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A croupier doesn’t pick winners. The house has an inbuilt edge and takes its expected share over a large number of transactions at each table. Most of this publication concerns businesses of that kind: exchanges, royalties, toll roads etc.

Another sub-category of hybrid-croupiers exists in the financial services sector. Here, each company takes a toll on transaction such as: card payments, Pix transfers, cross-border FX etc. They also are involved in lending, and lending is where the market’s attention has settled on today’s constituents.

The idea I want to impress on you in this mini-series is simple. A business can earn enough on its equity to deliver a very satisfactory return without the market ever re-rating it with higher multiples. Its share price can even rise while the stock becomes cheaper, because the business compounds faster than the price. Two of today’s four names have done exactly that since the end of 2024. They compounded, returned a great deal of capital to shareholders and yet the market actually pays less now than it did before. In my experience that doesn’t persist indefinitely, albeit it can persist for longer than seems reasonable.

Lending aside, these businesses clip a ticket on volume: every card swipe, Pix payment and cross-border transfer can be seen as a small toll.

This matters in Brazil — home to 3 of the 4 names covered today. Inflation and pessimism has compressed the multiples the market will pay, but it also inflates the nominal value of volumes flowing through the pipes. A toll priced as a percentage of volume rises with prices automatically, much like a royalty.

Higher rates can lift lending yields and the spread on customer float, which helps them given they are all banks of sorts. On balance, the inflation depressing their multiples is quietly inflating their earnings base and they appear to have put in a low from which they are likely to climb quiet high and quiet quickly thanks to the mathematics of base effects.

The 4 names are ranked by market cap, with 3-year scenarios for each. In the base case the multiple never moves. In the bull case it re-rates towards a normal level. In the bear case earnings fade and the multiple falls to its 5-year low, basically where we already are today. That is what lets me underwrite a reasonable expectation of an unreasonably good return.

A select group of unloved croupiers:

No love towards WISE has been lost on my behalf since they forced me to close my account with them due to my receiving portfolio management fees from Crassus Investments — a portfolio that holds cryptocurrency and hence went against their policies. However, with my investor’s hat on, the 25% decline in price over the last 5 years presents an interesting opportunity. PAGS and STNE I am familiar with, having owned both off and on over the years.

1/ The balance-sheet lens

Chart 1 values each business on its tangible book value (TBV) which is what a shareholder actually owns once goodwill and capitalised software are stripped out. It then asks what multiple of that book the business deserves, given what it earns on it. EG: A company earning 30% on equity, when investors require 16%, should trade well above book. One earning only its cost of equity should trade at about book. Banks have been valued this way for a century, because book value is audited, slow-moving and hard to flatter.

Yet, it doesn’t appreciate a company buying back a fifth of its shares at 4x earnings. It also understates the bear case, because in a real Brazilian credit downturn, earnings fall first and provisions then eat into book.

2/ The Earnings Lens

Chart 2 builds the return from the ground up: earnings growth, plus buybacks, plus dividends, then any change in the multiple. It’s more sensitive. It captures the full force of buybacks at 4–5x earnings, which is why the bull cases for PAGS and STNE are larger. It is also harsher when earnings fall, because at 5x there is little room for the multiple to absorb the damage.

Which Is Better? Book value tells me what I own; earnings tell me what I’ll be paid for owning it. For the lenders, book is the better anchor, being less exposed to currency swings and one-off items. For WISE, which carries almost no book, only earnings mean anything. Bottom line for the TLDR crowd: Taking the more conservative answer from each lens:

• PAGS and STNE offer 50–65% in the base case.

• Each carries a realistic bear case of about −15%.

• The bull case sits somewhere between 140% and 230%.

Price up, stock cheaper?

For illustration of the concept introduced above, the test I apply is this: If shareholders have made money while the like-for-like multiple has fallen, then per-share earnings have outgrown the share price. That is: the company is actually cheaper even though the stock price is higher.

(Some) Risks

1. The Brazilian credit cycle. A wave of defaults means earnings and book values take a hit.

2. Currency & Interest rate risk. A higher-for-longer Selic squeezes the acquirers’ funding costs, and a sharp fall in the real erodes dollar returns. The reverse is also true.

3. Pressure on the toll. Pix is eroding card fees in Brasil, regulators may cap rates and fees, and Wise is cutting its own prices.

The wildcard: Stablecoins. Instant dollar transfers via tokens evade the banks completely. That is a first-order risk for WISE, perhaps a lesser one for the Brazilians. This is the one risk that could redraw the table rather than simply shift the odds.

With the introductory framework in place, company specific notes are provided for each name as well as my personal ranking. Become a premium member today for access (the annual subscription works out to 34 cents per day!).

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WhiteHawk Minerals Corp. NYSE: WHK

TRK Rating — watch.

WHK is a new starter position in The Royalty King and Crassus Investment portfolios.

Executive Summary

WHK is a natural gas mineral and royalty company who, subsequent to their recent IPO in June 2026 claims the largest publicly traded natural gas mineral portfolio in the US. Its 3.6m gross unit acres across the most prolifically producing gas basins in the USA provides its shareholders with exposure to ~13% of all US dry gas production.

The majority of royalties owned by WHK are mineral interests which means, unlike the net overriding profit interests owned by another member of TRK portfolio — SJT — it is exempt from operating and development costs.

On assets alone, an unimaginative sum-of-the-parts valuation of WHK appears worth ~$14/sh. The market price today sits at ~$26 which at first glance makes the stock look less interesting with a P/NAV of circa 1.7x. Yet that premium is the key to its value creation.

Just as MSTR funds its buying of BTC via preferred stock and equity raising when the P/NAV = >1x, WHK intends to use a similar mechanism to fund its acquisition of private acreage, tucking it into its assets and receiving a double-bump via a royalty from field operators and a higher multiple awarded it thanks to its public-stock wrapper.

Today’s essay examines whether this multiple is appropriate given the value accretion shown by the company through its acquisition integration buying private minerals at ~6.6x cash flow and enjoying the arbitrage mentioned above.

What needs to happen to justify the multiple?

Any combination of three things:

• Rising gas prices: specifically, sustained Henry Hub of ~$6.70+.

• Moderate gas plus deals: ~$4.50 gas plus ~6 years of accretive deals.

• Strip gas plus accretive deals: ~11 years of deals at today’s spread.

I view WHK at today’s price as a decent long term call option on higher gas prices in the USA. Its royalty model shields it from margin creep in its costs. An 8% dividend yield makes it an option with positive theta, meaning one is getting paid to wait for the tail event of rising gas prices to occur.

A large part of the valuation depends on the public-private premium persisting. In other words, that they continue to acquire private deals cheaply and are awarded with an expansion of multiples (private deals are usually priced at single digit multiples whilst public companies should trade at double digit premiums). The loop is somewhat circular: the premium funds deals, and deals justify the premium. This is not uncommon and is the secret of success of some well known royalty companies such as: FNV, WPM, Altius et al.

MSTR is probably the best known public company making use of a premium to NAV, raising equity to fund more BTC purchases. However, a key difference lies in BTC no paying any cashflows while WHK enjoys leasing and royalties on the assets it acquires.

Gas Prices — The All Important Variable

Betting directionally on gas prices has historically been a widow-maker of a trade.

Therefore, I prefer to get my exposure via select royalty plays which will provide a certain amount of insulation and prevent blow-up risk.

The ~8% yield offered currently by WHK is a good start and solves the time value of money problem. Yet the real upside lies in increased revenue (a product of price and volume) and increasing market multiples.

Here’s (an abbreviated) take on US domestic gas towards the end of the decade.

US gas heads into winter oversupplied, but demand is about to change. The EIA expects storage to end the injection season 5% above the five-year average, with Henry Hub averaging $3.43/MMBtu in 2026 and $3.28 in 2027.

Production keeps rising, led by the Permian and Haynesville. Permian gas comes out alongside oil, so it keeps flowing whatever gas prices do.

The demand wave arrives from 2027. The EIA sees LNG exports rising from 15 Bcf/d in 2025 to 19 Bcf/d in 2027, and another ~7.5 Bcf/d of export capacity is due by mid-2028. Data centers could add roughly 6.1 Bcf/d by 2030. They’re still a wildcard. Together, that’s 12–15 Bcf/d of new demand, or more than a tenth of current US output.

For WHK, gas price upside is most likely in 2028–30 just as its hedges roll off, so the timing could work in WHK's favour. The Appalachian caveat still applies as the tightness comes from Gulf Coast demand, and Appalachian gas has limited pipeline access to it. WHK benefits mainly from any rise in price rather than volume. A narrowing of gas spreads is something I deem inevitable, but not imminent, in a future global society thirsty for molecules.

The question that matters for investors is how much of the $26 share price is backed by assets and how much depends on management continuing to execute. Below the paywall I break that down: the full sum-of-the-parts model, NAV sensitivity from $3 to $6 gas, what the market is implying about the undeveloped acreage, the value of the acquisition platform in years of deal flow, and the exact price and conditions at which I'd buy in size.

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Do I buy now, or wait?

Such a common question. One which is not limited to Bitcoin (BTC) exclusively, but is frequently associated with it given its famous volatility.

In August of 2025 I outlined my expectations for BTC’s likely price range based on: its prior cycles, mining economics ahead of the 2028 halving include estimates of mining equipment and electricity costs as well as using power law regressions.

TLDR: My price range for BTC in 2026 was $40-$70K which was hit June 1 when it broke below $70,000. Post-halving (April 2028) I have updated my targets to a low of $117,000 and a base case of $270,000.

I earmarked the October-November period as when I considered the final flush-out most likely to occur and of course I’m writing this in September.

So, to return to the question at the beginning?

Do I buy now — or wait?

My time in markets has taught me that no amount of cleverness can make up for patience and a solid framework and therefore I’m doing both.

I’ll explain.

In Crassus Investments I currently hold 10% exposure to BTC (5% in BTC itself and 5% via MSTR). In The Royalty King portfolio I hold 15%, that consists of CMSG and WELX.

In the event that BTC drops <$60,000 I am willing to double my exposure to these investments as these two portfolios are designed for long term growth.

Ergo, I’m buying and I’m also waiting.

The logic for positioning, even partially, now rather than later is simple:
Bitcoin at time of writing is $77,135, so if I assume my targets are accurate and use them as a working axiom the risk:reward stands thus:

• Upside to $270,000: +250.0%

• Downside to $60,000: −22.2%

When viewed in current portfolio terms:
Crassus Investments (10% BTC weight)

• Downside: 10% × −22.2% = −2.2% portfolio drag

• Upside: 10% × +250% = +25.0% portfolio gain

TRK (15% BTC weight)

• Downside: 15% × −22.2% = −3.3% portfolio drag

• Upside: 15% × +250% = +37.5% portfolio gain

The actual move will vary given the treasury companies have different beta to BTC

So, sitting tight is a perfectly reasonable option for someone with conviction in the thesis.

