Robotti & Company is a New York deep-value boutique founded by Bob Robotti in 1983, specializing in left-for-dead cyclical industries — energy services, building products, shipping — with multi-year holding periods and occasional activist letters. It manages about $650m; Bob is regarded as one of the most steadfast Graham-tradition cyclical value hunters.
This letter explains how a veteran investor traveled to mines and factories in Chile, Dubai, and Norway. His big finding: copper supply is barely growing, but electric cars and wind turbines need way more copper—a shortage of 8 million tons per year is coming. For ordinary investors, this means don't just chase renewable energy hype. Look at companies that supply mining equipment (like Caterpillar) and natural gas as a bridge fuel. The author warns that crowded conferences can fuel overconfidence; real value comes from checking facts on the ground.
Robotti & Company Advisors emphasized in its Q3 2023 client letter that value investing relies not only on financial data analysis but also on gaining deep insights through on-the-ground research and face-to-face meetings with management. The report notes that the author traveled to Istanbul in Sept
This chapter is the opening section of Robotti & Company Advisors’ third-quarter 2023 letter to clients. The author documents field research trips in September to Turkey, Dubai, Norway, and Chile, illustrating the importance of “getting out of the office” in value investing—gaining deep insights beyond financial data through face-to-face meetings, facility tours, and industry conferences. The report emphasizes that, against the backdrop of global supply chain restructuring and the energy transition, this “grassroots macro” approach is critical for validating investment hypotheses and identifying structural opportunities.
The author’s central investment argument is: Combining on-the-ground research with a global perspective is key to discovering undervalued assets, enhancing per-share value, and driving sustainable growth. The report presents several contrarian judgments:
The report supports its views with the following data and case studies:
1. Copper Market Supply-Demand Imbalance
| Metric | Data | Source/Notes |
|---|---|---|
| Chile’s copper production in 2022 | 5.3 million tonnes | World’s largest producer, 25% of global output |
| Chile’s expected copper production in 2032 | 5.3 million tonnes | Zero production growth |
| Global copper demand in 2022 | 22 million tonnes | — |
| Expected global copper demand in 2040 | 40 million tonnes | — |
| Estimated annual copper shortfall | 8 million tonnes | Demand growth far outpaces supply |
| Codelco’s capex plan over next 25 years | $68 billion | Primarily to maintain current output, not increase it |
2. Incremental Demand from the Energy Transition for Commodities
3. Observations from Field Research
| Company/Asset | Role | Key Data | Bullish/Bearish |
|---|---|---|---|
| Finning International | World’s largest Caterpillar dealer | Author met with executives and local management in Chile, Argentina, and Bolivia, toured facilities for a week | Bullish (beneficiary of energy transition; new electric equipment will replace existing diesel equipment) |
| Caterpillar | Construction machinery manufacturer | Indirectly benefits from energy transition via Finning | Bullish |
| Codelco | World’s largest copper producer (state-owned) | Plans to spend $68 billion over 25 years, but only to maintain current output | Bearish (weak supply growth exacerbates shortage expectations) |
| BHP | Mining giant | Electrification of Escondida mine will increase steel demand by 200% | Neutral (cited as an industry case) |
1. Go long on copper and related supply chains: The copper supply-demand gap (8 million tonnes per year) represents a structural opportunity over the next 10–20 years. Investors should focus on copper miners, copper recyclers, and companies providing “shovels and picks” (i.e., equipment and services) to the mining industry, such as Finning International and Caterpillar.
2. Go long on North American energy-intensive manufacturing: The U.S. has a sustainable electricity cost advantage due to abundant low-cost natural gas reserves. Combined with incentives from the Inflation Reduction Act (IRA), North American manufacturing will gain a structural competitive edge.
3. Focus on beneficiaries of Globalization 2.0: Under the trends of reshoring and supply chain diversification, companies benefiting from capacity expansion outside China (e.g., chip manufacturing, vertically integrated firms) are worth attention.
4. Beware of confirmation bias driven by investor enthusiasm: Increased attendance at industry conferences reflects a recovery in market sentiment, but the author reminds readers to remain rational and avoid ignoring risks due to collective optimism.
The author identifies two levels of “inability to expand rapidly”:
Supporting Data:
Comparison Table: 2000s China Supercycle vs. Current Global Green Transition Cycle
| Dimension | 2000s China Supercycle | Current Global Green Transition Cycle |
|---|---|---|
| Demand source | Single country (China) | Global synchronization (Europe, U.S., China, India, etc.) |
| Key commodities | Iron ore, coal, copper, aluminum | Lithium, cobalt, rare earths, copper, nickel, silicon |
| Price impact | Iron ore up 5x, copper up 3x | Lithium up 10x, cobalt up 2x, copper up 1.5x |
| Duration | ~10 years (2000–2010) | Expected to last beyond 2030 |
| Bottleneck type | Lagging capacity expansion | Uneven resource distribution + environmental restrictions + geopolitics |
Extended View: The author implies that the “green premium” for renewables may be eroded by rising material costs, potentially reducing the economic viability of some projects. This contrasts with the competitiveness of traditional energy (e.g., natural gas), setting the stage for later discussions on “carbon offsets” and “natural gas production.”
The author notes that global energy demand—especially from developing countries—will continue to grow, making hydrocarbons (oil, natural gas, coal) indispensable for the foreseeable future. This, in turn, creates demand for “emission reduction management,” including:
Supporting Data:
Extended View: The author sees “hydrocarbons” and “emission reduction management” as symbiotic rather than opposing forces. This suggests investment opportunities not only in new energy but also in the low-carbon transformation of traditional energy (e.g., natural gas + CCS, carbon trading platforms). This contrasts with many “net-zero” narratives, emphasizing a more pragmatic, gradual transition.
The author closes on a personal note, emphasizing that investor trust is the foundation of his research freedom. Drawing on 40 years of experience, he reaffirms his passion for “unraveling the mysteries of the financial world” and thanks “like-minded” investors. The letter’s tone is humble yet confident: humble in acknowledging reliance on client support, confident in adhering to “the right way to research” (i.e., deep fundamental analysis, long-term holding, board participation).
The appendix explains the reasons and implications of the author serving on the boards of multiple companies:
Supporting Data: Under SEC rules, directors and their affiliates cannot trade while in possession of material non-public information; violations can result in hefty fines (e.g., a hedge fund fined $150 million for insider trading in 2023). The author emphasizes that the “temporary inconvenience” is far outweighed by the “board benefits,” reflecting his long-termist philosophy.
Extended View: The appendix represents the author’s commitment to client transparency and also hints at the uniqueness of his investment strategy—creating alpha through deep engagement in corporate governance, rather than relying solely on market volatility. This stands in stark contrast to quantitative funds or passive investing.
The core thesis of this letter is: The energy transition is a long-term trend, but in the short term, it faces material bottlenecks, rising costs, and resilient demand. Hydrocarbons will continue to play a key role, and emission reduction management (carbon offsets, natural gas + CCS) is the realistic path forward. Through personal experience, data comparisons, and boardroom practice, the author constructs a pragmatic, cautious yet optimistic investment framework. His style is a continuation of “old-school value investing”: emphasizing field research, long-term holding, active participation, while acknowledging market imperfections and complexity.