishing wages for people who don't pay back student loans. And it's been a massive stimulus for all these kids who did, or these people who didn't have to pay student loans. And so I think that's the bigger story here and we'll see how that works. - For the first time in a while, I have a little bit of a top-down concern.

And it really is a function of AI, right? Like I've always felt that AI, if it works and if it's successful, and it sure seems like we're trending that way. Lord knows that the Mag7 are spending a fortune to make it as such, is that this could be a huge reduction in all else being equal on employment, right? And we're seeing it right now. We're seeing massive layoffs. They're not saying it's AI related, but I'm starting to believe it is.

And if that, and when you, when you talk to bulls, they, they acknowledge that, but they say on the, on the backend, there's going to be all these new industries created. I think in the near term though, they're going to cut a lot of jobs. You just don't need to add jobs like you needed to before. I just don't know if you can make up that differential. Maybe that's why maybe we're too bearish. So like understanding your, your natural tendencies of being bearish, but that's a lot of fucking jobs to make up. And if that is the case, then consumer credit is going to,

tilt south. I'm not saying go crazy, but tilt south. I think you might see it in that combined with student loan repayments and the like. I'm not really, we don't have many positions on in the short side in terms of consumer credit, but I'm not bullish. Well, if you look at a firm in the buy now pay later for the first time, right, you're going to have the rating, the credit rating companies now start to look at it and they're going to put it in buckets. Now, I can only imagine that's coming from the fact that

people that use Buy Now Pay Later are not showing up. If they're delinquent, it's not hitting their credit. So they're going to get auto loans and so forth, and it's not giving a true picture. I thought that's really interesting because to me, if that were to happen, you have buckets within Buy Now Pay Later. Again, not for right now, but you look at a firm stock that, you know, they just had decent numbers. At some point,

To your point, Ben, if consumer credit does turn, that's the bottom of the barrel as well. And I don't think people understand that because it's a new industry. It hasn't been tested in a normal cycle. I mean, it comes back to jobs, right? And, you know, this time last year we were clipping, I'll use ADP because the government payrolls are stupid. They don't make any sense, right? So they were clipping along and I think it was 200,000 jobs a month. We're now adding 40,000 jobs a month on ADP payrolls.

And, you know, if that flattens out or goes negative, I think it's

it's problematic, right? And so that's kind of one of my views that the Fed might cut here, right? Just because the labor market's weaker than people kind of give it credit for. Everyone's like, yeah, economy's fine. But like underneath it, you've seen the slowdown, right? And also immigration slowdown is a big deal. Your population growth just basically goes to zero. You've had job openings go down and job demand, because you've had the whole fraction move down together. And at some point you're right.

numerator, denominator start to mismatch, it could really turn rather quickly. And in general, you're not seeing it completely yet in consumer credit, just to say. No, you're right. You're actually, auto loans have actually been improving. Credit card loan, credit quality. Capital looks good. It all looks good. Student lending, not so much. But, you know, it's more of a...

Okay, how good can this get if we don't get a cut in rates, which we might, combined with the fact that I think employment is not trending as favorably as it was six months ago. - Well, the other thing is that the housing market stinks. - Yeah. - It's terrible. - No, that's another interesting, so we'll close with this 'cause I know we're gonna get you guys out of here, but.

People believe, and I do this, that there's a lot of pent-up demand for HELOCs and people can access equity in their homes. Maybe more on the higher end, obviously, than the lower end is going to be. But there is, people's belief would be, and you saw housing react just to Fed funds. It's trading with a...

KBH did not have a good quarter, but no one expected them to, right, within housing. So that's going to be a really interesting sector to me. But if you get an economic downturn with rates moving lower, what does housing do? That's my point. It's going to be really, and this is why you guys do what you do. That's why you get Ivy Zellman on to ask those questions. She's been on, she'll be back on. Well, guys, listen, I think we're at an inflection point. We may have said that a couple times, but a lot of things...

But we are at a flexion point for things boiling up, you know, whether it's credit, whether it's stock, but whatever. It didn't go on for a long period of time, Tom Petty style, as we just said. So really appreciate it. But if you've seen like the markets back, basically, I'm not looking at the chart right now, but basically back to an all-time high. Oh, yeah. So do I want to go out and

Do I feel hunky-dory and go out and buy stocks right now? No, I don't. And so, you know, maybe the Fed will cut and that'll give another push to things higher. But the stuff you're doing, you don't have to. No, I don't care. But it does impact the macro names like a Tesla. If you're short or whatever it might be, it'll swoon down. It could be the leader of what it does. So it's really interesting to watch. And every day that goes by and every year that goes by that you guys have been on, the next generation of traders is behind us. They don't know the GFC, what we saw.

And we had lunch today and I said, you can't unsee what we saw. So we know what can go wrong. And this whole market to me about is what can go right. And God bless the optimists and the people that are out there and that are buying stocks here. And so until proven wrong and the flows change, passive wins the day, flows win the day. That's just what it is. The dip buyer has been proven right every single time for the past 15 years. I mean, like look at this most recent thing. Like,

You know, if Trump had kind of didn't taco himself, stock market would be down a lot more. But everyone kept buying. But listen, and we joke about Powell, not joking, because it's a it's a serious issue. He has eight meetings left total less, you know, after the next one. And so at some point he won't even matter. So what will happen will be late in the fall, early winter. We'll start thinking about a very dovish Fed and whether that's good or bad for the long rates. No one's going to care. Short term QE5. Here we come. I'll let you out of the bet now. No, I'm not. You said zero. I just said it wasn't zero. All right.

Love you guys. Thanks for coming on the tape. Thanks for having us. Thanks for listening to the On the Tape podcast with Danny Moses. If you like what you heard, please subscribe on either Apple or Spotify to the weekly podcast and please leave a rating and review, positive only. You can also watch on the On the Tape channel on YouTube and give us a thumbs up there as well.