Yet with geopolitics being what they are, sustained liquidity injections into markets become more and more necessary so I want more exposure to BTC as it is the most liquidity - responsive asset there is. Let’s assume BTC drops to $60K and I double my position. What might that look like?

Blended cost basis = $67,499 (weighted by equal dollar amounts at $77,135 and $60,000)

• Revised upside to $270,000: +300.0% (up from +250%, since cost basis is lower)

• Portfolio weight: Crassus BTC exposure moves to 20% invested, TRK BTC exposure to 30% invested.

From a portfolio perspective the upside is now:

Crassus: 20% × 300% = +60.0%

TRK: 30% × 300% = +90.0%

Of course, BTC could fall further and should BTC continue dropping to, say $50K, the portfolios would be marked down as:

Crassus (20% weight): 20% × −25.9% = −5.2%

TRK (30% weight): 30% × −25.9% = −7.8%.

Still the overall reward to risk is 11-12:1 assume my 2028 target holds.

With gold royalties consisting more than a third of exposure for both portfolios and IMHO a highly likely double or more, from here, I can afford BTC to go to zero (though I don’t expect that) and have the losses offset by the more tried and true asset in gold royalties.

From my perspective, this is a logical move. The entry price will be volatility and likely looking silly for a given period of time. A comfort for the uneasiness felt when BTC is exhibiting its signature volatility might be found in considering its main competitor: the US dollar, which is less volatile, but loses 7-8% of its purchasing power every year historically and likely more now given the debt levels.

It’s worth clarifying that the gold/bitcoin/hard asset story is really a bond story which is really a debt story which in turn is really a serviceability story. When the world’s pre-eminent fiat currency, with unlimited supply constraints faces off against the world’s first engineered money with immutable supply cap, the specious units can only flow in one direction by simple mechanics.

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Until next time,

Eyes to where the ball is going in 2028.

Benjamin

Disclaimer: This publication is intended solely for documenting my personal journey with trading and investments for income and travel purposes. I am not a certified financial advisor nor am I a financial professional and none of the content provided should be construed as investment advice. It is essential to conduct your own thorough research and consult a registered financial service provider for appropriate guidance. I cannot guarantee the accuracy or completeness of the information presented. Any actions taken based on the information shared in any of my work are done at your own risk and discretion.

Read The Entropy Trap to discover what physics knows the economics doesn’t.

The Crown Compendia: An informal dispatch on markets, money and my musings. For those who want to go deeper, the links are at the bottom.

— Villa Del Balbianello, Lake Como. Italy.

During my time in Lake Como I stopped in to visit a place I’d always dreamed of: La Villa Del Balbianello in Lenno. You may know it from the James Bond film Casino Royale.

What you probably don’t know, however, is the story behind it — in particular the story of its last ever owner: Count Guido Monzino.

The Monzino family were not actually nobles yet they were very important in Milan in the early 1900’s who made their fortune from founding and then expanding Italy’s first national supermarket chain: Standa.

Guido was made Standa’s general manager in his mid twenties and managed to 10x its growth before the firm was sold to Montedison in 1966 for 700 billion lire (approximately 9 Billion Euros in today’s terms).

He then dedicated the rest of his life to mountain climbing expeditions, achieving numerous feats including leading the first ever ascent of Cerro Paine, Chile and the first successful Italian ascent of Mt Everest. His many other alpine achievements took him across Africa and the Chilean Patagonia where he purchased land and built community centres. (In Chile he was coerced to hand over his land to the state when Pinochet came to power, however he negotiated for the land to be converted into a national park).

As a child he always coveted the villa and in 1974 managed to purchase it and renovate it back to its full splendour. He died in 1988, leaving the villa to the Italian State trust and is buried there.

All this is to say, that after visiting the villa and reading his life story, one can’t help but to be inspired towards raising the bar on their goals and dreaming a little bigger. Or, to borrow the good Count’s favourite quote

“Gradatim conscenditur ad alta”

(Gradually towards the highest highs)

— Guido Monzino

In terms of my investments this simply means I am dialling up the offence — raising the bar on my hurdle rates, with allocations tilting more towards those plays promising a more aggressive rate of return.

I have recently ran a portfolio audit and share the changes with premium members.

The two biggest investment themes are Sovereign debt and AI.

What people call the gold trade is really about bond markets which are in turn sovereign debt re-financing facilities. I have chosen to invest in the AI story via the toll roads and land owners with a pecuniary interest in the commodities critical to the roll out of data centres.

If you’d like access to how I’m allocating my capital currently why not join the premium tier? With a proven track record sharing several multi-bagger trades it’s only $125 for the entire year.

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Read The Entropy Trap to discover what physics knows the economics doesn’t.

Truer words were never spoken.

Especially in this day and age and as a research writer where the public has become addicted to news and activity. I’ve noticed a loop: A news story breaks. Market participants trade based on the news. This causes price movements in a given stock or sector (up or down) which in turn leads to questions asked about the original investment thesis or valuation (especially in price declines). I am forced to evaluate the news and determine whether it is or isn’t meaningful to the original investment thesis and therefore whether my valuation models should/shouldn’t be updated and finally whether to add/trim/exit or do nothing with my affected holdings. And, most of the time, the correct decision is to do nothing.

Phew.. just writing that was exhausting.

A pertinent and recent example was the price action surrounding major exchanges which dropped significantly (20% in the case of ICE) on the news that prediction markets had received permission to trade perpetual contracts (don’t call them futures because they’re not). The fear was that this would take trading volume away from the exchanges, who enjoy an oligopoly on regulated derivative products and thus would suffer lower revenues.

Such fear, to anyone with a cursory understanding of exchanges, their product offerings and who their major clients are, was ridiculous as I stated unequivocally in this chat with .

Ironically, in contrast to the price decline, every single one of my major holdings reported earnings that were either in-line with or beat my estimates.

I took the opportunity to add to my exchange holdings and the major exchanges now make up 26% of the Crassus Investment portfolio, which is up 25% YTD. The Croupier Collection, which is a portfolio I opened this year specifically to buy and hold ‘croupiers’ is almost 100% in exchanges and is up 6.7% YTD.

Premium members will have access to my update models and valuation targets for all the names shown in the above chart.

But first, a different take on perpetuals — in this case on perpetual assets or businesses. Land and water are two perpetual assets. They exist naturally and lend themselves to ever higher use purposes over time, a concept I think of as a terminal value of infinity.

Exchanges are businesses, hence man-made ergo not naturally occurring. Yet as far as business models go, they’re about as perpetual as it gets. Thinking about it, their perpetuity is tied to regulated, publicly traded commerce. So if one believes that the world continues to spin and people or institutions want/need to engage in any of the myriad activities that occur on publicly traded exchanges such as: buying, selling, hedging, insuring, rebalancing, market making & arbitraging etc etc. then exchanges seem like a good candidate in which to compound wealth over time.

The trick will be to avoid interrupting said compounding.

Valuation Updates & Price Targets

You’re reading the free edition.

Paid subscribers just got the full valuations and updated price targets on the names above. Below I break down the same valuation process that’s kept us ahead of consensus on the exchanges and allowed me to buy more while the uninformed sold them off.

Upgrade to paid to get every update in The Royalty King’s Valuation Deck the moment it happens.

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In Proud partnership with The Solstice Laboratory — the physics of markets, quantified. Read The Entropy Trap to discover what physics knows the economics doesn’t.

An informal dispatch on markets, money and my musings. For those who want to go deeper, the links are at the bottom.

— Vernazza, Ligurian Coast. Italy. August 23.2026.

Market Musings

The big news this week was of course the first US-Yen intervention since 1998 led by US Secretary of the Treasury, Scott Bessent.

One can’t help but be reminded of the (likely apocryphal) allegory of King Canute, the Viking who once ruled in what was dubbed the ‘North Sea Kingdom’ which covered England and many parts of Scandinavia around 1016-1028. It is alleged the good king Canute had his throne taken to the shore and commanded the waves to stop. However, the laws of nature, being what they are, ignored the command and proceeded to soak his feet anyway.

991 years later, another very powerful man attempts to stem the tide in US bond yields to prevent water seeping into the rest of US asset classes.

The yen this week was near a 40 year low against the greenback which worried not only Tokyo, but also (moreso?) Washington, which lead to the US government buying Japanese yen in order to prevent it falling further (propping up the currency).

However, instead of using dollars to buy the yen, Bessent sold euros from the US’ reserves and used that money to buy yen, thus avoiding weakening demand for the dollar.

Why?

Japan owns more US government debt than any other country. A collapsing yen forces Japan to sell their US Bonds to prop up their own currency. Naturally, the subsequent dumping of US treasuries would result in lower bond prices and thus higher yields and consequentially spike US borrowing costs. (Think of bond yields as the interest rate the US pays to finance its own debt).

There also appears to be a push to expand a lending facility (REPO) so Japan can borrow dollars using its Treasuries as collateral, instead of having to sell them outright (Similar to a line of credit on your house which provides you with liquidity without having to sell your house).

What does this mean?

Essentially this is the official signal that the US is willing to monetise its own debt, albeit initially via a little subterfuge.

It’s early days and IMHO people are getting a little too excited, but this was certainly noticed in the gold market - rising 5.27% in 5 days and now up 14% in the last month alone, while 2.10.20 and 30 year yields all rose significantly alongside it.

Bond Market Banter

Given the US government finances itself through issuing debt: bills, notes or bonds, it looks to issue at whichever end of the curve has lower yields (cheaper interest rates on its debt).

Given the shorter end of the yield curve has a lower interest rate ~3.63% currently, Vs 5% on the 20 yr, the US is clearly incentivised to do as much of its funding as possible on the shorter end where demand is deep, liquid and could withstand a sell off. However, roughly $5.3 Trillion of treasuries have a duration of more than 10 years with higher rates and are less liquid ergo cannot easily absorb a potential Japanese sell off hence Bessent’s move to prevent this from occurring during the week. This still is merely biding time and fighting against the tide.

The only long term solution is to collateralise the debt using an asset that isn’t simultaneously a liability — Gold.

Section 2.10 of the Fed's Financial Accounting Manual allows the 261 million Oz of gold held in the Treasury General Account (TGA) to be revalued under the direction of the treasury. The gold is currently marked at its 1973 accounting value of $42.22/oz. The question driving my underlying gold thesis is ‘ what price would it need to be to cancel the long term bonds and push US funding over to short duration bills whose rates are more friendly can be massaged through stablecoin demand dynamics?

Answer = $5.3T ÷ 261M oz = ~$20,307/oz increase from $44.22, or

~$20,350/oz. A 4x move.

From another angle, foreign creditors need assurance that the US will be able to honour its obligations in real terms in order to keep holding and rolling their US treasuries (keep financing the US). At today’s spot price, US gold holdings only back approximately 11% of foreign-held treasuries. Historically, foreigners have needed 40-60% backing in order to feel comfortable holding their treasuries and avoid a sell off and subsequent spike in bond yields.

Again, this implies a >4x move from today’s spot price.

