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.

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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

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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.

If so, be sure to spread the word.

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

Rule Symposium 2026

All the best.
Benjamin

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

Rule Symposium 2026

In the winter of 2024 I became aggressively bullish and, I daresay, rather vocal on a sub-sector of the market that exhibited the unusual circumstance of quality assets trading at extreme discounts to book value. Junior royalty companies were changing hands at sub-0.5× BV. One in particular; Gold Royalty Corp, had reached approximately 0.3× book, which inspired me to write several pieces and build it into a high-conviction position. Hindsight is 20/20, but this really was a lay-up. The stock re-rated to above 1× BV, from $1.20 to $5.18 in little more than a year.

Since then I have lamented two things with regards to the natural resource markets: an absence of no-brainer-book-value-cheap royalty companies, and a dearth of quality exposure to base metals — copper in particular.

Today’s focus company addresses both criteria simultaneously.

I’ve taken a starting position in a relatively unknown royalty Co. with interests in copper and tin and is also likely to be the only royalty co. still trading at a discount to its book value.

Executive Summary

Evolve Royalties (CSE: EVR) is a royalty and streaming company with interests in copper, tin, lithium, and gold. At C$3.21 per share, the company trades at approximately 0.75× my current NAV estimate and is the lowest P/NAV multiple in the junior royalty peer group by a material margin. It is the only royalty vehicle simultaneously offering exposure to: Canada's largest copper mine, Canada's newest copper mine and a producing tin royalty generating US$4–4.5M in annual cash flow.

Remarks On Valuation & Context

A technical note on royalty valuation first.

Although from time to time I take a slice of the Royalty’s expected cashflow runway and perform a 5-10 yr Net present value (NPV), the ‘correct’ approach is to evaluate each royalty individually and perform a bottom-up Net Asset Value calculation. This provides an estimate that is a snapshot in time and while useful directionally, fragile to point-in-time commodity assumptions and almost always understates the optionality embedded in future production which, thanks to the business model, is a free call option with an investor today doesn’t have to pay to hold. The market is notoriously clueless in appreciating this.

My philosophy is that it is far more important to be approximately and directionally right, with a solid base case and a range of free call options embedded in the structure, than to attempt precision and be precisely wrong.

With that caveat stated, today’s NAV of US$174M is conservatively calculated and presents Evolve as an attractive opportunity on a relative valuation.

The junior royalty peer group trades at 1.0–1.6× NAV.

Gold Royalty and Elemental Altus trade at or above 1.0×. Triple Flag and Versamet sit at 1.5–1.7×. Thus the NAV discount applied to Evolve is not subtle.

The natural question is: why?

The answer: size. Evolve is small, listed on the CSE rather than the TSX or NYSE and has not yet accumulated the institutional following that re-rates these vehicles. The exact same setup was witnessed in the junior gold royalty sector less than 18 months ago; it is stunning how short-term the market’s focus is. What is lagging is recognition and recognition, in small-cap royalty land, is a function of time and demonstrated cashflow.

Portfolio Snapshot

The cornerstone asset is a 0.51% Net Profit Interest (NPI - A weaker type of royalty) on Highland Valley Copper in British Columbia and is Canada’s largest open pit copper mine, operated by Teck Resources since 1962. In 2025 HVC produced 127,100 tonnes of copper. In July of that year, Teck sanctioned a Mine Life Extension program that extends the mine’s operating life from 2028 through to 2046, at an average annual copper production of 132,000 tonnes.

The NPI structure concentrates approximately 32% of our NAV estimate in a single asset which is a concentration that warrants disclosure. An NPI is more leveraged to copper prices than an NSR: it only pays when the mine is profitable above Teck’s reported cost base and Teck controls those inputs. In a sustained low-copper-price environment this structure may underperform a simple royalty.

This as the primary risk to monitor.

Highland Valley Copper | 0.51% Net Profits Interest | NAV: US$55M

The second producing asset is where the story gets interesting.

On February 24th of this year, Evolve entered into a definitive agreement to acquire a cash-flowing sliding-scale royalty on the Uis Tin-Tantalum Mine in Namibia for US$32.5 million. It produced 1,071.6 tonnes of contained tin in 2025, achieving nameplate capacity for the first time. It is expected to produce between 1,000 and 1,100 tonnes in 2026. The mine life exceeds 40 years, with significant additional resource on proximal pegmatites and active lithium development studies running concurrently.

Given there were really only 2 prior tin-based names available to investors previously and both were miners in Banana republics (Congo and Australia) the advent of a tin-royalty is highly attractive to this author.

The royalty generates US$4–4.5 million per year at current tin prices and provides a payment schedule already in motion.

Uis Tin Mine | Sliding-Scale NSR | NAV: US$38M + huge right tails

I share the entire NAV model with premium members below.

Additionally, the company has added a nice list of contracts that are at various stages of development and provide free call options on a multitude of commodities.

Tin and Copper: The Same Trade

There is a version of this story that positions Evolve purely as a copper royalty play and that version is already compelling on its own merits given that, aside from Altius, there really isn’t another pure-play copper royalty. The structural undersupply of copper + insufficient developments, declining ore grades etc.is among the more well-known themes in resources investing.

But the Uis acquisition adds an intelligent peculiarity: tin.

Tin is a small market with approximately 379,000 tonnes of global demand in 2025. Roughly half of that demand is solder, used in electronics manufacturing. It is, in a real sense, the element that joins copper to everything else: circuit boards, power inverters, EV drivetrains, solar modules, data centre infrastructure etc. Where copper moves electrons, tin connects them. The supply base is heavily concentrated in China, Indonesia, and Myanmar; each is subject to its own catalogue of regulatory and geopolitical risk. The development pipeline is thin and the market is widely expected to enter structural deficit later this decade.

For a royalty investor, the tin angle represents something rare: high quality commodity exposure that is difficult to access and is attached to a mine with a 40-year resource base with a competent operator who restarted it from brownfield in 2022 and hit nameplate capacity within three years.

EVR is, to my knowledge, the only listed royalty vehicle offering simultaneous exposure to copper and tin in a single share. That is not a small distinction.

Synopsis

The simplest way to think about this investment thesis in the near-term is to consider a reversion to at least fair value (1xNAV) providing a 25% upside; that’s the no-brainer, low-hanging fruit.

