Q2 2026 Conference Call

Here is the English translation of the provided Chinese investment research notes.

This is an analysis of the "Introduction" chapter from Kopernik Global Investors' Q2 2026 conference call.

At a Glance

In this quarter's conference call, Kopernik Co-Chief Investment Officers Dave Iben and Alissa Corcoran outlined their core assessment of the current market: the market is at historically high valuation levels, investors are extremely lacking in skepticism, and index investing carries significant risk. They believe this is a stock picker's market, with opportunities lying in overlooked areas. Specifically, they favor real assets that can preserve value in an inflationary environment (such as precious metals, base metals, agriculture, timber, etc.), as well as emerging markets with highly attractive valuations (especially China, Brazil, etc.). Concurrently, they are actively rebalancing positions across multiple sectors, capitalizing on market volatility.

Main Text Chapters

I. Market Environment: Historic Overvaluation and Extreme Optimism

Dave Iben opened by highlighting the core contradiction in the current market: there are numerous unknowns and risks, some of which are priced in and some are not. Using Howard Marks' framework, he posed a series of key questions and offered his own judgments.

Are valuations reasonable? Dave believes this is clearly a rhetorical question; current market valuations lack any semblance of reasonableness. He cited several indicators:
Buffett Indicator: The ratio of total stock market capitalization to GDP is at an all-time high. He noted that when he entered the industry, this indicator was 25%, and it is now nearly 10 times that level.
Price-to-Sales Ratio: Also at an all-time high, ten times the level when he started his career.
Historical Lessons: High valuations typically imply lower future returns. When markets are expensive relative to fundamentals, it is usually not a good time to invest.
Are investors skeptical? Dave again considers this a rhetorical question. The chart he showed indicates that investors have never been less skeptical; they are "all in" and unwilling to hold cash.
Are investors risk-averse? He believes the market has turned into a "casino," with people borrowing at extreme levels to buy stocks, citing examples like leveraged trading in South Korea and single-stock ETFs. He contrasted SpaceX and Amazon: both have similar market capitalizations, but Amazon has revenue and profits, whereas SpaceX has almost no revenue, negative cash flow, and its founder Elon Musk has stated the probability of SpaceX's success is below 10%. Dave pointed out that the opportunity is real, but skepticism is lacking.
"This time is different"? Dave refuted this notion. Reviewing history, he noted that in 1968 (semiconductor boom), 1929 (radio, automobile boom), and earlier eras of canals and railroads, people justified high valuations with "great new technologies." He concluded: "Bubbles only happen when great things are happening."
The math of capital returns: Great things require massive capital, and when the scale of investment becomes enormous, the denominator grows, making it harder to achieve good investment returns. He mentioned the massive capital expenditures in the AI field, which he believes will eventually lead to difficult times, despite long-term rewards.

II. Inflationary Environment and the Investment Logic of Real Assets

Alissa Corcoran took over the discussion, elaborating on Kopernik's investment logic from an inflation perspective.