Previously, the conservative case for gold at $7,500 was examined, because $20K almost seemed embarrassing to write.

Yet, after this week’s events, the following meme did come to mind..

Therefore, let’s examine my top Royalty holdings through the lens of $20,000 gold.

To access the valuation deck adjusted for $20,000, please become a premium member today for $125/ year, that’s only 34 cents per day!

Sources:

• https://discoveryalert.com.au/u-s-gold-revaluation-a-potential-solution-to-the-national-debt-crisis/

• https://en.majalla.com/node/328158/business-economy/revaluing-us-gold-reserves-comes-pros-and-cons

• https://www.jpost.com/business-and-innovation/precious-metals/article-829152

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“ … Trading is about anticipating changes in human behaviour.. ultimately, if you think of it in that sense, the VIX is a very logical trading tool for one who wishes to engage in that activity. I myself do not wish to do so but, if I did, I would choose the VIX.”

—Murray Stahl

I have a number of unusual habits. One of which is that I like to read and then re-read, through various collections of shareholders’ letters and call transcripts from investors I admire. The above quote is from one such source.

It’s no exaggeration to say that Murray was (and remains) a hero to me. The admiration I have for him extended far beyond investment philosophy, I was particularly struck by how much patience and kindness he had when dealing with questions from shareholders and the public whereas I, in contrast, would often be yelling at my computer that the questioner should read the report and have their answer!

There’s always something new that strikes me while revising the reaerch writings and compendia of this wizard and a few weeks ago I read the above quote and was rather surprised — Murray, in favour of, and almost favouring the idea of being long the VIX!

Hence I began to review the charts of the VIX and its options chain and think about which circumstances might be more favourable to being long the VIX as a relatively simple way to have insurance in a regular portfolio or, an anti-fragile speculation to profit handsomely from a spike in volatility, or even its reversion to mean.

Here are two simple trades to profit that are completely uncorrelated to the broad market, in fact they’re inversely correlated - let’s explore.

The Trades

This publication has positioned readers ahead of several multibagger returns for years now - just check out the archives for a running track record. For only $125 per year — that’s 34 cents per day — gain access to the Royalty King’s premium research.

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In Proud partnership with The Solstice Laboratory — the physics of markets, quantified. Read The Entropy Trap to discover what physics knows the economics doesn’t.

Two variables have held in a range-bound ratio for eighty years. Not by decree, but rather by market or natural forces.

The ratio?

15 ≤ x ≤ 20

Let x = 1 oz of gold and 15 and 20 represent the equivalent of barrels of oil purchasable.

Whenever one side moves without the other, the system doesn’t break so much as store tension, which eventually must be released. The lens here isn’t so much policy or sentiment; it’s closer to physics. Gold is the proxy denominator for the true price of consumed goods and the end destination for ‘excess liquidity for storage’ (read inflation-protected savings). Its price is affected by sovereign debt expansion, Chinese money supply, the pressure building on fiat. Oil is downstream of that same liquidity, yet its end use is consumption and its supply is much more responsive in the short term to price changes. A question worth pondering is whether this ratio holds and reverts back to its historical range, or whether the much anticipated increase in fiat currency liquidity might be sharp enough to break the ratio this time, effectively forming a de facto new monetary system?

Let’s explore this idea, contemplating a range of likely gold prices first, understanding what that would require from a compounding perspective and then locate the resulting oil price needed for the ratio to hold.

I’ll begin conservatively and give the theme time to play out - say, end of decade- and work backwards.

A Gold Hypothesis

In this video I explored my range of price targets for gold (and become convinced that most commentators only ever read the headlines and not beyond!).

The point was less about the exact nominal price gold may reach, but much more about what that means for everything else in gold-adjusted terms.

Hypothesis: Gold is at least $7,500 USD per oz in 2030.

Two numbers to remember as a starting point: Gold printed a nominal all-time high of $5,589 an ounce in January 2026, then corrected hard, down some 28% to the low $4,000s.

THE MATH

What does $7,500 actually require?

From today’s price near $4,000, it needs roughly 12–13% compounded annually through 2031. While they may sound high coming off 40 yeaers of benign economic environment, in actuality it would merely be on par with gold bull runs during that period.

Yet from January’s $5,589 high, the compounded annual growth rate (CAGR) needed is a paltry to 6–7%, a rate slower than the pace sovereign debt is currently expanding. Measured against gold’s three prior bull markets, a 12% CAGR would be the most anaemic run ever — which seems unlikely given the fundamental drivers are the most bullish for gold they’ve been in recent history. Nothing about this base requires imagination. It requires the least extravagant bull market gold has ever run.

The Misconception

Whose liquidity is actually driving this, the dollar’s debasement or someone else’s?

Most commentators I hear talk about the US dollar’s debasement being the reason for gold’s bull run. I believe that will ultimately be true - but so far that particular guest is yet to even arrive at the party.

China conversely, is already seated at the table and is a few Aperols in, it has taken a water break since the Iran conflict began, and its drop in liquidity injection is speculated to be a tool to temper oil consumption during an uncertain time.

Chinese gold, has already roughly doubled with a domestic run that maps closely onto the $4,000-to-$7,500 move in dollar terms. China’s M2 sits near 354 trillion yuan or ~ $52 trillion USD equivalent, with an M2-to-GDP ratio more expansive than America’s.

Additionally, a domestic population that can’t buy Bitcoin and its real-estate savings vehicle having been rug-pulled by the CCP and the exit ramp for that liquidity points at one place. The yuan is more likely to weaken than strengthen over the window, which only adds fuel: a weaker yuan means Chinese buyers need more of it to buy the same gold, and the government has shown every sign of preferring that flow over the property market or capital flight.

THE OIL PROBLEM

Here’s the part not many are seriously considering.

If gold nearly doubles, what happens to the other side of the scale?

Does the ratio hold? In which case oil goes to $375-$500 per barrel.

Which boggles the mind when considering the ripple effects that would have on the rest of the world economy.

Or does it break?

Which means we’ve entered a de-facto new monetary system, just not the one everyone is talking about.

All the focus is on the gold: USD ratio, which is important, but nominal.

Gold : Oil represents true money’s ability to buy the most fundamentally essential input good in the modern economy.

This is the real stress test. Real (inflation-adjusted) oil is historically cheap. The 1980 peak of $36 a barrel is roughly $160 today; the 2008 peak is closer to $210. Current prices near $84 sit at about 40% of the 2008 real high and half of 1980’s. Even the shock of open conflict in the Middle East hasn’t pushed oil back to its inflation-adjusted highs.

All the aforementioned support the axiom that the real price of all consumer commodities is lower due to their stock:flow profile which is so misunderstood and under appreciated. I expanded on this point here in Compendium I

Now run the ratio: if gold reaches $7,500 while oil stays flat near $84, one ounce buys roughly 90 barrels — a ratio more extreme than COVID’s 85x, which was itself the most dislocated print in the modern data series, and was set in the moment a futures contract briefly traded negative. There is no historical precedent for that level of distortion becoming the norm in USD denominated terms.

However, consider that, while oil became a global commodity in the 1860s, for the majority of oil’s life as the world’s primary energy source (1950’s onwards) this has coincided with the USD being the global fiat reserve and post Bretton Woods, the monetary system has been the petrodollar standard.

Ergo, ipso-facto, should the historic ratio fail to mean-revert in the face of an un-offical gold revaluation of the USD — because that’s what $7,500 gold really means — it means the end of the petrodollar system.

POSITIONING

How do you own this without picking a side?

Royalties.

On both gold and oil.

It’s the only full-cycle, outcome agnostic way to gain alpha on either scenario.

Gold miners may skyrocket if the ratio breaks, oil producers and services should the ratio hold. But miners’ margins cannot remain if the ratio holds and oil catches up to gold and price-sensitive oil producers will suffer if the ratio breaks and their commodity continues to cheapen in real terms.

I’ve created a full valuation deck for the names I own and monitor whose valuations are updated in accordance to commodity price changes. If you’d like to know what my valuations for key stocks are under certain price scenarios - upgrade to premium today and send me a message.

THE RECAP

Gold to $7,500 by 2031 isn’t the bull case here, it’s the floor. It needs 12–13% annualized from today, half that from January’s high, and it reads as a near-certain double in either dollar or yuan terms. Oil almost has to keep some pace; the alternative — gold detaching entirely while oil sits still — asks the system to hold a state more extreme than COVID’s worst moment, indefinitely, with no measurement ever forcing a collapse. History says that’s not how equilibria behave and therefore anything else would signify a phase-transition in the underlying system.

This means the end of the old world order and the start of a new one.

Until next time.

Benjamin

SOURCES: Gold’s January 2026 nominal all-time high ($5,589/oz) and subsequent correction to the low-$4,000s; Tetragrammaton asset allocation framework, first underwritten September 2025, published to Substack June 2026. Chinese M2 and retail gold-per-gram pricing per domestic reporting. Real oil price comparisons (1980, 2008 peaks vs. current) inflation-adjusted from nominal historical prices. Gold-to-oil ratio, 80-year average and COVID-era 85x extreme, per historical commodity data. Solstice Laboratory, Letter No. 5, September 2025. Figures rounded; verify before citation.

DISCLAIMER: This piece is commentary and analysis for informational purposes only. It is not investment advice, nor an offer or solicitation to buy or sell any security or asset. It reflects one person’s opinion and underwriting judgment, not guarantees. Seek advice specific to your own circumstances.

Synopsis

Two execution milestones cleared this month:

BLM’s right-of-way conversion approved and a guaranteed-maximum-price construction contract executed for the northern pipeline. A more subtle shift in the capital structure does more for the equity story than either headline. I raise the base case to $6.50 and widen the bull case to $9–11 and shift the probabiltiy weighting slightly from bear towards base case.

Base case: $6.50 (was $6.00) · Full completion: $9–11. E[PT]: ~$6.35

Long-time readers know Cadiz from the water mini-series. The opportunity promises land, water, and a 220-mile pipeline that functions like a toll road once operational. This update covers two pieces of news, a valuation refresh, and a cleaner look at what Cadiz shareholders actually own.

What Cadiz Owns - Recap

Cadiz sits on 45,000 acres above one of the largest undeveloped groundwater aquifers in the American Southwest, with 220 miles of pipeline threading through Southern California’s water corridors. The company doesn’t own the whole project outright, as construction is being financed through Mojave Water Infrastructure Company (MWI): a joint entity where outside equity investors hold 51% of the long-term cash flows from groundwater banking and storage, in exchange for funding the roughly $800M build. Cadiz retains 49% of the storage rights plus 100% of its existing water supply contracts, and receives approximately $76M from MWI on closing for contributing the pipeline infrastructure.

The News

The Bureau of Land Management (BLM) has just granted a 50-year right-of-way converting the Northern Pipeline from natural gas to water conveyance. This enables deliveries from the Mojave Groundwater Bank to San Bernardino County of up to 25,000 acre-feet annually, above the existing 21,275 AFY contracted floor. One of the project’s key execution gates is now cleared.

