The story of this blog begins nearly one year ago for our team. Shrey Patel was a burgeoning analyst working at GAMCO Investors covering the Lithium space. He was following Albemarle Corporation (ALB) and was pitching the company to anyone that would listen. It was clear to him that an opportunity was here for ALB and the greater Lithium space. For Jonah, his brother first mentioned the Lithium space to him as a result of his work for a small investment bank that mainly focuses on the Metals & Mining sector. The more he spoke about the space, the more it sounded like this area was an incredible investment opportunity. Jonah spent much of the second year of his MBA focusing on this sector during any spare moment he had.
Skip ahead a few months, and as classmates at the Fordham Gabelli School of Business, Shrey and Jonah volunteer to give a lecture on the Lithium space for their Value Investing course.
Having independently researched the field for quite some time, it was an opportunity to combine their expertise, introduce their classmates to the industry and present their findings to the extremely well respected value investor, Professor Paul Johnson, on why the field was so interesting from an investment perspective!
The presentation lasted for 1 hour and 15 minutes, yet, we were just clearing our throats- AKA we were just getting started! Following this talk, we continued to delve into the space and found that the analysts as well as blogs online were missing a lot of key points which we thought we could provide. In particular we found that:
- Blogs mainly focused on the smaller lithium players and often ignored the largest producers such as ALB, SQM, etc (These are the stock ticker’s for some of the largest Lithium Producers). We plan on covering the largest and smallest producers as we feel that this is the real way of following the supply and demand of the marketplace.
- Speaking of supply and demand, we think there is room for at least one more voice and most likely, several more voices to provide key in depth analysis on where the market is headed.
- We also felt that a lot of the blogs were very negative with the largest producers and that they felt that they were in trouble. Considering the time and investment it takes to get into this space, we feel this opinion is greatly misguided and one which we will be focusing in on.
- We believe there is a real lack of focus on ideas such as competitive advantage, Porter’s Five Forces, and other strategic parts of the conversation that are lacking when it comes to the Lithium marketplace. Who is the cheapest producer? Who has scale? Who will get scale? Who has a lock on their customers? Questions such as these are items we are excited to discuss more in depth.
- Finding an answer to these questions will help us hone in on where the best place to put one’s money will be in the future. Many of the blogs out there on Lithium are just that – only on Lithium. We want to provide up to date information on the Lithium space and then our beliefs on where best to put your $$.
- Finally, where it’s best to place your $ will depend on the valuations of each player at any given time. Valuation is an issue that all investors grapple with, especially in a rapidly changing industry such as Lithium. We will strive to provide valuable insight into valuations by providing our own, original analyses. This too is something we are very excited to discuss and which we feel is lacking in the coverage of the Lithium space.
Stay tuned for our first follow up post which will come sometime next week! We will be starting off our blog with several introductory Lithium blog posts to give both beginners as well as experts in this space a great overview.