However one does not simply buy a royalty co as a mean-reversion trade and call it a day.

Let’s explore the potential of this most rare of beasts: a copper/tin royalty.

Here’s a fully developed model, with all the numerous and necessary details concisely presented in a Bear/Base/Bull case.

Valuation

Read more

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

Rule Symposium 2026

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it".

— Albert Eistein

It’s a good time for us to detach from the news noise cycle and contemplate the big picture asking what it is we’re really trying to achieve. If you’re like me, and grew up from humble beginnings, you probably have a tendency to be impatient and ‘push’ towards outperformance, as somewhere in your unconscious you feel like you’re behind. For me this persisted into my late 20’s when, in fact, I was way ahead and simply lacked perspective.

It’s important to recognise that the biggest force in reliably building wealth/compounding an investment portfolio is time. Therefore, it’s worthwhile pondering that the greatest threat to achieving ‘the goal’ (whatever that is for you) is most likely to be any actions you take to interrupt the compounding.

I’ve been pondering the juxtaposition between the rewards that come with ‘seeking alpha’ vs its detrimental effects in the case of: mistakes, turnover & taxes etc.

I took the liberty of searching for the median net worth and retirement balances of 35 year olds (my age) in the USA.

Key Data for Age 35–44 Bracket:

• Median Net Worth: Approx. $135,300 – $135,600.

• Median Retirement Savings (401k/IRA): ~$45,000.

I then took the median net worth and compounded for 30 years using 15% as base case and 5% variance. This is a great tool to use

Lest the reader think that my chosen base case of 15% is unachievable for a non-professional, the below whitepaper shows how one would have gotten quite close by simply buying and holding a collection of global exchanges. Hardly a complicated strategy. An even simpler approach would have been to stack gold and forbid yourself from consuming news.

Why am I not mentioning indices?
Simply because they were outperformed by both exchanges and gold in what I believe will prove indexation’s ‘golden era’. On a forward-looking basis, I lean towards the view that the SPX is likely in for a ‘lost decade’ or two in real money (gold) terms, although it may track upwards-and-to-the-right in nominal terms.

As you may know by now I prefer to invest in quality derivatives of real money and tangible assets (Royalties, streamers and land owners) along with exchanges as the toll booth of all financial activity.

As Mike Howell is fond of saying “all money that’s anywhere must be somewhere”. And no matter where capital is flowing between sectors in the stock market, it’s by default on the exchange and the exchange is ‘clipping the ticket’.

Portfolios

Whilst I continue my protest against constant portfolio updates for my investments ( , in contradistinction, is an operating business) I know there can be some confusion as to the different books I run so here I’ve laid it out along with the respective annualised returns:

• The Royalty King: A collection of Royalty & Streamers + select crypto miners) +20.33%

• The Croupier Collection: Exchanges, Asset Managers & Select Private equity fund manager. +0.85% (4 months old and still in construction

• Crassus Investments: All the above + special situations. +21%

Machina Capitalis, as mentioned, is an operating business involving short sales, options and exotic trades. Thus far it has returned +46% since its inception in Jan this year.

Reviewing Positions

Hawaiian Electric (HE) has quietly risen ~38% since I wrote this piece in August 2025. It’s a classic example of a case where understanding the equity yield curve concept and being able to look forward 2-3 years really pays off.

In the piece I outlined an opinion of why HE might reach $33+ in 2-3 years.
That’s still 100% upside from here and I am yet to see a reason to change my thesis. I remain happily long amidst the deafening silence of this most unusual opportunity to purchase a monopoly utility for cents on the dollar. (shh, don’t tell anyone).

Gold Royalty (GROY) holds a special place in my heart (and portfolio) given it practically 5x’d for me since I aggressively added to it during the yen-panic of 2024. My friend Don Durrett is insisting on underwriting $7000 gold for his investments over the next two years. I don’t disagree with the price but am less convinced as to timing. In my most recent piece on GROY I modelled out several price and production scenarios for GROY, one of which included $7k Gold. I felt slightly embarrassed underwriting such figures at the time but should they eventuate GROY may give me another 1-2x on invested capital from today’s price.

Exotic Trades

ICYMI It’s my birthday tomorrow so I decided to share an insight into plus an exotic trade with potential for up to 26x return.
It is non-paywalled and will remain so for the rest of the week to give you a taste.

Media

Check out my latest interview with Rob, . I breakdown the most lucrative investment theme that almost everyone is ignoring.

That’s enough for this compendium.

I hope you’re well. I continue to hold nearly 50% in cash (includes gold bullion) and am deploying capital in dribs and drabs for the companies I know well which have inelastic demand, scarce-monopoly on supply and boast a capital light operating model.

Take Care.

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 Memory of Murray Stahl

Murray Stahl passed away on April 7, 2026. This memo was already being written when I heard the news.

The quality of your thinking is proportionate to the clarity of your writing.

I have learned so much from Murray but perhaps the most impactful lesson as it pertains to cognitive endeavours is the above. A few years ago, in an interview, when asked about his continual and prolific writings I heard him say:

..You may hold an idea in your head that you think you know well, but then you go to write about it and you get maybe a third or a half a page in and you realise.. you really don’t know what you’re talking about..

(paraphrased)

Inspired by Murray’s insistence on written research as a disciplined practice to improve both thinking and communication I began to write my research thoughts and subject them to the scrutiny of the public.

Committing a thesis to a sentence is qualitatively different from holding it loosely in your head. It demands that you know what you actually think. It exposes the gaps. It makes you honest with yourself in a way that no amount of reading or conversation can replicate on its own.

Murray also had an appreciation for rare books, both for the non-tangible value of their content as well as their tangible value as a collectable asset class.

I had already been assembling a research report on rare books as a store of value when the news of Murray's passing came through. The thesis in these pages draws from various concepts he included in his papers, many of which provided unique insights into sometimes obscure and overlooked asset classes.

The rare canonical book is the natural conclusion of that same line of thought and the subject of this report. Below I examine the use case and performance of physical rare copies as a store of value and a stealth means of wealth transfer completely immune to any shortcomings of the digital world and safe from any tyrannical government who might outlaw gold, seize wallets and freeze bank accounts yet at the same time be oblivious to you crossing a border checkpoint with over $500,000 of value bound in hardcover, tucked safely under your arm and right under their noses.