Separately, Cadiz signed an MOU with RIC Energy for on-site solar generation and a green hydrogen platform, with the same pipeline corridor floated for future hydrogen transport. No disclosed terms yet this remains a right tail option and hence not something that belongs in a valuation until more clarity is available.

All the above good news coincides with a share price sell-off.

IMHO, one of the more important pieces of news that has flown completely under the radar is Cadiz executed a guaranteed maximum price contract for the construction of the northern pipeline on July 28. CAPEX is now pegged at $403.3 million. Having certainty around costs helps enormously in securing funding.

Funding & Capital Structure - The Lynchpin

Read more

In Proud partnership with The Solstice Laboratory — the physics of markets, quantified. Read The Entropy Trap to discover what physics knows the economics doesn’t.

Hormuz Reignites — Hunting Cheap Energy Plays

The U.S.–Iran ‘ceasefire-with-middle-eastern-characteristics’ didn't hold and rumours of strikes involving infrastructure not just in the gulf but also in Russia seem to be hitting the newsfeed recently. Brent is up a moderate +46% YTD, yet flat over three months, having round-tripped from a spring spike back to pre-war levels before this latest flare-up pushed it back toward $86.

The real move is in gas: TTF (European) is up +98% YTD and JKM (Asian LNG) has more than doubled at +116%, both driven far harder by Hormuz-transit fear than crude itself LNG cargoes are more exposed to a chokepoint closure than diversified crude flows. Counter-intuitively to most, but not readers of , U.S. Henry Hub, insulated by domestic supply, is actually down YTD 20.5%! (Co-production dynamics which have been discussed at length).

Of further interest, is that despite the clearly bullish news for Uranium as a strategic resource, SPUT (U.UN) is also down YTD and down over 10% over the prior 3 months. I prefer using SPUT as a proxy for the spot market here as it gives more insight into retail sentiment than the UX1 futures.

Cheap Producers, Different Grades

I’m known for my fondness for buying royalties and toll-booths, yet in the Crassus Investments portfolio I have no specific mandate. Circumstances being what they are, and being well-stocked with royalties in The Royalty King Portfolio, I’ve been searching through the cheapest quality claims on a barrel I can find. Here’s how four names on my radar stack up right now. Only two of these are genuinely vertically integrated; the other two are pure-play upstream optionality, and that distinction matters for anyone looking to hand around in this sector for a while.

Shell (SHEL) — Integrated. Full chain: upstream, refining, LNG and an in-house trading unit. Trading IMO ~8x fwd earnings, ~3.5-4% divvy and running an active $3bn buyback tranche through July. Just added ARC Resources to the upstream book. This is the “quality when cheap” case in its purest form: a diversified major at a mid-single-digit multiple with capital returns running hot.

Petrobras (PBRA being my preferred share class) — Integrated Brazilian SOE. E&P plus ten domestic refineries plus distribution. ~6-7x earnings, yield bouncing 5-9% depending on distribution timing. A $109bn 2026-2030 capex plan, but PBRA has demonstrated a quality of capital investment that’s severely under-rated. In fact, you may be surprised to learn that PBR’s return on capital has far exceeded that of Exxon (XOM) — Uncle Rick’s benchmark for the sector (shh, don’t tell him!).

With elections in Brazil this year, a political cloud sits over the multiple re-rate.

Harbour Energy (HBR) — Pure-play E&P Not integrated, but so cheap I had to buy! North Sea plus new US Gulf and Argentine barrels post-LLOG M&A. IMHO the most important number is their 2026 FCF guidance, which just got revised from $0.6bn to $1.4bn on higher realized Brent/gas, implying a P/FCF approx 2.5x current run-rates and a trailing yield north of 6%. This is a leveraged-to-the-commodity price name, it’s been a while since I bought such a speculation but it’s so cheap I had to make it a small-but-meaningful position.

Given Argentina lost to Spain and I now owe a visit, the cashflow from HBR should suffice. He may also wish to look at this due its market cap being only 4.2 Billion GBP.

PetroTal (PTAL) — Pure-play E&P Small-cap Peruvian producer. ~$280-370m market cap, nothing other than a wickedly cheap barrell-pumper.

It’s cheapest of the 4 at prima facie but the smallest, least liquid, and most binary of the four given there’s a ton of risk: single-basin, single-pipeline export risk, landslides affecting their platform, Peruvian politics etc. etc.

However, at <0.66 BV, no net debt and positive net income (just), technically there’s an argument to be made that this is a net-net that’s —strangely— also an inflation beneficiary over the short term.

Bottom line: Shell and Petrobras are well known and have been good to me.

Vertically integrated, diversified cash-generative majors trading at multiples that don't reflect their balance sheets. Harbour and PetroTal are cheap for different reasons: real FCF inflection in Harbour's case, pure optionality in PetroTal's. All four benefit from the current risk premium, but only two of them keep the thesis intact if Hormuz calms down again.

To be successful, all great managers must adapt to the state of play. Today’s note was to update you on my recent additions to the team and slight moulding of the short-term tactics. Hopefully I’m a little more versatile than Scaloni, but then again, it’s easy to criticize.

As for TRK and TCC portfolios, nothing has changed there in terms of philosophy. I continue to hold quality royalties and exchanges and am practicing intelligent inactivity.

If you’d like access to my valuation and pirce targets for the above names and all the stocks I follow — become a premium member today. At only $125 yearly, that’s literally 35 cents per day! I mean — Come on!.

Until next time.

— Benjamin

How to enter — each action counts as one separate entry:

1. Restack this dispatch on Substack Notes

2. Share it on Notes with a comment — a line on what stood out, agreement, disagreement, all valid

3. Quote-share on X, tagging @TheRoyaltyKing

Disclaimer: This publication is intended solely for documenting my personal journey with trading and investments for income and travel purposes. I am not a certified financial advisor nor am I a financial professional and none of the content provided should be construed as investment advice. It is essential to conduct your own thorough research and consult a registered financial service provider for appropriate guidance. I cannot guarantee the accuracy or completeness of the information presented. Any actions taken based on the information shared in any of my work are done at your own risk and discretion. The author may hold positions in the assets mentioned.

In Proud partnership with The Solstice Laboratory — the physics of markets, quantified. Read The Entropy Trap to discover what physics knows the economics doesn’t.

All the disciples of Benjamin Graham agree that his central investing tenant could be boiled down to buying $1 of value for a lot less than $1. While they all differed slightly in their applying of his ideas, the common starting point was a prospective investment’s balance sheet — an analysis of which could determine whether something might be trading at less than its book value (BV) calculated simply as:

Assets - liabilities.

For one disciple in particular, Walter Schloss, this was often where the analysis ended. He famously paid little respect to earnings, very much in contrast to The Oracle Of Omaha yet he went on to boast one of the best records on Wall St and amongst his group of Graham-Newman alumni.

His approach was so simple, yet he outperformed the index over the spans of decades and put up over 30% annually during the vicious inflationary decade of the 1970s. As he saw the world:

“…those companies with large book values in relation to market prices offer the stock holder the greatest rewards…”

The rise of value investing’s popularity has meant that ex-Japan, there really aren’t many, if any true net-net opportunities available in public markets and this has been the case for some time. There are however, some attractive opportunities to buy high quality at a discount to its BV.

Where Net-Nets are really more of a short term liquidation strategy focused on buying opportunities for less than their net current assets, book value takes into account the longer term assets like property, plant and equipment and future projects that, whilst current non-cash generating, will eventually contribute to company earnings.

I actually consider the discount-book approach a superior approach as it’s simpler to perform and is far less reliant on a liquidation event or inflection catalyst in earnings. When applied to companies with no net debt and an ability to grow the business’ book value, a patient investor can expect to earn a healthy rate of return over time. A proven example is Urbana Corp which I wrote about recently

At time of writing, I find myself in the rather unusual position whereby 3 of my largest holdings currently trade at at a significant discount to their Book Value (BV) and have no net debt and produce cash.

These 3 musketeers are: FRMO, Urbana and Dundee Corporation (DCA) which is the focus of today’s piece and is currently trading at less than half its book value and less than half its 2026 EBITDA!!

HISTORY

To understand why Dundee trades where it does, one must understand what the name meant in 2011 and how it had been considerable hampered by 2019.

The rise.

Ned Goodman was a Montreal kid who trained as a geologist before adding an MBA and a CFA, a combination that basically didn't exist in 1960s, which became his edge: he could read a drill report and a balance sheet.

In 1967 he co-founded Beutel, Goodman & Company from which an impressive amount of talent sprung: namely Seymour Schulich of Franco-Nevada fame. Ned’s big breakthrough came via financing International Corona Resources, the junior that drilled off the Hemlo gold camp in Ontario in the early 1980s and then spent most of a decade in what would became a legendary litigation case LAC Minerals v. Corona. Interestingly, Corona won the Williams mine back from LAC on a breach-of-confidence claim that's still taught in law schools today.

Fast-forward to 1991 and Corona was organized into a vehicle named Dundee Bank Corp. Through the 1990s and 2000s the crown jewel was DundeeWealth, the public wrapper around Dynamic. Dynamic in the late 2000s was arguably the hottest fund family in Canada with one of Ned’s sons, David, running it.

In 2007 the Bank of Canada was caught holding asset-backed commercial paper and had to be sold to Scotiabank in the crisis yet in late 2010 Scotia bought all of DundeeWealth in a deal worth roughly $2.3 billion and closed in early 2011. Dundee Corporation walked away with a mountain of cash and Scotia paper, plus it retained a piece of: Dundee Realty (which became DREAM) Dundee Capital Markets, and the Dundee Precious Metals position that Jonathan Goodman (another son) had converted from a closed-end fund into an actual operating gold miner.

Ned at that point was routinely called Canada's Buffett, had a business school named after him at Brock, and had roughly a billion dollars of redeployable capital and total credibility. It’s unlikely he knew it at the time, but this was to be the zenith.

The fall.

Ned had a macro conviction: fiat debasement, the death of the US dollar, hard asset inflation (sound familiar?) etc. Post-2011 he allocated heavily but into operating businesses in fields outside his original specialty in mining + finance. Dundee bought into numerous and varied businesses, which included: Casinos, agriculture, hydrocarbon exploration and even biotechnology just to name a few. At one point the org chart had something like a hundred entities.

Having tempted fate, almost all of it went wrong at once. The businesses consumed capital, management attention was spread across industries nobody had experience in, and the 2014–15 commodity bear market hit the resource book simultaneously. Ned's health forced him to step back around 2013–14; David took the CEO chair and initiated an unwinding of the assets. Book value, which had been in the high teens per share, ground down toward the low single digits; the stock, which traded north of C$17 in 2014, bottomed under a dollar by 2019–20.

Ned died in August 2022, and the obituaries had to hold both truths: one of the greatest capital allocators Canada ever produced, with a final act that destroyed most of a fortune. I can’t help but re-iterate the importance of business models here as it appears the good times at Dundee coincided with financing mines — the bad with operating them.