Inflation is a policy choice: Citing economist Mises, she argued that inflation is a policy choice. Since 1960, the monetary base has grown 134 times, and since 2008, it has grown 6 times. She believes studying the 1970s (the last time people truly cared about inflation) is helpful, as real assets performed exceptionally well during that period.
Official CPI understates inflation: She pointed out that investors holding 10-year or 30-year Treasuries, if they believe the CPI, are earning a real yield of only 1%, but the official CPI likely severely understates true inflation. She cited data: New Yorkers hosting the same July 4th barbecue spent 31% more than last year; ShadowStats calculates inflation at 12%; Rick Rule's personal consumption basket inflation is 8%. She believes investors holding 10-year Treasuries are likely to achieve negative real returns.
More inflation is coming: The US is running a $2 trillion deficit, projected to reach $3 trillion within 10 years, with a debt-to-GDP ratio already at 120%. If the present value of entitlements is included, the situation is dire. She believes default or inflating away the debt (i.e., debt monetization) are the only options, and the Fed has clearly signaled its preference for the latter.
Investor response: Real assets:
Gold: Has just experienced a 20% correction, with gold mining stocks underperforming the metal. Kopernik has started buying again.
Platinum and Silver: Have corrected by over 45%. Alissa focused on the investment logic for Platinum:
Supply/Demand Dynamics: 2026 is expected to be the fourth consecutive year of demand exceeding supply. Prices are insufficient to incentivize new mine development, and mine supply is shrinking.
Price Dislocation: Platinum trades at a 60% discount to gold, whereas historically it has often traded at a premium to gold. She believes it is highly likely platinum will reach parity with gold.
Position: The fund's largest holding is Valterra Platinum Ltd., the world's largest platinum producer and refiner. The company owns the best platinum mine globally, has a strong balance sheet, and remains profitable at current prices. She estimates that if platinum reaches half the price of gold, its risk-adjusted upside potential exceeds 150%.
Other Real Assets: Scarce and essential real assets like copper, uranium, and natural gas should also benefit from inflation and AI demand, but their share prices have corrected significantly from highs.
Agricultural Land: Since 1960, the global supply of agricultural land has not grown, while population and consumption demand have increased. Agricultural land prices in emerging markets are extremely cheap, with discounts ranging from 70% to 90%.
Fertilizer (Potash): Related to the agriculture theme. Global soil potassium levels are declining, and potash prices have been below incentive prices for the past decade (except for 2021/2022), leading to no new major supply sources besides BHP's Jansen project. New mine development takes at least 10 years. She believes prices need to rise to balance supply and demand.

III. The Vast Opportunity in Emerging Markets

Alissa then analyzed the investment opportunities in emerging markets.

Index Distortion: The MSCI Emerging Markets Index no longer represents the broad performance of emerging markets. Index weights are heavily concentrated in South Korea and Taiwan. These two countries/regions have populations, GDPs, and land areas far smaller than China, India, or Brazil, yet their combined weight is one-third higher than the combined weight of China, India, and Brazil. 31% of the index weight is composed of just three stocks, and the Information Technology sector accounts for 45%. Buying the index is not buying a diversified portfolio; it is buying concentration.
China's Appeal: China is a larger economy by almost every other measure (e.g., 25% higher GDP on a PPP basis, twice the electricity generation of the US, three times the auto production, over ten times the steel production), yet its weight in the MSCI ACWI Index is only 1/25. She believes this represents a massive opportunity for active investors. The quality and innovation capabilities of Chinese companies are improving year by year, with dominance in batteries, solar energy, and automobiles. She cited ASML dropping 8% in a single day due to China's progress in lithography technology.
Risk and Reward: She acknowledged the risks (e.g., the US forcing the sale of a valuable telecom company) but believes investors are currently focused only on negative outcomes, leading to oversold stocks. Kopernik's job is to remain calm. She compared Chinese companies to their US counterparts: over the past 10 years, Chinese company stock prices have barely risen, but book value per share and dividends have grown significantly, making valuations highly attractive. She mentioned Chinese conglomerates are also cheaply valued.

IV. Market Characteristics and Portfolio Management

Dave returned to summarize the current market characteristics and Kopernik's strategy.

Market Tops Are Not a Single Day: Quoting Marc Faber, he noted that a market top is not the day the index peaks. During the 1960s tech frenzy, many stocks peaked in 1968 but were masked by the "Nifty Fifty," which didn't peak until late 1972. The same happened in 1999, with non-tech stocks declining first, followed by the eventual collapse of tech stocks.
Opportunity Diffusion: Over the past few years, opportunities have spread from gold to uranium, oil, copper, agriculture, and recently to forestry products. This is the most expensive market in history, but many things are becoming attractive.
Active Rebalancing: In a volatile market, Kopernik is very active, reducing and adding positions across multiple sectors (resources, consumer, financials, healthcare, industrials). In June, they bought far more than they sold.
Portfolio Characteristics: The portfolio consists of high-quality companies trading below book value and slightly above tangible book value. The overall portfolio valuation is in line with the market, but it has acquired a large number of cheap assets. The portfolio is primarily invested outside the US and is concentrated in real assets (metals, oil, infrastructure like railroads and telephone companies).
Core Thesis: He reiterated that real assets are the most desirable things to own in the future environment, and they are currently on sale. Emerging markets typically perform well when real assets perform well, as many emerging markets possess real assets.