Books have been storing the distilled thought of civilisation since Gutenberg invented the printing press in 1440 at the latest. It is a physical object and a written argument simultaneously. It is, I believe in the truest sense, his kind of asset.

I hope, in my small way, to honour his legacy: That the written word is the foundation of serious investment thought, that original research is not a differentiator but a prerequisite, and that the willingness to think and write independently, even when the conclusion is uncomfortable or unpopular, is the an edge that cannot be indexed away.

This report is for him, with admiration for what he built and gratitude for the example he set. May his legacy live on.

The Royalty King April 9, 2026

Classic Literature as a Store of Value

This report makes a specific argument: that investment-grade rare editions of the great canonical novels constitute one of the most unusual and under-appreciated stores of value available to a private investor. Not necessarily due to their average annualised return rate (ARR) being spectacular, but due to their possession of a combination of properties that no other asset class simultaneously possesses:

• They appreciate in real terms.

• They carry zero correlation to financial markets.

• They are physical, non-digital, non-trackable and non-reportable.

Their portability provides extraordinary value across any border without triggering a single question. I document the ARR on confirmed transactions across five canonical works and estimate some works from my own personal library to put numbers to the thesis.

I. The Unique Property Set Of Books

The Border Property. A first edition of Don Quixote worth $500,000+ fits in a carry-on bag. It looks like a book because, well, it is a book. It has no serial number, no GPS chip, no registry entry, no digital fingerprint. An X-ray sees paper and leather. A sniffer dog smells old paper. A customs officer sees a traveller carrying a book. Gold bars of equivalent value weigh approximately 10 kilograms and trigger density alerts. Bitcoin leaves an immutable blockchain trail. A painting requires cultural property documentation and export permits. The rare book sits in a different category entirely and most collectors, authorities and border agencies are unaware of how much value can move in this form.

II. Books As Stores Of Value

An under-appreciated consideration when comparing stores of wealth is an object’s value-density. Murray was the first person to impress upon me its importance in cross-asset analysis for the purposes of storing wealth in his brilliant paper on diamonds. The reader will note throughout the paper an observance to an asset’s value-density or value per unit of weight and dimensions.

From this day forth I shall refer to this metric as the Stahl Ratio in his honour.

To see it function across different assets and different members of a heterogenous asset class, the inputs of my research have been made visual below:

III. History & Returns Of Canonical Works

With the concept of value-density now considered, let us explore the growth rate of the underlying value stored across a sample of rare books to test their inflation resistance across large time periods.

I’ve searched for confirmed transactions and dates on the same titles where possible and first present the ARR in nominal terms.

Una palabra sobre Don Quixote..

Published in Madrid in 1605 (Part I) and 1615 (Part II) by Juan de la Cuesta. The first modern novel and the most widely translated work in any language after the Bible. At that time it would have been priced in Real de Ocho (8 piece), the Spanish currency of the time which weighed c. 27.47g of 93% silver and would be valued at ~$70 USD. A large consignment of Part I first editions was lost in a shipwreck near Havana shortly after publication; surviving copies of the 1605 first edition are among the rarest objects in Western bibliography. The 1608 third edition, corrected by Cervantes himself, and the basis of all subsequent translations, is the collector's document of record. Interestingly, throughout the full span of a Quixote first edition’s life just sitting on a shelf; every currency in which that book could have been priced has been either abolished, re-denominated, or inflated into a fraction of its original value. (El Ocho, La Peseta and arguably the Euro couldn’t outlast a simple classic).

The Great Gatsby (1925)

As this anecdote involves royalties, I simply cannot resist including it..

Published April 1925 and a failure in Fitzgerald’s lifetime, he earned approximately $8,400 in total book royalties from it during his life. In 1929 his domestic royalties for the year amounted to $5.10. He died in 1940 believing it forgotten, yet post-war it become the definitive American novel; by 1960 it was selling 100,000 copies annually.

The rare book market for Gatsby is driven overwhelmingly by one physical quirk: the dust jacket designed by Francis Cugat, printed slightly too large for the book and prone to tearing. The first issue jacket features a lowercase ‘j’ in ‘jay Gatsby’ on the rear panel, hand-corrected to uppercase in ink by the publisher! Fitzgerald wrote to his editor: “For Christ’s sake don’t give anyone that jacket you’re saving for me. I’ve written it into the book.”

Without the original jacket it’s quoted at $3,000–4,000. With it, in fine condition: $350,000–450,000. The jacket is worth approximately 100 times the book!

My Favourite Writer Of All Time — Jorge Luis Borges

An unabashed reverence for the great Argentine author means I cannot complete this report without investigating his works from an investible angle. The issue is, given Argentina’s historical presence as the poster child for hyperinflation, I doubt you could pick a more difficult currency to try to adjust and calculate value change over time. The Argentine peso has been re-denominated four times since 1942; each time eliminating zeros the previous government had printed into existence. In fact, speaking of collectibles, I own a ring with a 5 peso piece on it from 1946 which, at the time, bought roughly one day’s unskilled labour and for which I paid 1,000 new-currency pesos in 2023..

El jardín de senderos que se bifurcan, (The Garden of Forking Paths) was published in Buenos Aires, in December 1941 and was Borges's first collection of short stories. In 2024, a first edition, inscribed by Borges sold at auction for £16,640

From an estimated $5USD initial price to £16,640 (~$21,133 USD) over 82 years implies a nominal ARR of~10.7%, eclipsing the entire comparable dataset - an impressive feat considering it hasn’t even hit antique status yet.

Meanwhile the currency in which his books were originally priced has been re-denominated out of existence four times over. Not even the most profligate central bank in recent history could out-print the great Borges!

IV. Stealth Wealth

The properties described in Section I combine into a specific argument about rare canonical books as a form of portable, non-digital, jurisdiction-agnostic stored value.

Consider; A $500,000 first edition of Don Quixote weighs half a kilogram. It fits in a carry-on bag. Gold of equivalent value weighs approximately 10.5 kilograms and triggers density alerts at every X-ray. Bitcoin of equivalent value leaves an immutable blockchain trail traceable to exchange KYC records. A painting of equivalent value requires export permits, property documentation, and crated freight. The book crosses the border as a book.

