I’m happy to celebrate one month since The Value Pond became a paid publication. For those who are new: I publish institutional-grade research on companies I believe are genuinely mispriced. 7-9 full dossiers per year, Excel models, and complete position disclosure. Quality over quantity.

Reminder: the annual subscription discount ($400/year) is open until May 31st. Link here.

Today's five-minute read covers two things: Japan, a market full of overlooked bargains where I am sharing a free screener, and Primark's parent company, Associated British Foods.

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Next in the Pond

Selecting a new company to analyse is always a complex process. I typically spend 2 to 5 hours on initial research before committing to a deeper dive. Most of the time, the decision to pass is almost immediate. This time I reached two conclusions:

First: I want to analyse a Japanese small or mid cap, so I ran a mini-screener with very strict criteria: below 9x MC/FCF, below 1x Net Debt/EBITDA, FCF margins above 8%, EBIT margins above 10%, and trading below Book Value. Does this exist? Yes, it does.

I am sharing my own screener with 13 companies and updated metrics. The first one is a standout. I have not made a decision yet, but at least one of these 13 will end up in The Value Pond.

Japan Screener

26.4KB ∙ XLSX file

Download

Download

Second: While exploring the universe of announced spin-offs, I came across an old acquaintance: Associated British Foods. The British company may not ring a bell, but if I say Primark, it probably does. It is one of the giants of fashion retail.

Some of its consumer brands will also be familiar: Kingsmill, Silver Spoon, or Blue Dragon. Spanish readers will recognise Azucarera, also owned by ABF. And to all this is added an agricultural business.

In April 2026, the company announced it is planning a spin-off of the Primark brand, which represents 50% of group sales, to unlock its value and separate it from the rest of the business. The move makes sense.

If you value Primark at multiples comparable to Inditex or H&M, this segment alone supports 70% of ABF's current market capitalisation, leaving aside the other businesses that represent the remaining 50% of sales.

One of Primark's key growth vectors is the United States, where the brand has barely scratched the surface of its commercial expansion potential.

In summary, I believe Associated British Foods is a compelling sum-of-the-parts story, where it may be interesting to build a position even before the spin-off itself. But that is what the full thesis is for.

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

The S&P500 closed last Friday at all-time highs. The Fear & Greed index sits at 68, firmly in Greed territory. The Eurostoxx50 is less than 1% from its own historical highs. All of this against a backdrop of a provisional ceasefire riddled with denials, reversals, and noise.

Trump has been playing a peculiar game with this war: agitating on Friday evenings post-close, then calming markets on Sunday pre-open: a juggling act designed to keep 20-year yields below 5%, oil below $100, and the impression that he is winning, winning fast, and conceding nothing. The Iranian regime is running a parallel game internally, but without internet, free press, or institutional/economical counterweights.

The closure of the Strait by the US, while dangerous, has changed the rules of the game by bringing China onto the board. China was among the countries most dependent on the Strait of Hormuz; in fact, the few ships allowed passage were bound for China, and the toll demanded by Iran was paid in Yuan or Bitcoin.

Polymarket has emerged as a 24/7 real-time thermometer, as interesting for reading global market sentiment as for watching the large players move. Right now, the most relevant variable for markets is the Strait of Hormuz, and its most perverse derivative: stagflation.

For its part, the Brent futures curve is already signaling a price only 5% higher for M+6. The market is pricing in this event as a temporary disruption that will eventually normalize. Probably there is too much euphoria for the amount of uncertainty still on the table.

Supply shocks have a cure: price incentives

When Russia invaded Ukraine, the narrative was apocalyptic. Ukraine was one of the world’s largest corn producers, a trigger for meat prices globally. Russian oil and gas supplied most of Europe. The end was near.

It wasn’t.

Supply shocks are painful in the short term. But they are also the most powerful incentive to develop resources elsewhere. Canada accelerated bitumen production. Offshore energy became economically viable again. In our Pond: Bayer was selling corn seeds & pesticides in the US & SA like never before. The same logic applies today.

Iran has shown it is willing to use the Strait as a weapon. But it may be a single-use weapon. Restoring passage through the strait and restoring confidence are two very different things. Gulf countries will seek alternatives and they will find them.

Short term, everyone suffers. Medium term, the economy reroutes.

The cost of being right about the wrong

Imagine you read the macro situation correctly one month ago. You saw the geopolitical risk, you decided to reduce exposure or exit entirely. Unless you have inside information from the Pentagon, you will likely have to stomach the initial, sharpest drop, where everything is uncertain.

Maybe this week was the perfect time to get back into the market. It seems like it’s all over. But what if it’s not? Do you exit again next week?

This is not a hypothetical. It happens to the most investors in the world. The problem with market timing is not that you cannot read the current situation, it is that you cannot read the future. No one knows where the bottom is. We only know that staying invested in good businesses at good prices has worked, consistently, across every crisis in modern history.

Buffett, Lynch, Howard Marks, none of them operated in calm waters. They operated through wars, hyperinflation, financial crises…. The lesson they all drew was the same. It is in moments like these that your conviction in what you’ve read is truly put to the test. It is one thing to read it; it is quite another to feel it.