Position Moves

Ticker/Company	Analyst View or Explicit Action	Key Rationale & Data
Valterra Platinum Ltd.	Largest position in the fund (Mining, Materials, Overall Fund).	World's largest platinum producer and refiner; owns the best platinum mine globally; strong balance sheet; profitable at current prices; if platinum reaches half the price of gold, risk-adjusted upside exceeds 150%.
Paladin Energy Ltd.	Still a significant holding (2% position).	Uranium company; has a high-cost mine in Namibia (with past issues) and a high-quality but undeveloped mine in Canada; opportunity is less widespread than before.
Cameco Corporation	No longer held.	Stock price rose from $10 to $120; risk/reward is no longer attractive.
EPAM Systems, Inc.	Bought (IT sector).	High-quality company, oversold by the market due to AI concerns; still needs engineers, may benefit from AI.
NICE Ltd.	Bought (IT sector).	High-quality company, oversold by the market due to AI concerns; its software may benefit from AI.
Northern Dynasty Minerals Ltd.	Still held, viewed as a massive option value.	Market cap under $1 billion, but the value of minerals underground could be trillions of dollars; owns one of the world's largest undeveloped copper deposits, located in the US; political challenges are the reason for the discount, but Dave believes development is a matter of "when, not if," with upside potential exceeding 50x.
Sberbank of Russia PJSC	Held only in one small account (local shares, not DRs).	Client DR positions were liquidated and cash returned; a DR position in Kopernik's own small account suffered a 70% loss.
Range Resources Corp	Held (US Natural Gas).	US natural gas has a significant competitive advantage; company valuation is far below what it was 12 years ago; if natural gas prices converge with oil, upside is multiple-fold.
Expand Energy Corp	Held (US Natural Gas).	Same as above.
Rayonier	Held (Timber).	Public market valuation (EV/acre) is half of private transaction prices; timber is one of the commodities with the least price appreciation since 1973 (only 7x), with room for a catch-up rally.
Weyerhaeuser	Held (Timber).	Same as above.
Barrick Mining Corporation	Position action not explicitly stated.	Mentioned as an indirect play on silver, but silver represents a very small portion of its business.
BHP Group Ltd.	Position action not explicitly stated.	Its Jansen potash project was described as "disastrous" and is the only major new supply source.
ASML Holding N.V.	Position action not explicitly stated.	Used as an example of China's technological catch-up; its stock fell 8% in a single day due to China's progress in lithography.

Memorable Views and Ideas

1. Bubbles only happen when great things are happening (Dave Iben): People often associate bubbles with absurdities, but Dave points out that every major historical bubble (1929, 1968, 1999) coincided with the most exciting technological revolutions of their time (radio, semiconductors, the internet). Therefore, justifying high valuations with "this time is different because of AI" is untenable.

2. Market tops are a process, not a single point (Dave Iben, quoting Marc Faber): The day the index peaks is not when all stocks peak simultaneously. In a topping process, different sectors and stocks peak at different times, creating a "disguise." For example, many stocks peaked in 1968 during the 1960s tech boom but were masked by the "Nifty Fifty" rally until the overall market collapsed in late 1972. This means that even if the index remains high, active investors may find opportunities earlier, but they could also suffer losses by holding the wrong stocks.

3. Invest in "crazy" prices, not "fair" prices (Dave Iben): Kopernik does not try to precisely predict the "fair price" of a commodity. Instead, it waits for the market ("groupthink") to offer a "crazy" price. They bought when oil fell to the low $30s (crazy low) and sold when it rose to $140 (crazy high). They focus on extremes, not the middle ground.

4. The extreme discount of platinum relative to gold is a core investment opportunity (Alissa Corcoran): Platinum currently trades at a 60% discount to gold, whereas historically it has often traded at a premium. Combined with a platinum market that has been in a supply deficit for four consecutive years and shrinking mine supply, Alissa believes a return to parity with gold is "highly likely." This forms the core logic behind the largest position, Valterra Platinum.