And lest you think this idea is reserved for only the truly high end works. Let me leave you with real-life examples from one of my (many) bookshelves.

La Divina Comedia - Dante Alighieri

My copy of La Divina Commedia is a 1956 Italian edition, original language, priced in lire, a currency abolished in 2002 having lost the majority of its value since the year this edition was printed. Dante completed the original Commedia in c1320. The 1956 edition is not rare by the standards of this report. But it is older than every financial instrument I own and is yet to default. Best estimate is that it would fetch $80 USD given its frayed condition. Yet from a reconstructed cover price of roughly 1,000 Italian lire (~$1.60 USD equivalent) its estimated ARR of 6.4% is not trivial and was most certainly preferable to holding lire.

Martín Fierro - José Hernández 1961

My copy is a first edition of a limited run of 10,000 bound in cowhide. Printed in the original Spanish, in Buenos Aires when the peso traded at roughly 83 to the dollar. Argentina has since re-denominated its currency four times for a cumulative factor of 100,000,000,000:1.

Using best estimates, the sale price in USD terms was ~$1.20 and today should fetch $175 for a nominal ARR of 8% over 65 years.

The Royalty King's Remarks

The case for rare canonical books as an asset class is not about beating equities. It is about three things in combination: a documented real return that outperforms bonds, cash and depending on the copy, even gold over long holds; genuinely zero correlation with financial markets and a set of physical properties that no other asset simultaneously possesses.

The ARR data across the titles studied clusters between 5.8% and 10.7% nominal for documented transactions over 10 years or more. Real returns vary and are harder to calculate, yet I would argue given many of these works were published in countries whose currency literally died — sometimes many times over— the value of holding a portable store of wealth which could later be transported to, and exchanged in, a country with a stronger currency is an underrated free call option on geopolitics.

What’s the optionality value on a management-free, correlation-free return on an object you can carry in a bag, read on a plane, and pass to the next generation without a transfer agent?

A rare book is a historically validated, intellectually serious, and physically unique store of value. It’s also fun to read.

Benjamin Demase

— The Royalty King Report

This document presents documented historical transaction data and analysis of rare books as an asset class. It is not a recommendation to buy or sell any asset. All transaction prices are sourced from contemporaneous reporting by Christie's, Sotheby's, Bonhams, Heritage Auctions, Swann Galleries, Rare Book Hub, Fine Books & Collections, artinvestment.ru, Paul Fraser Collectibles, and other public sources. Return calculations are approximate and nominal unless stated. Actual outcomes vary materially with condition, provenance, timing, and auction depth.

Tax reporting obligations on asset sales and transfers apply in all jurisdictions regardless of asset type or physical form. The portability and physical properties described in this document are factual characteristics of the asset class and do not constitute advice to evade tax, customs, or reporting obligations. Nothing in this document constitutes legal or tax advice.

The Royalty King and its publications do not constitute financial product advice under the Corporations Act 2001 (Cth) or any equivalent framework. Past performance is not a reliable indicator of future results. All investments carry risk including loss of principal.

Executive Summary

Wheaton Precious Metals provides high-quality, low-risk exposure to precious metals through its streaming portfolio — approximately ~67% gold, ~33% silver by revenue, giving investors meaningful silver optionality alongside gold exposure. All production figures are expressed in Gold Equivalent Ounces (GEOs), which converts silver and other metal production into a gold-equivalent weight using prevailing spot prices.

At the current gold spot price of approximately US$4,450–4,500/oz, my estimated price target is US$140–160. In my base case with gold reaching US$6,000/oz by 2029 and sustaining elevated levels thereafter, the 5-year DCF produces a price target of US$197.70, implying 58.5% upside and an ARR of 11.1% per annum from the current share price of US$124.70.

The streaming model delivers high margins due to fixed low delivery costs, no direct mining capex, and strong operating leverage to metal prices. Incremental revenue at higher gold prices flows almost entirely to free cash flow. WPM's ~33% silver revenue mix means GEO figures will fluctuate with the gold/silver ratio, and a rising silver price relative to gold provides an additional tailwind to reported production.

Price Target Scenarios

The standard PE multiples and even run-rate DCFs are not particularly good valuation methods for Royalty & Streaming companies however in the interests of brevity and simplicity I’m going to bend the rules here and use a modified DCF given we have good line of sight for WPM’s production profile over the next 5 years. Applying a terminal multiple will attempt (probably poorly) to account for the long mine life Wheaton enjoys and the ‘right tail’ optionality.

This methodology likely does not fully represent the full life-of-mine value of the royalty portfolio or the out-of-the-money optionality — both of which represent additional upside not captured in these figures. The numbers are deliberately conservative.

5-Year DCF Build — Base Case

I’m underwriting:

• Production ramps linearly from 900K GEOs (2026) to 1.2M GEOs (2030).

• Gold price grows at 10% per year from a US$4,475/oz base.

• Delivery cost fixed at US$400/GEO. EBIT margin 65%.

• Discounted at 7%.

• Terminal value applied at end of Year 5 using 20x NTM EV/EBIT on Year 6 projected EBIT.

Terminal value dominates total EV — this is typical for long-duration royalty businesses where the value of decades of future royalty cash flows sits beyond the 5-year forecast window. The DCF is intentionally conservative: OTM royalties converting to production, new stream acquisitions, and silver outperformance represent additional upside likely not captured at only a 20x Exit multiple.

Sensitivity Analysis

Price target (US$/share) across a range of gold price and GEO production outcomes. Base case sits at centre.

Primary Upside Drivers at US$6,000/oz Gold

Margin expansion. Incremental revenue at higher gold prices flows almost entirely to free cash flow due to fixed streaming delivery costs. Operating leverage is exceptional.

Production growth to 1.2M GEOs by 2030 supported by Antamina expansion, Blackwater, Platreef, Goose, and other pipeline assets — approximately 50% growth from current levels.

Silver outperformance. WPM’s ~33% silver revenue exposure means a rising gold/silver ratio reversal — typical in late-cycle precious metals bull markets — would provide a meaningful GEO and revenue tailwind above and beyond gold price gains alone.