The only question that matters is go through each position and ask one question: does this business have a future? could them survive? and embrace the volatility as an opportunity.

The risk you actually need to manage

There are two risks in investing:

• The first is drawdown, your portfolio falls in value. This is painful but circumstantial. Markets recover. Good businesses recover faster.

• The second is permanent capital loss, the business itself deteriorates. This is the one that cannot be undone. This is the risk worth obsessing over.

Trying to avoid both simultaneously is impossible. And trying to avoid the first by exiting the market usually just guarantees you miss the recovery.

We have all read the right books. Very few of us are capable of staying the course when it actually matters.

What’s new in the Pond

This past month has been the most active since The Value Pond launched. A few things worth flagging:

The blog has gone paid. Full institutional dossiers, live Excel models, and complete transparency on my own positions are now reserved for paid subscribers. The free tier keeps access to the 5-minute drill teaser for every thesis, plus articles like this one.

Three tiers are available. Paid subscriber at $500/year for the full research. Institutional subscriber at $1,500/year for everything above plus direct Q&A, priority on the research pipeline, and research on demand.

Two full theses are now live. Foraco (TSX:FAR) — a mining driller positioned for the commodity cycle and Dunelm (LON:DNLM) — the UK’s leading homewares retailer at 10-year PE lows with an 8-10% dividend yield.

Both include the full dossier and a live Excel model.

What’s next

• A WizzAir update is coming. The original thesis was published in September 2025. With the stock back near those levels and new fuel price scenarios to model, an updated dossier with Excel model is in progress.

• New full thesis expected around 20th May.

If any of this sounds like the kind of research you were looking for, the Pond is open.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Market risk perception is curious, to say the least: Israel’s benchmark TA-125 index surged as much as 6% relative to Friday’s close, while the Eurostoxx dipped over 6%, and the S&P 500 dipped only 1%.

No one knows where these events might lead, but it’s worth remembering that this isn’t the first escalation of tension in the Middle East, and that panics often represent prime investment opportunities.

Last year, the trade war was supposedly set to reshape the world. In April, markets suffered through extreme volatility, and within that chaos, opportunities with highly asymmetric risk-reward profiles emerged.

Two examples:

• Semapa: How could tariffs possibly affect a Portuguese holding company whose core business is producing and selling paper, cardboard, and tissue in Europe? The answer is: not at all. Yet, investors fled toward liquidity. On April 7, 2025, Semapa traded 12% below its prior levels, hitting €13.6. Today, it trades at €24 (ex-dividend 2025).

• Grifols: While the cross-tariff game could have impacted the company,despite its massive plasma production in the US, their pricing power within a virtual oligopoly served as an authentic shield. It traded 20% down at €7.3; today, it stands at €10.5. Still a bargain, but this is another story.

In times like these, “Cash is King”. This is why Berkshire Hathaway, with Buffett’s successor now at the head, is sitting on a $370 billion cash, roughly 30% of total assets. Waiting for the right moment to strike, like a hunter.

So, what should you hunt? Well, if companies you already know, whose fundamentals are consistently improving, correct due to a massive sell-off, that is your moment

In my last post, I updated the Forvia thesis. The stock, which had approached €15, is now hovering around €10.50. The company’s outlook isn't deteriorating; in fact, I recently revised the price target upward, driven by better margins and higher deleveraging.

Wizz Air could also be an interesting play. Only 4.4% of its active routes are in the Middle East, representing less than 5% of its total revenue. If it was compelling, it still is.

Then there is Foraco. As fate would have it, they presented their results this Monday, a day when commodities and miners were on a true roller coaster. The stock price failed to reflect what was, frankly, excellent news.

I’ll dedicate a section of today’s article to briefly analyzing their results. It doesn't require a full update like Forvia, given that the original thesis is less than two months old.

⛏️A promising 2026

The 2025 results are “bad”, but that was already priced in. The real uncertainty was whether we would see a rebound in Q4, a particularly difficult quarter due to the winter season in Canada and the US. And we did: while the quarter in the North was indeed tough, with revenues dropping 13%, South America surged by 95%. Combined with a 15% growth in EMEA, this offset the decline in North America, leading to a total revenue growth of 4%.

The real silver lining comes from the order backlog, which has skyrocketed by 83% to $404 million. Of that total, $228 million is scheduled for execution in FY2026. While a backlog isn't 'carved in stone,' it provides visibility for 66% of our 2026 revenue and 41% of our 2027 revenue based on our thesis estimates, with plenty of commercial upside still on the table.

Tim Brenner, CEO of Foraco, confirmed that in Q1 2026, they have already surpassed 50% rig utilization (compared to a 36% average in 2025) and expect to maintain a steady 67% utilization rate. In my projections, maintaining 50% utilization throughout 2026 alone would imply a revenue increase of more than 30%.

“This year, I can tell you that 67% of the fleet is going to be used at any given time” Tim Brenner CEO. Q4 FY25 earnings call.

The company’s record utilization was 74% back in 2012, and management believes reaching those levels again is possible. But step by step, eyes on Q1 2026 now. This rig occupancy could drive a +43% revenue increase over Q1 2025 lows.