Don’t Call It A Come-Back — The rebound.

Jonathan Goodman was named CEO in 2018 and he channeled his inner Javier Milei by ruthlessly cutting anything the was non-core Afuera!

The last of the failed ventures was finally sold in 2025 and now the company resembles that of the ‘90s. Which is why I’m now interested and invested.

The balance sheet is now clean, the company is earning again from core operations. There’s still time for a rebound to end the decade successfully, the question is, can Jonathan rise to the occasion and seal victory like Enzo Fernandez did two days ago for Argentina in the world cup?

Valuation

Uncle Rick is a long term friend and co-investor with the Goodmans and he taught me that the easiest money to be made is when something goes from being hated, to merely tolerated.

The base investment case therefore would be DCA simply re-rating to fair value of its assets, implying a 100% upside from today’s price of $3.61 CA.

The more interesting question is, what might it be worth in success mode?

This is very much a Walter Schloss situation.

The company holds approximately C$194 million in cash. Its portfolio of mining equities are a mix of public and private assets purportedly worth ~$6.55 per share.

Against a C$3.61 price, that is 55 cents on the dollar.

The floor. Roughly C$2 per share of the C$6.30 is cash. That is the sub-basement. For the shares to be worth less than that, management would need to spend the cash destroying value — which is precisely what the old Dundee did and precisely what the new one has spent seven years proving it will not.

The base case requires no imagination at all: the assets are simply worth what they are stated to be worth, the discount closes, and the shares double. I do not need the discount to close to be interested, but it is worth being honest that this is the entire base case — a re-rating, nothing more.

Success mode is where it gets interesting, because there are three engines and they compound on each other.

The first driver is the buyback. Every share Dundee retires at C$3.61 removes a C$6.30 claim from the register, roughly C$2.70 of value transferred, silently and permanently, to the holders who remain. The company is doing to its own stock what Walter Schloss did to the market for five decades: buying dollars for half price, over and over and over again.

The second is the portfolio developing. Magna faces a Levack restart decision in the second half of this year. Saturn's Apollo Hill and Ausgold's Katanning are both marching toward development milestones. New Found Gold is ramping up. None of these need to work for the base case. Any of them working feeds the third engine which is growth of the assets leading to compounding of the BV.

Putting modest numbers together. Suppose book value compounds at 12% for three years and buybacks alone contribute half of that, so this assumes only mild success from the portfolio. Book reaches roughly C$8.90 per share near the decade’s end.

Remarkably, if the market never changes its mind and DCA remains hated yet continues to execute well, the combination of buybacks and portfolio compounding still produces a double-digit annual return. The re-rating is a kicker, not the cornerstone of the thesis.

Schloss paid little attention to earnings, held no meetings with management and really only cared about a large book value in relation to the market price, a clean balance sheet, and time. Dundee today offers all three: 57 cents on the dollar, no debt at the parent, and a management whose principal capital-allocation activity is exploiting the very discount you would be buying. If a business is worth a dollar and I can buy it for 57 cents, while the company itself buys alongside me at the same price, something good may happen to me.

I hope it happens more than once.

Until next time.

— Benjamin

How to enter — each action counts as one separate entry:

1. Restack this dispatch on Substack Notes

2. Share it on Notes with a comment — a line on what stood out, agreement, disagreement, all valid

3. Quote-share on X, tagging @TheRoyaltyKing

Disclaimer: This publication is intended solely for documenting my personal journey with trading and investments for income and travel purposes. I am not a certified financial advisor nor am I a financial professional and none of the content provided should be construed as investment advice. It is essential to conduct your own thorough research and consult a registered financial service provider for appropriate guidance. I cannot guarantee the accuracy or completeness of the information presented. Any actions taken based on the information shared in any of my work are done at your own risk and discretion. The author may hold positions in the assets mentioned.

The Royalty King Report

Hawaiin Electric Industries Inc | HE

The Investment Case Recapped.

The setup in HE provides a rare chance to own a perpetual asset which enjoys a monopoly position providing electric power to the state of Hawaii at a double digit yield on cost for the patient investor.

Such an opportunity has only presented itself as a result of the Maui wildfire disaster in 2023 which, long-story-short, resulted in HE settling to pay $1.99 Billion and its stock tanking in reaction to the news.

The reader can get up to speed here:

What’s New Since Then?

A good deal, and nearly all of it positive. In April 2026 the company made the first of four equal annual payments of roughly $479 million and the rating agencies noticed: Moody's lifted the utility’s credit to Ba1 and the holding company to Ba2, one notch below investment grade.

More important for what the business earns, the company filed a rate rebasing in March 2026 which should add $170 million of additional annual revenue, a 5.3% consolidated increase phased across 2027 and 2028 and then locked to 2032. Simply put: rebasing here refers to an increase on the equity base on which HE can earn its allowed return - think of it as an increase in total potential future revenue base.

The quarter’s return on rate base was softer, coming in at 6.5% vs its allowed max of 9.5% but overall the story is turning ever more positively.

In fact, readers might be surprised to learn that HE’s stock price has actually risen over 27% on a year-on-rear basis.

A note before we continue: this month I'm comping one reader a full 12-month premium subscription. Entry is simple — restack this article, or share it on Notes or X. Every share is an entry. Full mechanics at the bottom of the piece.

Share

Macro - Economic Considerations

A strong dollar — which I expect in the short term— tightens conditions worldwide and hits the big, low-yielding names hardest. The broad market looks expensive, yields are near lifetime lows.

So where to hide? In something boring and cash-generative, with customers who show up no matter what. A regulated utility fits: in a downturn people delay certain purchases but they don’t unplug from the grid. The catch is that the payoff in this case is deferred. HE pays nothing today. It’s a high-yield idea whose toll is patience, not dollars. That’s the whole thesis and not only is it insulated from a weak economy but also from inflation as it has a regulated allowed return on equity which enables it to pass-through any increase in its input cost (which is largely diesel) for power generation.

Monopoly Moat

Hawaiian Electric supplies about 95% of the state's electricity across grids that are physically isolated island by island; there’s no neighbouring utility to import from, no way to replicate the wires, no way to abandon them. This enviable position is why I refer to their assets as perpetual because they would remain of the utmost strategic importance even in the event of a bankruptcy. A litigation cloud is a thing that lifts. A monopoly is a thing that does not. Looking past the fog of the near term and valuing the opportunity looking 3-5 years out is the modus operandi. It’s easier to visualise the opportunity through the looking-glass of the equity yield curve.

The Equity Yield Curve

The idea is elegant: Just as the bond market has a yield curve that ordinarily slopes upward, paying you more for the risk of a longer wait, so too does equity — only the equity curve is far steeper. Go out three years+ and you routinely find implied rates of return of 30% and beyond. Why should that be? Because the professionals who run most of the world's money are judged on a twelve-month clock. A reward that is four years away, to those managers, has little utility because it will not feature into the calculation of their yearly bonuses. The equity yield curve is simply a picture of that collective aversion to time. It is a map of the discount the crowd hands you for being willing to wait when they are not. Hawaiian Electric’s peculiar regulated returns and knowable rate base makes it a good candidate to run through the equity yield curve lens.

So let me draw the curve for HE specifically, underwriting the utility at its full allowed 9.5% return on equity and updated rate base. The four settlement instalments run through April 2029; the last one clears, and the curve inflects.

Valuation

Read more

The US Dollar

A rising dollar has taken away much of the mirth felt in market sentiment at the start of the year. A rising dollar acts as a sponge soaking liquidity out of global capital markets and softens demand for commodities all things being equal. I remember the FED’s aggressive rate hiking from a low base effect in 2022 coming out of COVID cause the DXY to spike circa 20% in quick succession, which lead to severe stress on broad indices like the SP500 and the foreign exchange markets, particularly emerging nations with US denominated debt — 2023, the following year was the year to travel to peso-countries!

I recommend this video from for further explanation to the mechanics of the above:

Gold.

Much ado about Gold’s recent price slump, down 1.8% YTD, yet the fact that it’s up 21% over 12 months YoY (June 30 2025 – June 30 2026) seems lost on many market pundits.

My base case is that Gold has, at most, 10% downside from here before continuing its march upwards and to the right. This is most likely a cyclical downturn in a secular bull market. The dollar is being blamed, but I think China’s stemming of liquidity injections to slow its domestic oil consumption has been more influential in Gold’s price weakness (and that of Oil).

Energy

Oil (both WTI & Brent are basically on par) up ~21% YTD, yet despite the most significant threat of a supply shock in 50 years, a barrel sells for only 9% more than at this time last year, while Nat gas is down 5–8% over the same period and -18% YTD

A better advertisement than the above for owning businesses whose pecuniary interests in the commodities above are expressed through a capital-light structure more attuned to volume rather than price could not be made. Royalties & Streamers and the associated land owners continue to be my preferred investment exposure to these fields.

On Natgas: important to note that the market is not really pricing in / believing the estimated additional sources of demand coming online over the next 2 years.

Data centres have made the news here, but the numbers show this is immediately an LNG export story: 5 Bcf of added demand by ‘28, with the expected 4–8 Bcf additional annual demand from DC slated towards 2030.

Here’s my back of the envelope economics as of today, using a blend of the Energy International Association’s (EIA) STEO (Short term energy outlook) and its Annual energy outlook (AEO).

For the more verbal among us:

Land & Water

The best performing of my 4 pillars of investment themes so far this year. Including but not limited to the names shown below:

Exchanges & Croupiers

By far the most controversial pillar of my themes so far this year, with bell weathers having drawn down in the double digits YTD on the back of fears of perpetual contracts disrupting their futures and derivatives franchise.

I repeat my view that ‘perps’ are not a serious threat to large institutional capital who need a deep, liquid and regulated exchange through which to place their future hedging needs for currencies, interest rates, energy etc. A contract without an expiration date is of little use for hedging purposes and no sovereign wealth fund is likely to be foolish enough to entrust its capital to an unregulated exchange.

Personally I am using the opportunity to add to my croupiers: especially those exchanges and asset managers trading at double digit free cashflow yields — traditionally an anomaly and amusing that such a price decline would occur after many of them just reported record revenues.

Media

ICYMI — I really enjoyed this video with Mickey Maini. A pioneer in the field of econo-physics and family office investor. He explains his models and how we are likely on the verge of a new monetary system incoming over the next 3-5 years.

Any questions?
DM me or comment and I’ll address them.

Take Care out there.

Benjamin

Disclaimer: This publication is intended solely for documenting my personal journey with trading and investments for income and travel purposes. I am not a certified financial advisor nor am I a financial professional and none of the content provided should be construed as investment advice. It is essential to conduct your own thorough research and consult a registered financial service provider for appropriate guidance. I cannot guarantee the accuracy or completeness of the information presented. Any actions taken based on the information shared in any of my work are done at your own risk and discretion. Past performance is not indicative of future results. All investing involves risk, including the potential loss of principal. There is no guarantee that any investment strategy, including those discussed here, will achieve its objectives or generate profits. You should carefully consider your investment objectives, risk tolerance, and financial situation before making any investment decisions.