Accretive stream acquisitions. A high-gold-price environment creates opportunities for WPM to deploy capital into new streams at attractive terms.

Market re-rating. As the market recognises significantly higher intrinsic value, P/PT compression reverses i.e the same re-rating dynamic that has defined every previous precious metals bull cycle.

Investment Considerations

Key Risks

• Production shortfalls or delays at partner mines

• Short-term gold price volatility (mitigated by bullish outlook)

• Minor dilution from future stream acquisitions (historically low impact)

• Premium valuation vs peers limits downside margin of safety

The Royalty King’s Remarks

WPM currently trades at a meaningful discount to the modeled price target. Buying at today’s price of US$124.70 and reaching the base case price target of US$197.70 by end-2030 implies an annualised rate of return of 11.1% per annum ex-dividend, while the higest success mode modeled implies ~19% ARR.

In a US$6,000/oz gold environment by 2029, WPM offers compelling re-rating potential as the market is forced to mark up intrinsic value. The combination of production growth to 1.2M GEOs, sector-leading margins, and no operational risk makes this a core holding for my expressing a long-term bullish view on gold.

WPM is a high-conviction way to capture upside from sustained higher gold prices with lower volatility than direct mining investments. It is a core holding in both the Crassus Investments & Royalty King portfolio.

Want More Leverage on This Thesis?

If you want to go beyond the stock and access the options trades I have on WPM including: specific strikes, expiries, and position sizing, that level of detail is available inside Machina Capitalis. Members get my live options book, real-time trade alerts, and monthly strategy calls covering royalty and streaming positions across the portfolio.

machinacapitalis.com

Until Next Time,

— Benjamin

This is an illustrative price target. Not financial advice. For paid subscribers only.

General Disclaimer: This document is an illustrative scenario-based price target using a 5-year DCF and exit multiples. It is not a full life-of-mine model and does not capture out-of-the-money optionality value. All figures are estimates only. Actual results will vary with realised production, metal prices, new stream acquisitions, and market discount rates.

Not Financial Product Advice (ASIC): The Royalty King and its publications do not constitute financial product advice as defined under the Corporations Act 2001 (Cth). The information contained herein is general in nature and has been prepared without taking into account your individual investment objectives, financial situation, or particular needs. The Royalty King does not hold an Australian Financial Services Licence (AFSL). Before making any investment decision, seek independent financial, legal, and taxation advice from a licensed AFS licensee.

Conflicts of Interest: The author may hold a direct or indirect interest in securities mentioned in this document, including Wheaton Precious Metals Corp (WPM). This does not constitute a recommendation to buy or sell.

Royalty King Water Brief Final

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Data Centres, Water, and the Next Infrastructure Bottleneck

The prevailing view in markets is that the binding constraint on the AI buildout is electricity. Gigawatts of generation capacity, grid interconnection queues, transmission infrastructure, fuel substrate etc. These are the terms of the investment debate. Power, in this framework, is considered the scarce resource in this modern-day race to secure electrons.

This view is not wrong, but I contend incomplete and the dimension in which it is incomplete (water needed for said power generation) has consequences for project economics that are not remotely reflected in current market pricing.

The purpose of this report is to establish the full water demand picture for hyperscale data centre infrastructure, then attempting to model the specific case of a 1 GW campus in the Permian Basin of West Texas.

The sourcing problem is more acute than most operators publicly acknowledge and it appears the investment community’s continued reliance on a single, deliberately incomplete metric: on-site Water Usage Effectiveness (WUE) has produced a systematic blind spot that will likely to eventually be corrected by the market in the customary painful fashion.

Part I: The Scale of the Problem

Water consumption in a data centre occurs across three distinct systems:

1. The power generation plant supplying the centre’s electricity

2. The data centre cooling infrastructure

3. Backup and redundant generation

It is a peculiarity of current reporting practice that the first of these systems,the power plant, which in almost all thermal scenarios accounts for 50 to 70 percent of combined consumption, receives little-to-no mention in operator or broad market commentary.

This author can only surmise that this is due to the fact that WUE, as defined and disclosed by the data centre industry, covers only on-site water consumption. Investors who evaluate data centre water risk solely on disclosed WUE figures are evaluating, at best, 30 to 50 cents of every dollar of water consumed on their behalf.

Before attempting to calculate the entire picture of our 1GW model, let’s get some macro context on where the industry is heading in the USA.

For perspective: a medium-sized 15 MW data centre uses as much water as three average hospitals, or more than two 18-hole golf courses, per year. Now let’s appreciate that these facilities are now being built at 1,000 MW and above.

Withdrawal vs. Consumption: A Critical Distinction

When reading the available research it was found that these two terms are used interchangeably in most infrastructure writing yet they should not be.

• Withdrawal — total water drawn from a source. Most is returned to the environment, though often at higher temperature or altered chemistry.

• Consumption — water permanently removed from the local water cycle, primarily through evaporation. For wet cooling tower systems, ~80% of withdrawn water is evaporated and permanently lost; the remaining ~20% is discharged as blowdown.

Another thing to note is that withdrawal represents a one-time fill. It does not. The cooling tower evaporates roughly 1–3% of its circulating volume with every pass, and make-up water is drawn continuously year-round. Withdrawal is a perpetual annual operating cost, analogous to a fuel cost rather than just a capital input.

All consumption figures in this report use the evaporative loss definition. Withdrawal figures are provided throughout for infrastructure sizing, because sourcing, treatment, and pipeline costs are incurred on the full withdrawal volume — not only the fraction that evaporates.

Part II: Power Plant Water & DC Colling Requirements

The choice of power generation technology has consequences for total water demand that dwarf the consequences of data centre cooling technology selection. The numbers:

Source: US EIA Power Plant Operations Report; River Network 2012; World Nuclear Association.

Gas CCGT appears the most water-efficient thermal generation option by a significant margin which is why it is the assumed power source for the Permian Basin model (additionally there’s an abundance of cheap gas out there!). Dry cooling (air-cooled condensers) can reduce power plant water consumption by ~90%, at the cost of power efficiency, but the environments that support it rarely coincide with the other prerequisites for a hyper-scale campus.