Regarding margins, they have weakened, but this is typical given the additional mobilization costs of preparing the fleet for 2026 orders. Debt has also risen slightly, as they have added five new drillers to the fleet over the last six months. The thesis is accelerating, faster than I anticipated. The question remains: will we get a chance to catch it even cheaper?

I’ll see you soon, likely with an analysis of Bayer’s results. Until then, remember that the stock market is a device for transferring wealth from the impatient to the patient.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

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Remember Liberty Global? Is a complex telecommunications conglomerate and investment holding company geographically diversified across Europe. Known for its opportunistic capital management under John Malone, it focuses on high leverage, tax minimization, and aggressive share buybacks to unlock shareholder value.

A little over a year ago, I wrote a thesis alongside , primarily focused on taking advantage of a special situation involving the Sunrise spinoff, which was set to unlock the value of both the spin-off and Liberty itself.

The value catalyzed, though only on the Sunrise AG leg. In Liberty, there is still around ~70% upside. The funny thing is, this past Friday we saw a very strange market situation, which could be a precursor to further catalysts.

The Anomaly🤔

Liberty Global trades through three share classes: Class A (LBTYA) and Class B (LBTYB) carry voting rights, while Class C (LBTYK) has the same economic rights but no voting power.

Furthermore, there is a massive difference between Class A and B: Class A has one vote per share, whereas Class B has 10 votes per share. In short, the company is controlled through the ownership of Class B shares.

These shares have historically been held by John Malone, the “Cable Cowboy”, and Mike Fries, his right-hand man and successor. Together, they hold ~90% of the Class B shares. This makes Class B highly illiquid, with an average daily volume of just over 1,000 shares, compared to the 3 million shares traded in the other two classes.

Usually, all three classes trade at parity. Until Friday.

Class B shares skyrocketed +100% at the open, hitting $29, while the other two classes remained below $12

Some say this was a short squeeze; honestly, I don't think that theory holds water. Not only is the short interest in this stock practically non-existent (185 shares), but the volume traded during the session tells a different story.

Opening volume was very high, dismissing the idea of sharp price swings on low liquidity: 1.2 million shares were traded against an average of 1,000 shares, with another 1.3 million shares moving throughout the day. This means ~19% of all Class B shares moved. In other words, 8% of the company's control votes changed hands at a roughly 50% premium.

And that, my friends, is no small feat.

The contagion reached Class A shares (1 vote per share), which saw their average volume double to 5.5 million shares, ending the day up 4%.

The company has up to four business days to report these moves to the SEC; only then will we know more. In the meantime, we can only speculate:

• If we assume Malone/Fries haven't sold any of their Class B shares, someone has bet big on snatching up all other existing voting rights to take an active role in catalyzing the company's value.

• If it’s Malone/Fries who have tightened their grip, something big is coming: A take-private bid? A simplification of share classes? Who knows.

Q4 2025 results will be presented this coming February 16th, and we also know that Fries/Malone are very fond of dropping major headlines the week before earnings.

Unreliable sources leaked on Friday that Liberty might be looking to acquire the 50% stake in the VodafoneZiggo joint venture (Netherlands) at an implied valuation of $4.40 billion, subsequently merging it with Telenet (their Belgian subsidiary) to create a Benelux giant. All speculation, nothing official.

What we do know is that Liberty Global is a clear case of undervaluation offering, in a conservative sum of the parts, a very attractive upside. These moves could stir the hornet's nest, forcing the actions needed to finally unlock that value. And if you have an undervalued stock in your sights, along with potential signs of upcoming catalysts, there is only one thing left to do.

An interesting week lies ahead after this strange event; I will be posting updates via X and Notes.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

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I will be commenting on the results for WizzAir, Forvia, TGS, Foraco, American Axle, and Bayer on X, and if anything of vital importance arises, I may cover it more extensively in a future Journal.

But before that, let’s revisit Pond Journal #1, written back in October. At that time, we discussed gold, and I stated the following:

"Gold is at an all-time high against our beloved fiat currencies, but not against real assets like housing or other commodities. There is no bubble here; only a paradigm shift."

Since then, gold has climbed an additional 20%, and research firms like Goldman Sachs are already raising their price targets to $5,500.

Geopolitical tensions, central bank demand, and a complete lack of faith in any government balancing its books without debt-based stimulus are sufficient drivers for gold demand. This remains true whether we see a 10% correction tomorrow or if the price reaches that $5,500 mark.

Miners of Gold

One of the most lucrative ways to gain exposure to gold in 2025 has been investing in miners—for instance, through the VanEck Gold Miners ETF (GDX), which represents the top forty global gold mining companies by market cap. With a 180% return in one year, it has been even more profitable than investing directly in the metal.

However, this hasn't always been the case. Following the peak of the previous cycle (2011-2012), miners went through a profound crisis that forced a sector-wide restructuring and consolidation. This process generated deep disinterest among investors, who began to view mining as a risky, volatile, and extremely cyclical investment. We discussed this in greater detail in the thesis on Foraco (TSX:FAR).

As always, the capital cycle comes into play: disinterest leads to reasonable prices for these assets, and once the price of gold rises again, highly attractive investment opportunities are created.

This opportunity materialized clearly in the Major Miners-to-Gold ratio, which expresses the price of miners relative to the metal.