In Proud partnership with The Solstice Laboratory — the physics of markets, quantified. Read The Entropy Trap to discover what physics knows the economics doesn’t.

How does a shell company with gold mining claims become a publicly-listed investment fund whose founder enjoyed the “trade of a generation” - witnessing his privately held exchange seats convert into publicly listed shares of some of the most desired assets in the world?

That is the story of URBANA CORP [TSE: URB & URB.A] and its founder and talisman Thomas S. Caldwell. In 2002 Caldwell, the former governor of the Toronto Stock Exchange (TSX) and 2nd largest owner of the New York Stock Exchange (NYSE) turned the shell corp — Macho River Gold Mines Ltd— into a public vehicle. His motive was simple: exchanges were converting from members' clubs into for-profit corporations and were the great toll-booths of modern finance. He rode the demutualisation wave through New York, London, Toronto and Chicago. Two decades on, Urbana no longer just owns exchanges — it builds them.

Side-note: Urbana still owns the original gold mining claims — 44 of them to be exact.

Mr Caldwell remains the chairman of the Canadian Stock Exchange (CSE), the crown jewel & largest holding in Urbana’s enviable list of assets. And if you’ve never heard of the CSE, that’s because its shares are not publicly available — the only way to acquire them is on a look-through basis by buying Urbana’s stock.

Urbana is almost certainly the most interesting and obscure holding in The Croupier Collection.

The Croupier Collection, it will be recalled, is a portfolio I created for long-term investing in financial exchanges, brokerages & asset managers. The underlying rationale is available via the original white paper I wrote alongside Navarro here:

Urbana is a rare coincidence of two factors I look for in my investments: owner-operators and a superior underlying business model.

The Caldwells, Thomas & son Brendan, jointly own 55% of the stock and their holdings mainly consist of arguably the greatest business model there is: securities exchanges.

What makes businesses like exchanges and royalties so great as investments?

The market in its myopia routinely overlooks the value of a business with the ability to originate an asset and walk it through a value-accretion process. Even better when this takes place inside a vertically integrated structure the company owns and controls as it can lead to truly superlative returns. In royalty Co.s, this prospect generation; where the royalty company stakes the land, does the early exploration, then sells the deposit to a JV development partner while retaining a Net Smelter Return (NSR) for itself. The company manufactures the royalty rather than buying it.

A constructive example is that of Altius minerals who sold a 1% royalty on Silicon/Merlin to a Franco-Nevada subsidiary for $275M and kept a further 0.5% — implying ~$412M for the whole royalty it had generated for roughly $300,000. That’s ~1,375x, or 106% ARR.

Urbana does a similar thing by incubating exchanges — staking, building and then helping them go public as seen with the likes of MIAX. A prospect generator manufactures royalties; Urbana manufactures exchanges.

It’s easy to overlook Urbana’s ability to develop quality private businesses and bring them up the value chain and most market participants do. Urbana’s track record includes:

• CSE (CNSX): ~$14.5M cost → ~$100.7M fair value = ~6.9x

• Blue Ocean: ~$13.6M cost → ~$76M fair value = ~5.6x, a ~459% gain

These are the private valuations as agreed by their auditors, yet one can expect further gains from the multiple expansion they occurs when a business goes from private to public.

To give an example of how mis-priced the private assets might be, another holding, TETRA, had its valuation reviewed for financing purposes and as a result was marked up such that its new valuation added 45c worth to the entire stock’s NAV.

Incredibly, such quality is available today for purchase at an estimated 43% discount to its fair value. Upon closer inspection, the discount may be even greater if one is willing to do the valuation work on the potential of the private assets held.

Naturally the question arises: How is it that such quality is available at such a low price?

This is likely due to half of their assets being private and hence analysts are clueless as to how to value them.

Additionally, Urbana is considered — perhaps unfairly — as a passive holding company, with such a stigma often penalizing an investment firm and leading to their stock trading at a discount.

Both the aforementioned factors are likely to lead to Urbana trading at a discount to NAV for as long as it’s considered a closed-ended investment vehicle. However, this doesn’t impact URB’s ability to grow in the slightest as is supported by their 5 year track record of returning investors 23.5% CAGR.

Add in a new buyback program and the chance for several windfall opportunities from the future IPOs of the private holdings and the case for URB becoming the number one holding in the croupier collection is compelling.

So, what’s it worth today? And what could it be worth in the future?
Let’s find out.

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The answer he got is roughly two thousand years old. Divide your wealth into three. A third in land, a third in commerce, a third kept ready to hand. Land endures. Commerce compounds. The reserve is the part that stays yours in any weather.

I have run my portfolios on that rule for years. But the rabbi lived in a world where the only energy was burning wood, so I have added a fourth pillar he could never have priced — energy, the minerals and molecules that now decide who dominates the century. Four pillars. And beneath all of them, a single question I return to like a metronome: “who gets paid?”

Today I am putting the whole thing down in one place — the philosophy, the four pillars, and the twenty-five highest-conviction names that express them, each with a base, a bull and a bear case, probability-weighted. It begins with an Italian nobleman fleeing a vengeful Pope with everything he owned thrown into a single saddlebag, and what that tells you about the difference between wealth you can hold and wealth you only think you own.

What’s behind the paywall?

The full deck. Not a model portfolio handed down from on high, but the actual book, built to be adjusted as the world moves and earnings land:

- The five-year assumptions I’m underwriting: gold, silver, bitcoin and the rest and what happens to every target when you change them

- A crypto-treasury situation trading for the value of its cash with the coins thrown in for free. A potential 15x or more in success mode.

- The land-and-water book, including a name screening at roughly a double on its own NAV

- Why a single exchange ranks first on a blended basis and the toll-booth test a business has to pass to earn my capital

- The energy trust I’ve turned aggressive on: a ~$2 downside against a ~$28 bull case, and why the market has the story backwards

- Viper, Uranium Royalty, PrairieSky, Altius and the rest of the basket

For **$125 a year** you get all of it, plus live updates as the numbers change. I share more of what I actually do — the positions, the valuations, the reasoning — than just about anyone I know of. If that has value to you, the door is open below.

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In Proud partnership with The Solstice Laboratory — the physics of markets, quantified. Read The Entropy Trap to discover what physics knows the economics doesn’t.

No terminal year.

Such an idea makes a capital asset invaluable through the lens of traditional corporate finance models.

Today’s feature piece is one of my investments which is likely the quintessential example of a perpetual asset which, at least since 1888, has consistently “re-set the clock” on any NAV or terminal value calculation, as it has consistently found ways to achieve higher-end use cases for its main asset — land.

The fact that its land brings with it mineral and surface rights, right around the time when this exact combination is being sought after as the necessary ingredients of the next big rush — the AI / data centre movement — places the acreage owned by this once-bankrupt railroad at the epicentre of perhaps the most desirable location on Earth. You might say it remains invaluable — but in a different sense of the word.

Nonetheless, here I leave an honest attempt using a few different methodologies along with my remarks as to the accuracy / appropriateness of each.

By the way, from now on I am writing all my articles free hand, then uploading the photos to AI for transcription. Of course I’ll proof read the drafts but in case something gets lost in the process this may explain any strange typos.

Such a mammoth task is sure to fail in precision. This antipodean author accepts that from the outset, and is comforted somewhat by the words of Uncle Rick who once told me — on the topic of valuation — “You won’t get it right. But you don’t need to, luckily — you just need to get it more right than the next guy.”

Before exploring a number of valuation attempts for the “Grand-daddy” Royalty Co., a brief recap on this mineral-estate, because that’s a better lexical item to understand it; certainly better than “stock,” “business” or “operator.”

Executive Summary

Texas Pacific Land is not an oil producer. It is a perpetual royalty + surface + water enterprise on ~881,000 surface acres and ~224,000 net royalty acres in the core of the Permian Basin — the purest expression of our "who gets paid" framework in North American energy. Zero debt, $248M cash, an 86% EBITDA margin, and super-major operators carrying every dollar of development cost.

The Business — Four Tolls on the Best Oil Basin on Earth

Oil & Gas Royalties — 52% of revenue

Perpetual non-participating royalty across ~224,000 net royalty acres production volume grew 8.8→34.6 mboe/d ('18–'25).

Produced-Water Royalties — 16% of revenue

A volumetric fee on water disposed across TPL's surface — capex-free. Delaware wells produce ~4 barrels of water per barrel of oil and the ratio rises with field age, so this is a structurally growing annuity (volume 433→4,292 mbbl/d since '18) tied to drilling, not directly to price.

Water Sales — 21% of revenue

The one genuinely operating aspect: the largest source-water network in the northern Delaware. ~71% segment margin; volume mature (+4% in '25) but pricing strong (+16.7% YoY). Scaling cash engine.

SLEM — Surface Leases, Easements & Materials — 11% of revenue.
Easements and commercial leases with ten-year terms renewing at the greater of 115% or CPI — a quietly compounding, inflation-protected annuity (~+1.4% real per renewal cycle). $250M+ of renewal value sits in 2026–2035 before any next-generation use.

TPL, and its 881,000 acres of land in the Permian, are the result of a failed attempt to build a railway connecting Texas and California. The endeavour ended in bankruptcy, whereby the land was placed in a trust, the TPL trust, in 1888 — and for the next 130 years the trust did well, not much aside from lease its land and occasionally selling some acres — the proceeds of which were used to buy back shares.

This is not a minor point. In fact, it beautifully highlights how some assets and business models provide superior returns on capital in the fullness of time — as illustrated in the below chart.

Assets — that’s the key word. Because prior to 2016 TPL really didn’t actively manage or seek to maximise their various royalty fees.

RETURN / CAPITAL

TPL's main asset, land & mineral [+ water] rights, organically grow in value over time; though as from simple grazing leases to mineral royalties to commercial & residential real estate development to now data centres, this ascension up the value chain naturally increases the numerator (the return) without much effort or innovation from TPL and — critically — no commensurate increase in the denominator: the capital.

In fact, if the concept is viewed as Return on Capital, Stock or Equity, TPL’s astonishing returns are explained via the power of a naturally increasing numerator and an actively shrinking denominator.

This, in part, is what makes trying to put a number on TPL’s per-share value befuddling. When will the earnings roll-over? When will the Basin run-dry? One question will likely have little to do with the other, as TPL seems to find a new use-case for its assets every few decades, thereby effectively re-setting the clock on the Net present value (NPV) of its earnings.

As a result, using the NPV or DCF method isn’t ideal.

But equally unhelpful is that oft-cited figure PE or Price to Earnings.

Due to the fact that “earnings aren’t earnings.” There does exist a qualitative factor to earnings that is almost universally ignored by buy-side analysts.

Most apparently struggle with this concept let’s explore a simple example visually.