Now that a guide for the main power plant figure has been estimated, let’s examine the cooling requirements for the DC itself, before considering that additional power and by extension water requirements must be anticipated to satisfy practical criteria to achieve the 1 GW working model in Pt 3.

These advances in data centre cooling are genuine and material. They are also largely irrelevant to the total water question, because the power plant dominates in every scenario and is unaffected by what happens to cooling technology inside the server racks of the DC.

Part III: The Model — Applying Theory To A 1 GW Hyperscaler In The Permian

Why the Permian Basin?

Firstly, a 1 GW IT-load hyper-scale campus in the Permian Basin is not a hypothetical. Chevron’s planned data centre power complex is sized at 2.5–5 GW of generation for a single client. Pacifico’s GW Ranch Project in Pecos County targets 7.65 GW which is the largest approved in the United States at time of writing. It in turn is expected to be eclipsed by BOLT Data’s 10 GW planned project in West Texas. The 1 GW working model that follows is a intended as a scalable starting point.

Key model logic: The data centre sells and delivers 1 GW of compute at all times. The 90% figure is primary plant availability, not system output. When the primary is offline, the backup takes full load. All water volumes are calculated on this basis. Other analysts contend differently i.e that not a second of downtime would be acceptable ergo a second back up power plant would need to be on standby at all times. Others also estimate PUE more towards 1.58 or above. The salient point is that my model can be considered on the conservative side of water and power consumption that will ultimately be needed - which is somewhat incredible given the outputs I’ve estimated are eye-brow raising in and of themselves.

Power Plant Water Demand: Two-Plant Model

Water intensity: CCGT withdrawal 10.6 L/kWh; consumption 0.86 L/kWh (midpoint of EIA range)

BL = billion litres = 1 million m³. Returned/discharged combined: 144.07 BL/yr.

The standby figure warrants particular attention. A CCGT in hot standby i.e gas turbine turning, heat recovery steam generator warm, steam pressure maintained consumes approximately 20% of its full-load water withdrawal continuously, even while generating no useful electricity. For this 1.43 GW backup plant, that equates to 23.92 BL/year of withdrawal and 1.94 BL/year of permanent evaporative loss simply to keep the plant ready.

This is not optional. A CCGT cold restart requires 4–8 hours — incompatible with data centre uptime requirements. Hot standby, with its associated water draw, is the minimum credible standby mode for a mission-critical facility.

Data Centre On-Site Cooling: Scenario Analysis

Annual IT energy on nameplate basis: 8.76 TWh/year

The mid-tier base case (WUE 1.2 L/kWh) is retained as a conservative planning assumption given the source water purity questions addressed in Part IV. A new-build AI hyperscale in 2026 might achieve WUE 0.15–0.45, placing it between the best-in-class and zero-evap scenarios above but the operator would need to be up for a higher grade of water.

The Three Scenarios That Drive Different Investment Questions

All figures use mid-tier DC cooling (WUE 1.2 L/kWh).

The distinction between B and C is meaningful. The water treatment plant, produced water pipeline agreements, and cooling tower capacity must all be sized for Scenario C, even if steady-state annual opex runs at Scenario B levels. Think of it as analogous to a power purchase agreement: you contract for capacity whether you use it or not. The supplier must be able to deliver the full volume on demand.

Total Integrated Model Across All Cooling Scenarios (Scenario B)

Even zero-evaporation data centre cooling still carries 12.72 BL/yr of power plant water consumption. The power plant dominates in every scenario and is unaffected by on-site cooling technology choices.

Permian Basin Barrels

It’s estimated that over 6 million BOE are produced in the Permian every day, alongside that emerge ~15 M BBL of toxic produced water.

With the context established, let’s put things into Barrel equivalents for our USA brethren.

Equivalents

For comparability with regional oil and gas water reporting. 1 barrel = 158.987 litres.

Part IV: Sourcing the Water

Freshwater Is Not a Solution

The Permian Basin cannot supply potable or freshwater at the volumes required. The numbers make this plain:

The model’s steady-state consumption exceeds Midland’s entire municipal water supply! Groundwater aquifers in the region as I understand are partially brackish and under severe multi-year depletion stress.

Produced Water: The Permian’s Structural Opportunity

The same basin that cannot supply freshwater produces approximately 15 million barrels (~2.4 billion litres) of co-produced water per day from oil and gas extraction — currently a disposal liability for operators.

The Texas Railroad Commission has been progressively restricting produced water injection permits in response to induced seismicity, a trend that accelerated following the appearance of a 160-foot geyser of toxic water in Toyah in December 2024, which gushed for weeks. This pressure is simultaneously closing off traditional disposal routes and building legislative momentum for beneficial industrial reuse.

The symbiosis is straightforward: data centre operators need water at scale; oil and gas operators need to dispose of water at scale. The Texas Produced Water Consortium is the primary body developing treatment protocols for industrial reuse, including data centre cooling.

Treatment Cost by Quality Grade

Annual Water Cost Model (Scenario B — Steady-State Opex)

Note: Costs applied to withdrawal volumes throughout, because sourcing, treatment, and pipeline infrastructure costs are incurred on all water entering the system, not only the fraction that evaporates.

Total annual withdrawal of 170.6 million m³ equals approximately 2.94 million barrels per day. A campus paying the current integrated midstream market rate of ~$0.725/bbl (WaterBridge 10-K, March 2026) on the same volumes would face an annual water bill of approximately $778 million per year.

The $264M figure reflects treatment-cost-only assumptions ex-transport and delivery. The $778M figure is what the water supply chain currently charges. Both numbers belong in any serious investment model; neither is currently in most of them.

Part V: The Discharge Problem

This is a dimension of this analysis that is almost universally under-appreciated and I have found difficult to comprehend in terms of its numeric effect on water needs.

Water withdrawn must eventually go somewhere and account for changed in the solids concentration increasing as a result of the liquid lost through evaporation in the heating cooling cycle.

In an urban or coastal location, this discharge flows to a receiving waterway or municipal wastewater system. In the remote Permian Basin, neither option exists at this scale. The discharge must be treated and re-injected into the subsurface, or managed in large-scale evaporation ponds.