While gold resumed its upward trend in 2020 due to the pandemic, monetary stimulus, and resulting inflation, miners failed to keep pace. By 2024, the ratio reached levels so low they signaled a clear arbitrage opportunity. Furthermore, the sector is now more concentrated, less leveraged, and allocates capital in a more balanced manner.

As the chart shows, the ratio is approaching resistance. After such a meteoric rise, it is only logical to ask: How much upside is left? Is it time to leave the last penny for the next guy?

These are not easy questions to answer, and one must feel comfortable with how their portfolio is constructed; therefore, I will try to offer the answers that I have applied myself.

Attempting an intrinsic valuation of an ETF with over 40 companies is a nightmare, but we can try to get close. We are going to do a napkin valuation, a method that oversimplifies things but is perfectly valid when backed by a solid macro thesis like the one we have.

The Napkin Math

According to the VanEck report from January 16, 2026, gold miners are trading at an NTM P/E of between 14x and 15x. It is important to note that this relative valuation was calculated with gold at $3,400/oz, while the price currently stands at $4,950/oz.

This implies that there will be a quarter where miners' revenue per ounce will be closer to $5,000 than to the $3,400 reflected in that 14-15x multiple (a 47% difference). To this, we must add operating leverage.

The sector's average All-In Sustaining Cost (AISC) is approximately $1,600/oz. Therefore, every dollar the gold price rises above that implied $3,400 flows almost entirely to the bottom line.

Obviously, costs could rise: gold may become harder to mine, costs could increase due to higher demand for services, or staff shortages... These costs will trend upward in the medium term. We will be conservative with this.

In the following chart, I have overlaid the price of gold onto VanEck’s NTM P/E series. The gold price doesn't have its own scale, but it serves to illustrate the key point: this is a cyclical industry, and as in many others, the highest valuations are reached at the lowest multiples. And that is exactly where we are, except for the fact that gold seems to have no ceiling.

Based on the scenario implied in the VanEck report (12/31/2025), at current gold prices and with costs held ‘ceteris paribus’, the multiple would drop from 14.50 to 9.55 NTM P/E. This implies a potential annual earnings growth of 86%, assuming every ounce is sold at current spot prices.

Adjusting this scenario with a 10% increase in AISC, holding gold at $5,000, and applying a 12x multiple, the ETF would reach a price of $127, providing a potential 21% upside from current prices on a one-year horizon.

Before wrapping up, a note of caution: everyone must find their own comfort level when managing an asset currently trading at all-time highs. It makes sense to try and capture the full potential of this trend, but nobody ever knows exactly when the music will stop. Remember to be greedy when others are fearful, and fearful when others are greedy.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

The year at The Value Pond started strong, with a full thesis on a small and unknown company where I believe many powerful macro trends are about to catalyze. We took a deep dive into Foraco (TSX:FAR), a mineral drilling services company.

But in today’s article, we are going back to our roots. We return to Bayer, one of the most challenging theses I’ve faced as an analyst and one from which I have learned the most. And I continue to do so.

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It has been just under a year since the last full update of the Bayer thesis. At that time, market pessimism was still widespread, but the first signs of a reversal were beginning to emerge.

Since then, the company seems to have lived up to what I said at the time: “it could also be a pivotal year.” The shares have achieved a 100% upside in one year, with the pharma division delivering positive results both in clinical trials and in the market, signaling that the portfolio could return to growth territory. We can say the turnaround is becoming a reality.

However, in my view, the Crop Science division holds the most unlocked potential. A significant part of this is due to molecular breeding—a fascinating process that builds a moat around accumulated knowledge and genetic data.

My sister who, besides being the best is incredibly sharp, works as a Plant Breeder at a top-tier agricultural firm. I admit I didn't fully grasp what that entailed until this past Christmas, when she told me about her work.

Essentially, she is responsible for developing a viable variety to mass-produce seeds for a specific plant. It is a process of astounding complexity and meticulousness, involving very long development timelines and extremely high costs in both specialized personnel and laboratory equipment.

Time + Money + Trial and error = Moat

In 1798, Thomas Malthus established a theory on the collapse of humanity, positing that population would grow geometrically while food production would only increase arithmetically, limited by available land. This “Maltushian trap” principle was dismantled by numerous agricultural innovations, such as machinery and, in this case, crop species improvements that multiplied productivity per hectare.

The fruits and vegetables in supermarkets haven’t lost their flavor because your grandfather no longer grows them on a small plot while playing Mozart for them; they’ve lost it because, genetically, farmers have prioritized mass production and commercialization traits like shelf-life, homogeneity, and appearance. However, flavor, water consumption, drought resistance, or pest resistance as well as the specific time of year or region of the world where they are planted are also variables that can be modified and are considered in today’s and tomorrow’s agriculture.

This process, which in the past was basically based on trial and error, is still carried out through this same method, only now bolstered and improved by techniques such as genome sequencing.

Imagine Bayer aims to develop a new tomato variety for the pesticide-conscious consumer who refuses to compromise on flavor. Crucially, this seed must also thrive specifically in the greenhouses of southern Spain.