Imagine Company A has an average (and repeatable) net earnings margin of 59% compared to that of company B which is 7.7%.
In other words; for every $1 of earnings company A’s shareholders enjoy 59 cents free and clear, whereas company B — due to capital reinvestments required to run and grow the business — only leaves 7.7 cents for its shareholders after all costs are accounted for.

Intuitively, it’s not challenging to grasp that Company A’s earnings at 54% net margin are worth more than $1 in earnings each $1 of Company B whose margin is 7.5%.

Yet, this is absent discussion when experts scan across the universe of various companies and simply compare one PE ratio to another without consideration for the % of said earnings that can be enjoyed by the investor.

It never ceases to amaze me how many experts would consider Company B “obviously much cheaper / better value” trading at 12.8× vs Company A at 60× fwd EPS, without considering that — all else being equal — the margin ratio above would actually expect a P/E of 101× for A, when calibrating for earnings quality or how much of the earnings actually reach an investor.

The relevance?

* Company A is TPL and B is XOM, using latest figures.

As polemic as this idea is perceived, let us press further into the incredulity the reader is likely experiencing.

One can reframe the above numbers through a number of different lenses using mathematical ratios.

Method 1 — P/E per margin point: TPL: 55.7 / 59 = 0.945× XOM: 22 / 7.5 = 2.93×

Lower = cheaper per unit of earnings calibrated for quality.

Method 2 — Calibrated P/E: At XOM's pricing, margin-parity would put TPL at 22 × 7.87 = ~173×. TPL at 55.7× or at 32% of margin-adjusted parity — a 1 : 3.1 ratio.

The above is not intended as a comment on the attractiveness or lack thereof of TPL’s headline PE ratio, but rather an illustration of how inappropriate it is to compare two sector ‘peers’ superficially via their headline PE and conclude one is automatically cheaper/more expensive than the other.

Our excursion thus far has hopefully impressed upon the reader that trying to attain a reasonably accurate valuation for such an asset is far more complex than it first appears & is unlikely to be achieved by this attempts to force TPL’s financials through a procrustean bed of standard corporate finance models.

Yet the question remains: How then should TPL be valued?

The answer is simple in theory: Build a bottom-up NAV for every aspect of the business then apply a reasonable growth factor (Which is not so simple thanks to the perpetual nature of the assets as mentioned).

Harder in practice and certainly to make me look foolish with time. Nevertheless here’s my take:

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Market Musings

Gold

As I wrote in compendium VIII in March - It’s all about liquids and liquidity- the west appears to be experiencing liquidity pressure. Now it appears the Chinese may also be reducing the rate at which they are allowing liquidity to expand inside their economy.

This is important as I share Michael Howell’s view that eastern, not western, debasement has been doing the heavy lifting of the gold price over the past year. I won’t share any of Mike’s charts as I’m not sure what is or isn’t behind the paywall, but I encourage readers to subscribe to his work where you will see two things: The gold price following measures of Chinese liquidity and said liquidity growth now tapering after an explosive growth rate in the last 12 month.

A very crude and imperfect proxy is supplied below using Chinese M1 growth and gold bullion

Energy/Oil.

I remain astonished at the complacency of markets and the everyday citizens with regards to the potential for an energy crisis given the complete mis-match of acceptable outcomes on the lists of the three main parties involved in the current conflict in the Permian Gulf.

Assuming the below is accurate, traffic flows are currently at ~5% of normal flows. Pre-conflict flows were responsible for an estimated 20 mm BBls/day of total oil exports or circa 25% of the maritime oil trade globally.

Pre-crisis, the IEA had global oil supply at 107.4 mb/d in December 2025, with world supply projected to rise by 2.5 mb/d this year to 108.7 mb/d.

The EIA now assesses that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut in 10.5 million barrels per day of crude oil production in April, and they expect shut-ins to peak at nearly 10.8 million b/d in May as storage levels reach maximum limits.

Ergo my take is that effective global production right now is roughly 97–98 mb/d compared to to 104 mb/d of demand consumption.

Floating storage inventory numbers appear to validate my view that markets are sleep-walking into a spot of bother given that world floating barrels are down to 87 million from 146 million in March according to the below.

I have a (highly simplified) scorecard that currently reads: ~97–98 mb/d supplied (≈108 baseline less the ~10.5 shut in) against ~102–104 demanded, producing the EIA's ~8.5 mb/d inventory draw. Against that draw, the 8.2bn barrel total stock gives a gross cushion of well over two years (~130+ weeks), but that's misleading as most is unusable working/pipeline volume, so the genuinely drawable surplus is the binding constraint and runs more like a few months before tank-bottoms and operating minimums bite.

This, I suspect is what the EIA is referring to in their below statement.

“We expect global oil inventories will fall by an average of 8.5 million b/d in the second quarter of 2026 (2Q26), keeping Brent prices around $106/b in May and June. As oil production in the Middle East rises, we expect crude oil prices to fall, dropping to an average of $89/b in 4Q26 and $79/b in 2027”.

— https://www.eia.gov/outlooks/steo/

Positioning

I came into 2026 with ample liquidity and at ~66% cash (which includes bullion). I enjoyed being criticised in the comments on my interview on VRIC, when I stated that I was keeping my profits in bullion and rotating the initial seed capital into more Royalty investments both in metals and energy — readers can judge from the below performance chart as to who was correct.

My main investment themes have not changed, I’m simply adding aggressively towards royalties in metals and energy via options tactics that allow me to get leveraged (sometimes 100x) exposure. Same thing with exchanges.

You can see every trade in .

One sector to which I have returned after a few years absent is the Uranium sector. My positions here I consider speculations: BOE, PEN, LOT, ASPI and YCA.

Given they are speculations they are not tracked in the Royalty King nor Croupier Collection Portfolios.

That’s a lot to consider hence I’ll end this compendium here.
Post your questions in the comments section on things you’d like me to review.

Take Care out there.

Benjamin

Disclaimer: This publication is intended solely for documenting my personal journey with trading and investments for income and travel purposes. I am not a certified financial advisor nor am I a financial professional and none of the content provided should be construed as investment advice. It is essential to conduct your own thorough research and consult a registered financial service provider for appropriate guidance. I cannot guarantee the accuracy or completeness of the information presented. Any actions taken based on the information shared in any of my work are done at your own risk and discretion. Past performance is not indicative of future results. All investing involves risk, including the potential loss of principal. There is no guarantee that any investment strategy, including those discussed here, will achieve its objectives or generate profits. You should carefully consider your investment objectives, risk tolerance, and financial situation before making any investment decisions.

Buy-Side Research For The Croupier Collection

A new wave of investment interest in Brazil appears to be gathering momentum since 2025. Among the driving factors resides one most curious — Brazil is one of only two major nations in the entire globe currently offering a positive real interest rate (the other is Mexico).

With an official inflation rate of 4.14% and the Brazilian 10 year yielding 14.29% that’s an unprotected real yield of circa 10% while an indexed bond, or Tesouro IPCA+, guarantees an inflation protected yield of 7.8% - albeit denominated in Reais.

Brazil has featured many times and in various ways in this publication. Towards the end of the year 2024 I was particularly vocal about what I considered a highly compelling set up for those with a 2 year+ time horizon. The reasons were simple in that; a) The stocks had sold off heavily thanks to Government policy leading to a brutal drop in the local currency and b) Such circumstances were highly likely to improve in the event of a change of government in Brazil if only one had the foresight and patience to wait until the October of 2026.

Flávio Bolsonaro—son of former President Jair Bolsonaro—has closed a 23-point runoff deficit against the incumbent president Lula in four months, tying him in the March Quaest poll at 41%–41%. Prediction markets, which are often more reliable than polls, give him a 41% implied win probability versus Lula's 36%.

With Bolsonaro running on a campaign of fiscal conservatism the market would likely reward Brazilian stocks with a re-rating in the event he is victorious in October.

Rather than speculating on who will win the election, perhaps a more interesting question for investors is “how to gain investment exposure to Brazil’s promising growth story through vehicles that can survive and thrive regardless of who’s in government?”

That question can be answered simply via: Exchanges, brokerages and clearing houses who enjoy what I’ve dubbed positional or structural alpha.

The major Brazilian exchange is the Brasil, Bolsa, Balcão (B3), which is also likely to be the pre-eminent exchange exposure to Brazil, however foreign investors will need to apply for special trading permissions to purchase the shares.

Requiring no such extra step, is the subject of today’s piece and IMHO one of the most promising, quality business models in all of Latin America today. The business is best thought of as a combination of an exchange platform and ancillary wealth management and brokerage services. Or, if you prefer, Brazil’s version of Charles Schwabb. It is a financial marketplace that has compounded client assets at a 20%+ CAGR since 2020 while maintaining 30% EBT margins and is currently trading at an astonishingly cheap NTW free cash-flow yield of 29%.

The XP Story

XP inc. (for X-Perience) was born in Porto Alegre, May 2001 when founders Guilherme Benchimol and Marcelo Maisonnave set about addressing a conspicuous gap in the market: accessible, low-fee investment options for individual investors were scarce.

They began with an initial capital of around R$15,000, ($2,100 USD) and Benchimol personally contributed by selling his car and securing loans to fund the early stages of the venture. You love to see a good old fashioned bootstrapping as these owner-operator types tend to to outperform management of the ‘installed’ university-MBA types.

In the early days the company actually focused on financial education, creating courses and by 2006, the company ventured into asset management. In 2009 it expanded into insurance brokerage and in 2019 it successfully IPO’d on the NASDAQ at an implied Market Capitalisation of $14.9 Billion USD.

Quite the impressive journey for two Port Alegre lads who started with pocket change and a sold car!

Executive Summary

XP is a toll road on Brazilian financial disintermediation. It does not bet on markets, but rather collects a spread from R$1.53 trillion of client assets distributed through 18,300 advisors that competitors cannot easily replicate.

It operates across four segments: Retail (73% of revenue), Corporate Banking (17%), Institutional (7%) and miscellaneous (3%) that have the ability to feed each other and such a flywheel has enabled them to compound AUM at over 20% per annum since 2020.

Over the same period it has also reduced its share count by ~1.3% per annum and has exhibited a return on equity (ROE) of over 21% in each year. A trend which is likely to continue.

Investment Thesis

XP is a croupier of Brazil's financial casino, collecting a fee on R$1.5 trillion of client assets at a structurally stable 22% ROE. It is available today at half its 2019 IPO price despite tripling the business. Its current 3x NTW FCF multiple is too cheap for a business of this quality with much potentially lucrative optionality embedded for free.

A price target of $20 is placed as a bear case with a bull case showing $81 should things go right in Brazil over the next 3 years.

Price targets are the analyst's own model outputs, not guarantees — they are subject to material uncertainty across currency, macro, political, and competitive variables, and should not be relied upon as the basis for any investment decision.

Business Model

XP is not a bank in any traditional sense. It is an open-architecture financial marketplace and analogous to what Charles Schwab became in the United States.