This discharge infrastructure is not being scoped in most project announcements this author has reviewed. Unfortunately, I am no better equipped to reach an investment conclusion, but believe it’s important to mention.

Part VI: Six Observations for the Investment Community

1. Freshwater scarcity is structural, not cyclical. There is no municipal water system in West Texas capable of supplying a 1 GW campus, and none will be constructed for this purpose. Any project that has not secured a long-term produced water supply agreement and on-site treatment infrastructure before financial close is not, in the strict sense, financeable. The underwriting community should require explicit evidence of water supply secured, not merely assumed.

2. Produced water regulation is moving in one direction. The Texas Railroad Commission’s tightening of injection well permits is proceeding in a single direction. Projects with treatment infrastructure are advantaged; those that assume disposal will remain available at current cost and volume are carrying regulatory exposure that may materialise on short notice.

3. The discharge problem is uncosted and underappreciated. 655 ML per day of thermal discharge in a remote location with no receiving waterway and restricted injection capacity is a major capex and permitting risk. It must be addressed at the feasibility stage, not deferred.

4. Infrastructure must be sized for peak, not average. The water treatment plant, produced water supply agreements, and cooling tower capacity must all be sized for Scenario C — both plants at full load — even though steady-state annual opex runs at Scenario B.

5. Water opex deserves its own line in the model. At ~$264M/year on the treatment-cost basis and potentially ~$778M/year at current midstream market rates. Water treatment and sourcing accounts for roughly 26–38% of power generation opex. That figure will likely rise as more projects compete for the same produced water supply and treatment capacity. Equity return assumptions that do not model a rising cost trajectory for water are carrying hidden risk/opportunity depending on buyer/seller.

6. Political pressure is accelerating. Texas does not yet require most data centres to report water usage. The Texas GOP has adopted a resolution demanding that the AI industry follow the same water management and recycling protocols required of oil and gas. The question for investors is not whether reporting requirements will tighten, but when, and what they will reveal when they do.

Conclusion

The investment community has spent considerable energy developing sophisticated views on the power constraint facing AI infrastructure. The power constraint is real. The water constraint is equally real, less well understood, and currently unpriced in this author’s opinion.

Produced water reuse in the Permian Basin is, at present, the only credible path to supply at this scale. The economics of that reuse are genuinely favourable today as operators pay for disposal, and data centres need water. That alignment will persist until enough treatment and delivery infrastructure exists to serve the full pipeline of announced projects. At that point, as with most infrastructure constraints that transition from ignored to recognised, the pricing will adjust in the usual direction.

© 2026 The Royalty King Research Report. Subscriber distribution only. Not for redistribution.

Data sources: US EIA Power Plant Operations Report; EESI Data Centers and Water Consumption (2024); Baker Institute for Public Policy, Rice University (August 2025); Lawrence Berkeley National Laboratory 2024 US Data Center Energy Usage Report; EU Climate Neutral Data Centre Pact; East Daley Analytics; Texas Campaign for the Environment; E&E News Permian Basin Water investigation (December 2025); Nixon Peabody AI Facilities Permitting (February 2026); Nature/npj Clean Water; IFC/World Bank Water Reuse; River Network Burning Our Rivers (2012); World Nuclear Association; MIT Energy Initiative Power Plant Water Use Working Paper (2012); DOE/NETL Power Plant Water Usage and Loss Study (2007). WaterBridge 10-K, March 2026.

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.

Get your tickets to the RULE SYMPOSIUM 2026

Market Musings

My macro view in terms of most sectors price action can be briefly summarised thusly: down, then up.

Really I think it is that simple and as such I am very happy to have come into 2026 with such a huge amount of cash liquidity.

For 2026 through to Q1 2028 I am bearish on the broad equity markets in most countries, yet have no interest in flirting with bonds trying to time that market as its long term fundamentals are simply dreadful in my view. Ergo, I have left my profits in my gold bullion trade as a free ride and sold only enough to withdraw my initial capital. In the near term, I am putting on various options trades to profit from an anticipated downturn in what I consider to be the most liquidity-sensitive assets: BTC (via IBIT), QQQ and SPY.

My bearish trade on IBIT is already very profitable and I only require a mere 10% drawdown in QQQ and SPY to make a ~4x return on capital. I deem these rare examples where a high probability outcome also coincides with an asymmetric payoff. Interested readers can learn the exact positions in .

This then leaves my outlook for 2028 and beyond and brings us back to Druck’s quote above. If things go as stated above, thanks to contracted liquidity available in western capital markets, the only politically expedient option for policy makers will be to (yet again) inject enormous amounts of liquidity into financial markets and the ‘main street’ economy. All signs point to this occurring right when goods inflation is increasing thanks to a dearth of historic capex, combined with de-coupling and, thanks to the recent Iran war, outright destruction of key supply chains and infrastructure hubs.

Thus, with an eye towards 2028 and beyond I remain with my core positions in royalties and exchanges, which won’t be touched, and am using my large cash reserves to gain more leverage to precious metals and their associated royalty Co.s via options setups. It’s difficult for me to imagine the gold price to be less than $5,500 per oz in Dec 2028 and so logically it follows that if I am so confident in Gold appreciating circa 20% from today’s spot price, then I should be maximising my exposure via options on the metal itself and the royalties as mentioned above.

My Price Targets On Gold

Remember: a LOT can happen between now and then.

ICYMI: In the chat this week I shared a PDF of one of the tranches I am allocating to GOLD options. This tranche only needs $5,ooo/Oz gold by DEC ‘28 in order to profit and provides 3-5x the upside of price appreciation in the bullion. I’ve kept the tranche small as it’s totally possible that we experience more sharp and vicious sell offs to come as various states and institutions may need to sell (albeit reluctantly) in response to pressing liquidity needs.

So patience is what I’m practicing. the last thing I want is to be out of bullets if/when the true sell off arrives.

To summarise, Here’s a list of things I’m watching:

Media

I have a number of appearances coming up this week. Main topics I’ll be speaking on are: Royalty & Streamers, Exchanges & Water.

In the meantime, I re-iterate that my main framework for assessing the macro-economic environment is the global liquidity index tracked and published by . I am a premium subscriber and consider it one of the most useful and informative subscriptions I have.
If you haven’t already you really should watch the conversation I had with him recently.