This kicks off a process of sample cultivation, screening, and crossing where, eventually, varieties are sent to a laboratory to detect the genes responsible for desirable or undesirable traits, allowing them to be blended or isolated in the next crop. Viable varieties are tested in farmers’ fields, sometimes with farmers receiving a payment per square meter to conduct these trials. Through trial and error, discarding and selecting, and receiving feedback from labs and farmers, a commercially viable seed is reached.

This process can last more than six years when aiming to commercialize a completely new variety from scratch; furthermore, it requires potential adaptations to different climates or even planting seasons, if the crop allows for multiple harvests in a single year.

This complexity, involving the crossing of billions of genetic data points, creates a "natural patent", a fortress of accumulated knowledge that competitors cannot breach with capital alone.And this is exactly where the acquisition of Monsanto made sense.

Monsanto, there was a reason

In 2018, Bayer acquired Monsanto in what may have been one of the worst M&A deals in history. With the acquisition, the century-old German company faced (and continues to face) hundreds of thousands of lawsuits over the Roundup herbicide.

The cost of litigation, which currently stands at 14 billion euros and could reach 20 billion, could have destroyed the company. However, they also acquired a fundamental piece of the world’s food supply; they became a leader in this incredibly complex industry.

The development of seeds adapted to shifting demand patterns, the need for land productivity, drought and pest resistance, and adaptability to specific ecosystems will be a key driver in the global food system and Bayer’s positioning is a clear advantage.

Scale allows Bayer to double the R&D budget of its two main competitors, granting the company a formidable technological foundation and a strategic position in the most critical crops for global food security.

Seeds account for approximately 50% of Crop Science sales, representing 20% of Bayer’s total revenue. This is a significant weight in a sector with a clear growth vector and a moat built around billions of genetic data points.

For pre-Monsanto shareholders, the merger was undeniably a value destroyer. However, in investing, price is everything. With a long-term horizon and the current valuation, Bayer now presents a compelling opportunity.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

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In the Pond Journal #1 we discussed gold through the lens of demand: fiscal deficits, central banks, and inflation expectations. But we didn’t talk about supply. So today, let’s talk about mining. And not just gold, but let’s take it step by step.

The Scarcity Reality

Gold is a remarkably scarce mineral in the Earth’s crust. Each year, slightly less than 2% of new supply is added to the total stock of mined gold .

Furthermore, existing mines are aging, and discoveries of large deposits are becoming increasingly rare. As a result, Major miners are acquiring Junior companies with projects already underway given the astronomical cost and risk of starting from zero.

Financing for new ventures in junior companies had been completely halted since 2022-23 due to the high cost of capital, and has only timidly begun to reactivate during the second half of 2025.

Add to this the fact that banks like JP Morgan and Goldman Sachs see gold above $5,000/oz. The supply and demand imbalances are very clear.

“The Future” is fueled by Copper

It’s not just gold. The demand for Copper, essential for electrifying the data centers powering AI, threatens to cause a structural supply deficit.

Mining giants warn that this “new gold,” vital for the green and digital transition, is running out. This physical reality clashes with the needs of tech “hyperscalers,” creating a deficit in a market where ore grades are falling (forcing miners to process more rock for the same output) .

Prices are screaming scarcity: up 114% in 10 years and 25% in the last year alone.

Here is a very important fact: Gold and copper together account for around 60-70% of the major mining companies’ exploration budget. And these could increase enormously.

Gentlemen, it’s time to increase the supply. And the first thing that must be done is to explore and drill holes: As Trump said, copying the previously coined slogan: ‘Drill, baby, drill ⛏️’

How far and how deep is a matter of price

Starting the exploitation of a mine from scratch is a long process, taking more than 10 years from the discovery of a new deposit. These projects are called ‘Greenfield.’ Geopolitical risk, costs, and the fluctuation of commodity prices make the profitability of these projects very difficult to determine, and they are only undertaken in phases of major imbalances between supply and demand.

Although we are approaching that moment, there is another way to increase supply. These are the so-called ‘Brownfield’ projects, which means taking advantage of operational deposits to explore around or at greater depths. These investments start up faster and are the first line of supply when mining companies begin to see clear imbalances in supply and demand.

Appetite for destruction? ⚒️

I have often referenced the concept that Edward Chancellor explains about the capital cycles in his book ‘Capital Returns’ in investment theses and articles. The importance of that book for investors cannot be overstated.

I am going to do it again today, but focusing on the special characteristic of the capital cycle in commodities: To do this, we are going to illustrate the cycle with the following clock, taken from the podcast by @Charlandodminas.

At 3 o’clock , the expected mega-mergers occurred: Barrick+Anglogold (2019), Agnico+Kirkland (2022), Newmont+Newcrest (2023) in gold, and BHP+OZ Minerals (2023) or Rio Tinto+Turquoise Hill (2022) in copper.

We don’t have a clock to tell us the exact time, but based on what we’ve seen so far, we must be somewhere between 4 and 6. Let’s look at the clues the market is giving us, illustrated with some charts:

• ✅Healthy Balance Sheets: The debt ratios of mining companies, for both gold and copper, are historically low or very low. This allows them to consider investing in greenfield exploration.

• ✅Exploration budgets: The years 2023 and 2024 were especially low, in general, and they are expected to increase in 2026. The instability in 2025 caused by tariffs has delayed this dynamic, but the geopolitical risks due to mineral dependency only exacerbate the need.