The five incumbent banks in Brazil have historically charged among the highest spreads and management fees in the world. XP's original value proposition was simple and extremely effective: give Brazilian retail investors access to better products at lower cost and distribute the relationship through an independent financial advisor (IFA) network that bypassed the bank branch entirely.

Two decades later, that proposition has evolved into a self-reinforcing ecosystem: Retail (73% of revenue) covers both investments and financial services, Institutional (7%) serving asset managers and banks, Corporate & Issuer Services (17%) operates as an investment bank and Other (3%) captures the trading results.

Interestingly, each segment feeds the others; corporate issuances end up on the retail platform, while institutional order flow improves retail liquidity and a growing card and credit book deepens client stickiness. This is not an easy eco-system to replace or compete with.

The advisor network is the distribution moat that matters most and the hardest to replicate. With approximately 14,000 IFAs spread nationwide plus internal advisors and wealth services teams, XP has effectively built a franchised distribution army that holds client relationships independent of the XP brand itself. This type of initiative is wonderful for creating compounding. An analogy might be drawn to Abacus life (ABX) —another holding in the croupier collection— and their acquisitions last year which turn them towards a vertically integrated fee-generator model.

In contrast to ABX however, whose current model centres exclusively around acquiring and packaging life insurance policies, XP offers a wide range of products and services from retail banking to large corporate lending and insurance.

Valuation

For A full valuation and methodology of how the price targets are calculated become a premium member today.

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Don’t forget to grab your ticket to the Rule Symposium below.

Rule Symposium 2026

*Author’s note* Newer readers can get up to speed on the thesis behind my launching a seperate portfolio for financial exchanges and like businesses under the section ‘The Croupier Collection’ (TCC) in the home page. This whitepaper I wrote with is recommended reading.

The Croupier Collection is built on the premise that the best long-duration equity is a business that: earns a toll on human financial activity, is indifferent to direction, structurally sticky, and capable of compounding that toll as the underlying activity grows. By this framework, MIAX is an excellent candidate.

Executive Summary

MIAX is a multi-asset exchange operator. It earns a toll on every options contract, futures trade, and equity transaction that crosses its platform. It operates a variety of U.S. options exchanges, a futures exchange and clearing house, the Bermuda Stock Exchange, and — here’s one most have never heard of — The International Stock Exchange in Guernsey.

I bought Miami International Holdings (MIAX) direct stock, adding to my inderect ownership through various private partnerships, around its IPO in August 2025 at $23.00. I continued to add to my position over the following months, bringing my average cost basis to approximately $30.00. At the current price of ~$52.78, that’s a 76% unrealised gain in under a year acroos the holdings in Crassus Investments and TCC.

This belongs in the Croupier Collection for the same reason the CME Group and CBOE et al. are represented: the house always gets paid.

The differentiating factor relative to mature peers (CME, Cboe, ICE) is timing. MIAX is at the stage CME was in the early 2000s in terms of its growth runway. Investors who bought CME in 2003 at equivalent growth-adjusted multiples generated 70× returns over the last 23 years.
Compared the SPX index which went ~10.6x over the same period and one can’t help but be astonished that an unsung asset class could trounce what is commonly considered the economic bell-weather, sporting an alpha of 9.4% of annualised performance and yet witness such alpha be almost ubiquitously ignored by the broader investing public.

Interestingly, in the case of MIAX it appears that they are gaining market share against the incumbents.

Today’s piece is intended to be an informal commentary on earnings with a full valuation update available for premium members.

Q1 2026 Earnings - TheRoyalty King’s Remarks

Gross revenues grew 13%. Cost of revenues grew 2.5%. Operating income more than doubled. That is the exchange model working exactly as designed.

The keys to this model are volume, product proliferation and market share.

The increase in net-sales was primarily driven by their strong and growing options franchise with MIAX now holding over 17% of the US options market at time of writing.

MIAX options reached anaverage daily volume of 10.9 million contracts in the first quarter of 2026, a 26.6% year-over-year (YoY) increase!

Another noteworthy occurrence was the 90% sale of MIAXdx in January to a JV initiative of Robinhood Markets. Retaining 10% of the equity reminds me of a classic move out of the prospect-generator model.

Watch out for the addition of the Bloomberg index and its associated derivatives which shall be hosted on MIAX and promises to be a potential boon for the company.

All in all, MIAX showed revenue growth, margin expansion and market share gain and I couldn’t be happier with their performance since coming public.

Valuation

Given MIAX’s blistering entry onto the scene as the American exchange with the most growth potential on its — for now— small Market Capitalisation, what might a future share of MIAX be worth?

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“A cash flow positive net-net is a gift from God. It's like a bond with a negative cost."

—Rick Rule

Yesterday I enjoyed another insightful conversation with a mentor of mine, the legendary Rick Rule. In my podcasts I always aspire to provide novel themes and questions for my guest as I see no purpose in rehashing the basic themes that have already been asked of them - the internet abounds with this sort of content, which imho is more designed to eek out views thanks to the guest’s name rather than elicit truly meaningful insights.

I humbly believe I may have elucidated some themes which, to my knowledge, are not available in any of the many publicly available conversations Rick has generously agree to partake in. One standout segment in particular is where Rick teaches me step-by-step how to embark on a screening process to find a cashflow positive net-nets.

A net-net stock is a company valued by the market at less than its Net Current Asset Value (NCAV), or current assets minus total liabilities. Net-Net investing was pioneered by Benjamin Graham — the father of modern value investing— who was a mentor to Warren Buffet and looked for opportunities trading for <2/3 their NCAV.

As such, in today’s piece I’m running the playbook taught to me first hand by ‘Uncle Rick’ and sharing my notes with you fine folk.

If you haven’t listened to our conversation yet - see the link below, the feedback so far has been pleasing.

Firstly, some brief notes on my history investing in net-nets (and those discount-to-liquidation-value type plays):

• $GEO group - Prison/REIT traded at large discount to replacement cost throughout 2023 when I bought shares in the $7 range. Catalyst was a change in corporate structure (from REIT to corporation) which ceased the dividend but allowed them to pay down debt. The stock price reached a high of $35.10 in 2025.

• Transocean, Valaris et. al. Not all true net-nets for the sticklers would say the balance sheet would have disqualified them as such. Nonetheless they traded at ridiculous discounts to book value and has ample liquidity. I was vocal (and likely obnoxious) in my announcements of buying LEAPS on RIG coming out of covid in 2021 with the stock <$2. VAL in the $20s was obvious, although it tested everyone’s patience.

• NNDM - Disaster! Here I learned that at least when people rob you on the streets there exists some kind of recourse. Unfortunately in the stock market not so much. NNDM raised over $1Billion throughout the 2020-21 period as a SPAC ostensibly to roll up 3D printing and tech firms. The stock had something like $300 mm more in negative EV i.e; more cash than the price of the company, yet here I learned firsthand that bad management can derail even net-net opportunities. I sold at a ~30% loss a few years ago and, out of curiosity, I see that today it trades lower still; it’s still at a negative EV, with $400mm in cash yet in 2025 off a revenue of $100mm and I note with horror that management saw fit for SGA expenses to be $80 mm!!

You can avoid a similar experience by remembering the following from Rick in the podcast:

"It isn't enough just to do net nets. You have to do net nets that are either cash flow positive, which is to say they aren't declining, they aren't decreasing one net, or else are or about to be in liquidation so that you could realize it before they cannibalize themselves.”

Now just in case you’re wondering — no, I’m not changing the focus of this publication to net-nets— precious few exist in markets these days with the exception of perhaps Japan.

"If I wasn't 73 years of age, if you dialled me back to a 20 or 21 year old securities analyst working for Peter Cundill, he almost certainly would have assigned me to Japan and Korea."

So today I’m going to run the instructions from Uncle Rick for those who don’t have access to a Bloomberg terminal.

So, let’s begin.

“Anybody in your audience who has access to S&P Intelligence or Bloomberg can run a screen. Negative working capital plus free cashflow. You won't have to go looking for those companies, they'll pop up. Once you get your shopping list, what Bloomberg and S&P won't do for you is point out the unexploded bombs on their balance sheet. You'll have to do that for yourself.”

Using my TIKR terminal, I screened for the following across Korea/Japan:

1. Market Cap < 0.67 × NCAV + MC >$15mm USD

2. FCF (TTM) > 0

3. Bomb Defusal (manual review - sorry - no shortcut)

Many names came up, not all of which were viable and I’ll leave it to you to peruse the list, but let’s take one such example and review it - just for fun.

The Kaneshita Construction Co. Ltd. TSE: 1897

Executive Summary: The Kaneshita Construction Co.,Ltd. provides design, planning, survey, supervision, investigation, and construction civil engineering and architectural works in Japan. The company undertakes civil engineering works, including roads, tunnels, bridges, rivers, and water and sewage facilities, as well as road pavement, erosion control, port construction, and landscaping and construction works.

Why it passes: Kaneshita is a textbook net-net. The market has priced in permanent operating failure as the stock trades at 0.36× BV with a negative enterprise value of −¥11.5B. If one acquires the business at its market cap today, one immediately holds more than twice the cash you paid. The 5-year average FCF yield of ~9% satisfies the cash consideration. Zero debt satisfies the balance sheet question. A century of operating history suggests the "death by incompetence" scenario is unlikely, although they made a terrible unforced error in attempting to enter the restaurant business around COVID. This type of style-drift is something to keep an eye on, hopefully the lesson was learned.

Bombs to defuse: (1) Management quality (2) Insider/friendly shareholder control at 40–50% reduces involuntary delisting risk but also reduces pressure for capital returns. (3) Construction company balance sheets carry large receivables tied to progress payments. Those invoices better be reliable. (4) Land on books the most interesting aspect in my eyes, accounted for at historical cost (pre-1935) and likely substantially undervalued, which is a bonus, but who’s to say they realise this value?

The Royalty King’s Remarks

An investor in Kaneshita today, anticipating a re-rating merely to the stated book value is underwriting a potential 3x. That’s easy to grasp. What’s far more difficult is anticipating when Japanese equity multiples will revert to what westerners might consider fair value, say, 1xBV. You see the market multiple for Kaneshita has been this way for over a decade (below). One needs to be confident that the recent changes to Japanese securities law and the cultural incentives being encouraged in Japan for corporate transparency continue to permeate a market that has been dormant for coming on 4 decades. The other side of the coin is that at 9% FCF yield, one can afford to be patient in waiting patiently (and hopefully) for the value to be unlocked. In what would be an incredible plot twist, the hidden asset of the land owned might, for any number of reasons, be realised and drive a massive re-valuation of the balance sheet assets. However given the portion of shares and power held by insiders (and here lies the rub with Japanese equities) there’s little chance for an activist to catalyze such an outcome. At least in the near term.

Hopefully you enjoyed this detour and diversion.

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And before I forget - don’t miss out on Uncle Rick’s symposium for 2026.

Rule Symposium 2026

All the best.
Benjamin