  

  

• ✅Equity Raisings & M&A: In the commodity cycle, at some point, prices begin to justify IPOs and capital increases for medium-risk projects. One measure of the start of the recovery of this appetite is seen in the financing of junior mining companies, which is timidly beginning to pick up in 2025, although without adjusting for inflation, it remains well below 2012 levels. Additionally, there are some examples of low-risk M&A between 2024 and 2025 in the sector.

  

We have enough evidence that appetite is awakening at a time when the sector has consolidated and is amply healthy (or financially sound).

Before the Supply… The Drillers

Long before the first ton of mineral is extracted from a new mine, even before the project’s feasibility is known, a vital supplier for mining companies comes into play: The Drilling companies.

These companies provide the specialized crews and rigs to extract the samples that confirm a project’s viability. It is a fragmented sector with few listed players. Crucially, their capital cycle reacts not just to commodity prices, but to their clients’ exploration appetite.

They are the “second derivative” of the boom.

And stay tuned, because I will be publishing a full thesis on one of these companies very soon.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

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I am hunting for value within the oil sector—we have discussed this in previous journals—and recently, a Canadian company crossed my radar: Greenfire Resources (TSX:GFR), which exploits bitumen deposits in Alberta, Canada. On paper, it looks like the perfect deep-value play: small, underfollowed and navigating temporary issues.

Even better, in 2024, the Waterous Energy Fund (WEF) acquired a majority stake and recently launched a rights offering. In this process, the fund has committed to subscribe to all shares that minority shareholders do not take up (effectively backstopping the issue). This move wipes out the company’s expensive debt (currently costing 8.5%).

By 2026, with normalized production and zero interest expense, Greenfire would trade at a P/E of ~6. With oil above $60/barrel, this looks like an easy 2x return or more. Sounds perfect, doesn’t it?

Pull the Thread of Incentives

Allow me to share a perfect example. A friend was recently offered an investment product by a traditional bank: a structured product which, over a five-year horizon, could pay a 6.5% annual coupon and return the principal, return only the principal, or result in capital loss, depending on the performance of the Euro Stoxx.

You read that right: capped upside, unlimited downside.

I told him to run away and apply a simple rule: “Pull the thread of incentives.” Are the seller’s incentives aligned with yours? Do they win when you win, or do they win simply by playing the game?

The Loaded Coin

If a stranger approaches you on the street with a coin and tells you that, in exchange for €10, he will pay you €50 if heads comes up at least 3 out of 10 times, the person proposing the game and setting the scenarios is playing with a loaded coin. There is a clear information asymmetry.

In the best-case scenario—which is quite probable given how it is structured—they will pay you a 6.5% coupon on the principal (from which a 7% upfront fee must be deducted). The result is an annualized return of 4.8%. I assure you, in this favorable scenario, the bank will make more off your money [than you will].

In the base case, they return the principal (minus fees), and you have effectively financed them for free for 5 years.

In the adverse scenario, the loss is unlimited and PERMANENT, since at maturity, the product ceases to exist. This is not a company that could recover its value over time.

One piece of advice, and let’s move on.

Avoid binary bets disguised as “guaranteed” products. Seek skin in the game. There are investment funds where the manager and their team have their entire personal net worth invested alongside yours. They win if you win; they lose if you lose.

The Carnivorous Plant

Let’s revisit Greenfire Resources (TSX:GFR), the promising multibagger, to apply the two principles we discussed earlier: following the incentives and considering information asymmetry.

We saw that the majority shareholder (WEF) is willing to put up all the capital that minority shareholders do not contribute, in order to reduce the substantial debt load and financial expenses. Sounds fantastic. Let’s trace the line of incentives by investigating the track record of the Waterous Energy Fund:

In 2017, this fund began consolidating small and distressed assets in Canada, creating the company Strathcona. In late 2020, they launched a hostile takeover bid for a private company, Osum Oil Sands Corporation. It was initially rejected but finally approved in 2021 with a bid 25% higher, acquiring 87% of the share capital. Shortly after, having secured absolute control, they approved a merger with Strathcona, creating Strathcona Resources, and squeezed out the remaining minority shareholders of Osum at the same price as the accepted offer.

In 2023, they took Strathcona Resources (TSX:SCR) public on the Canadian exchange, and following subsequent mergers, it has become one of Canada’s large heavy crude producers. Strathcona is ~10 times larger than Greenfire itself in terms of daily barrel production.

The success of this producer consolidation strategy is evident and has delivered strong stock market performance. Furthermore, they recently divested ~7% of Strathcona Resources, raising approximately CAD 400–500 million, though they retain a stake of over 70%.

The playbook used with Osum Oil Sands is familiar territory for WEF, as they opted for a similar approach with Greenfire in 2024. They persuaded minority shareholders and, through a hostile takeover bid, wrested control from the previous owners, ousting the management team.

Waterous Energy Fund currently controls 60% of the company ( Q3 2025 Financial Statements), while the remaining shareholding is highly fragmented following the exit of the previous anchor shareholders.

Under Canadian law, a supermajority of 66⅔% of shareholder votes is required at the meeting. While WEF’s current stake falls slightly short, the pending rights offering—where WEF has committed to a backstop—changes the math. They only need 40% of minority shareholders not to subscribe to the offering for WEF’s stake to exceed 68%.

The risk for minority shareholders from that point on is clear: Osum 2.0. With the stock price depressed, WEF could merge Greenfire into Strathcona for pennies on the dollar. Let’s not forget that WEF owns 70% of it.

For Strathcona, Greenfire would be a sweet deal. Easy to integrate, debt-free, and cheap. Furthermore, in an article from this year, a WEF manager stated:

“It’s very difficult, in Canada, for small, subscale oil companies to be able to attract capital. By consolidating them together, we’ve been able to take advantage of operating cost synergies,” Waterous said of Strathcona. He sees similar acquisition opportunities for Greenfire in Athabasca, a region in Western Canada in which Strathcona isn’t present, he added.”

Who do you believe WEF’s incentives are aligned with: their own participants and clients, or Greenfire’s minority shareholders?

WEF is doing a magnificent job compounding capital for its investors. But in this scenario, Greenfire is the carnivorous plant. The cheap valuation is the nectar. And we are the fly.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

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We are in earnings season, and although a single quarter does not determine a long-term investment thesis, the market is currently looking for reasons to either panic or “keep the party going” after every earnings call. As we discussed in the last issue, there are reasons to believe there is an AI bubble, but when and how it will burst remains unknown.

Right now, CNN’s Fear & Greed Index places us in “Extreme Fear.” It is time (as it always is) to review our convictions and ask ourselves which assets we would be willing to hold for 5 years while accepting big drawdowns.
I’ll just drop an idea in the following chart here, and if there is interest, we will expand on it in the next issue.

Getting back to earnings, from our ecosystem, Dowlais (LSE:DWL)—whose merger with American Axle (NYSE:AXL) is imminent—will report this week. Next week, we have results from Bayer (XETRA:BAYN) and Wizz Air (LSE:WIZZ), so we will likely dedicate a section to these matters in the next issue.

Biesse (BIT:BSS), the company that is the focus of today’s first section, reported last week.

Biesse: A falling knife?

In October 2024, I published a full thesis on Biesse SpA (🔗), an Italian small-cap and a global leader in high-tech machinery for processing wood, glass, and stone. Despite the potential, I saw wait-and-see strategy was the best approach. This is due to the anticipated decline in sales in 2025 and significant uncertainties.

The scenario has played out, perhaps slightly worse than expected, and the stock plummeted 20% last week, caused by weaker Q3 order intake and resulting in a setback to ‘April tariff’ levels. Sales started to show signs of bottoming, down -3% in Q3, bringing the 9M (nine-month) total to -14%. The CFO mentioned, for the first time, a “reversal of the trend in order intake” and “First signs of reversal in Q4.”

The situation this year has been turbulent, with the departure of the CEO in 2024 and the CFO in recent months. The new CEO is Roberto Selci, son of the founder and the largest shareholder through the family holding company.

It is true that the overcapacity in the wood industry is also being seen among its competitors, such as Homag (Durr Group), although Biesse has been particularly hard-hit this past year.

This situation could represent an opportunity; after all, this family-owned company has navigated worse cycles, and furthermore, it does so with a solid net cash position (debt-free). I will soon publish an update where I will focus on analyzing Biesse’s demand drivers, primarily capital expenditure spending in the furniture industry.

And we move from a capital goods industry suffering from overcapacity, whose customers are not investing, to another where a duopoly is overwhelmed with orders.

Capital Cycle: The Airlines Squeeze

In issue #1, we discussed oil and the imbalance that arises when producers underinvest while demand remains stable or increases. But this dynamic is not unique to oil; it presents significant opportunities across sectors.

In this issue, we will discuss this dynamic as it also unfolds in the airline industry. I covered this in the investment thesis on WizzAir (🔗), which I invite you to read, but I want to summarize and expand upon those comments here.

Supply squeeze

✈️Manufacturer Delays: Airbus and Boeing have an order backlog of over 17,000 aircraft, equivalent to 14 years of deliveries. This is creating an acute shortage of new aircraft in the short to medium term.

♻️ Accelerated Fleet Retirements: The aircraft retirement rate is set to increase from 2-3% to 4% annually by 2043, driven by aging aircraft and environmental targets, further reducing available capacity.

Relentless Demand

📈 Demand: Global demand remains very strong. Global commercial flight volume is already 16% YTD above 2019 levels and 4% above 2024 YTD. Remember, in 2020, some certified the death of aviation, just as they did in 2001.

In Europe, Ryanair reported results in November showing a load factor of 95%, consistent with the 95% from the previous year, and a 3% increase in passengers for the first half of its fiscal year (H1 FY, April-October). In the same period, Wizz Air reported a load factor of 92.5% (vs. 92.5% prior year) with a 10% increase in passengers. New fleet additions are being absorbed.

The Outlook: IATA projects passenger demand will continue growing by 8% while capacity grows by only 7%, reinforcing the pressure from limited supply in an expanding market.

Thanks for reading the Pond Journal. If you enjoyed it, don’t forget to subscribe and share your thoughts in the comments.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

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A Market at Record Highs, a World in Transition

We live in strange times. Some say we are on the edge of a cycle change—geopolitical and social—provoked by globalism, fiat currency, or capitalism. Everyone can choose their favorite guilty.

And on the eve of this “great moment”, liquidity continues to flood the markets, pushing indices to new highs while gold also reaches new historic highs, surpassing US Treasuries as the reserve asset of Central Banks.

While it’s undeniable that not every ‘all-time high’ (ATH) is a bubble, the current market situation shows several signs of being one. Let’s take a look.

Valuation highs

The current Price/Earnings (P/E) ratio of the S&P 500 is 31. Excluding the “Magnificent Seven” (Mag-7) which trade at 45-50 times, this leaves us a ratio of 20-21 times, or, put differently, an implied return of 5% with US debt yielding 3.5%. And one additional consideration: the index’s P/E is calculated based on the earnings of the last twelve months, where many companies have achieved peak profits.

The Shiller $P/E$ (CAPE ratio) measures how many times the market pays for the average inflation-adjusted earnings of the last decade, allowing the multiple to be normalized across the business cycle. The ratio stands at 40 times earnings, which has not reached the levels of the dot-com bubble but indicates clear overvaluation levels.

It is undeniable that AI is going to change the world, just as the internet did. It is also true that there is currently an AI bubble.

Bubble signals

A common element in all bubbles is that expectations inflate asset prices, and at the same time, these higher prices allow for the financing of investments that, in turn, reinflate expectations and prices. This is what we’ve recently seen with the purchase agreements between AMD and OpenAI, where OpenAI ends up as a partial owner of its supplier. The market rewarded the announcement with a 24% upside. Announcements, not tangible results. The interdependencies are multiplying, as we can see in the graph published by the WSJ.

(I recommend the masterful quarterly letter on this topic by Javier Ruiz, manager of the Horos Value Internacional fund (🔗) )

But the bubble isn’t just overstating the big names such AMD or NVIDIA. An entire chain of component suppliers, data center construction, industrial energy and cooling, and services to these companies is expanding its structure with investment and employment, all sheltered by expectations for cash flows that may not materialize—or at least not at the necessary rate.
In a powder keg like this, a single match is enough for everything to go up in smoke.

A clear example of this is the company AST SpaceMobile. The American company is setting up a low-Earth orbit satellite constellation that could revolutionize global telecommunications. The shares are currently trading at 150 times sales, and the company is not yet generating profits.

Let’s imagine that AST manages to grow its revenue at an impressive 20% annually for a decade and obtain seemingly unreal profit margins of 60%. At current prices, AST’s P/E ratio in Year 10 would still be 40 times earnings, 2.5% yield.

A week ago, it was trading with a market cap close to that of Kellogg’s—a company that generates USD 13 billion in sales (vs. USD 120 million for AST).

There are more signals. The appetite for risk is insatiable.

Appetite for Risk

Beyond Meat is a plant-based meat company that had great success in its 2019 IPO, supported by figures like Bill Gates and Leonardo DiCaprio. Expectations became so inflated that they were impossible to meet, causing the stock to drop from trading around $150 to the current $2.50. The company, operating since 2016, still has not generated profits and has even seen its sales stagnate. Furthermore, it is highly leveraged.

Merely an announcement of distribution plans in Walmart stores and the appetite for risk were enough for the market to turn it into a meme stock, inciting thousands of investors to execute a short-squeeze (forcing short sellers to buy, by buying massively, which in turn causes a further increase in price). Shares rose by 1,100% to $7.6 in 2 days, only to fall by more than 50% afterward, with daily volumes 1,000 times higher than usual.

Compared to this craziness, gold’s all-time high makes much more sense.

Not All-Time Highs Are a Bubble

High public debt, combined with the inability or disinterest of politicians to adjust the deficit, creates expectations of further fiat currency degradation. At the same time, Central Banks are buying gold to back their currencies against this degradation and the new geopolitical game.

Gold is at an all-time high against our beloved fiat currencies, but not against real assets like housing or other commodities. There is no bubble here, only a paradigm shift.

There’s always value somewhere

Despite being in a market at all-time highs, there’s always hidden value. For instance, look at the oil cycle: The Brent barrel is currently near $60, and once again, it seems like the end of crude oil.

It is true that growth in crude demand has slowed, but it will still account for 30% of energy production in 2050, with India and other emerging countries maintaining or driving demand. Estimates from the International Energy Agency (IEA) project demand growth of 0.4% annually until 2030.

But the biggest imbalance may not occur on the demand side, but on the supply side. The expectation of lower demand has led to chronic underinvestment in new fields while existing ones are depleting.

The lack of investment will cause a decrease in supply and an imbalance with demand, boosting prices. Prices will spur exploration, and companies like TGS ASA (TGS), dedicated to sea-floor mapping, or drilling companies like Foraco International SA (FAR) will experience increases in demand. This is the capital cycle, over and over again.

But opportunities aren’t only in oil; here’s the link to the last two theses I’ve published.

And now I pass the question to you: Are there other sectors or geographies where you are currently finding opportunities?

Thanks for reading the Pond Journal. If you enjoyed it, don’t forget to subscribe and share your thoughts in the comments.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com