That’s it for this compendium, take care out there. Markets are in for pain unless we see results from the Strait situation very quickly. Be intelligent, do your own due diligence and in the words of the great man…

Benjamin

— The royalty King

If this analysis is useful, Machina Capitalis goes further.

Members get my live portfolio: exact positions, sizing, and entry levels across royalties, exchanges, and options trades.

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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.

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Market Musings

The Big Story: Liquidity Is Tightening (Again)

If there is one thread tying everything together this week, it’s this:

Liquidity in the west is drying up.

It’s not collapsing, but tightening at the margin.

We’ve got:

• Sticky inflation

• A hesitant Fed

• Ongoing QT

• A quietly strengthening dollar

It’s the kind of environment where asset prices could gap down as outflows/redemptions occur due to the increased marginal dollar coming out of capital markets and into the ‘real economy’ spending.

This dynamic is discussed at length in my latest interview with Michael Howell

Gold

Gold’s price declined sharply this week (11%), the worst weekly sell off in years. To paraphrase a Bessent-quote, this occurred due to there being more sellers than buyers, with over $1billion in combined outflows in a single day, March 19, from the major ETFS: GLD and IAU.

My early thoughts are that this looks like profit taking. Flow data suggest that investors were de-grossing gold exposure after an earlier run-up, not abandoning the asset class structurally. Remarkably, despite the sharp uptick in recent outflows, the gold price is still positive YTD and now the RSI is in oversold territory.

Capital flowed across to dollar denominated instruments and now the US 10yr yield is up 4.5% and the DXY; a measure of the dollar’s relative strength is also on the rise.

My take: price action is best understood as a cross-asset liquidation and profit-taking after 9 straight months of net inflows. Gold entered the week after a very strong run and once oil-driven inflation fears pushed yields higher larger players considered rebalancing.

Given liquidity in the west is drying up on an ever expanding numerator of aggregate debt level precisely at a time where fiscal deficits are assured to blow out even further due to the current conflict it’s only a matter of time being monetary policy is adapted to compensate. I expect more monetary easing to come, be it in 6,12,18 months and as that liquidity enters the system I expect net inflows to resume in gold and BTC vehicles. Ad interim of course, there’s likely some further downside.
I am positioning by looking at various options on acquiring my favourite precious metals royalties, which have sold off recently - in the case of GROY to the tune of 22%.

TRK Remarks

Water remains on my mind as my number one growth commodity. I’ve almost finished a 14 page research report which will be made available to subscribers only. The first issue is a deep dive on the hydro-requirements of Data centres and the associated investment implications.

Here’s a teaser:

“ A 1 GW hyperscale campus in the Permian Basin is not a 10× scale-up of a conventional data centre. It is a water event of regional significance, consuming more fresh water equivalent per day than the entire City of Midland's municipal supply..”
My modelling shows that the necessary infrastructure for the 1GW prototype DC will need the equivalent of 202 million barrels of water per year to operate at nameplate capacity which, at going rates estimated in the basin implies $428 million in annual running costs for the water alone.

Wishing you all the best.
— Benjamin
The Royalty King

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.

PS: Oh, and don’t forget to check out my other publication , think of it as my live trade journal operating an income portfolio of options and exotic trades.

Machina Capitalis

The Gold Carry - Turning Idle Bullion Into a Yield Machine

The Gold Carry…

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4 months ago · 1 like · The Royalty King

I’ll be attending the Rule Symposium (online) this year.

If you’re serious about commodities, capital cycles, and long-duration thinking, this is where the real conversations happen.

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The Australian Securities Exchange (ASX: ASX) is the only practical venue through which Australian equities can be cleared and settled. It holds a function so systemically critical that its regulator has described its stable operation as essential to the integrity of the entire Australian financial system . Curiously however, it is currently priced as though that monopoly were in question. It is not.

Today’s article hits close to home, given the antipodean roots of this author having spent most of his childhood in Terra Australis.

It’s often easy to miss the opportunities closest to us and as evidence I was surprised to learn upon my perusing of global exchanges, that one of the worst performance stock exchanges globally (and the worst in south east Asia) is none other than the ASX, The Australia Stock Exchange. I mean, stone the crows, even the bloody kiwis are doing better! (NZX).

It’s not very often that an investor can form a buy thesis on an exchange and frame it as a ‘turn around, or special situation’ yet it appears that is in fact the case here which, given the enviable business model that exchanges nejoy, might provide a discounted entry into the monopoly toll road on the Australian economy. An economy which stands to benefit greatly from an anticipated boom in natural resources.

Exchanges occupy a rare position in capitalism. They are toll collectors on financial activity. Every trade, listing, capital raise, hedge, or margin requirement passes through their infrastructure. The marginal cost of processing an additional transaction is close to zero, while the fees are recurring and difficult for market participants to avoid. This results in a business model characterised by:

• network effects
• regulatory moats
• low capital intensity
• very high operating margins

Few industries possess all four simultaneously.

For a primer on the exchange’s business model and why it might be the best in the history of publicly traded markets see the below white paper.

The Australian Economy — What The Conventional Misses

The conventional view of Australia is not wrong, it is just incomplete. Australia is a resources-heavy economy with significant China exposure, a relatively small domestic population of 27 million and a history of commodity cycles that have provided sensitivity for government finances and corporate balance sheets.

The ASX 200 index is roughly 30% financials and 20% materials. Simply put, when iron ore falls, the index falls. When the banks get in trouble, the index gets in trouble.

A $10 change in the price of Iron Ore can correspond with a $0.5-$1 Billion swing in associated government revenues and affect GDP to the tune of ~$5.2 Billion. Such an impressive statistic highlights the sensitivity of the Aussie economy to global commodity demand.

The Mining Boom as an Exchange Boom

Current geopolitical re-arrangements have led to a new type of ‘arms race’ in that governments globally are now intent on adjusting their supply chains and engaging in a high stakes scavenger hunt in order to secure the raw inputs need for the manufacturing of goods which underpin the economies, militaries and technology development of developed nations.

Such a circumstance necessarily means a new breath of life (and more importantly, an awful lot of capital expenditure) into developing critical mineral deposits, something which Australia has in abundance.

In fact, Australia holds the world’s largest reserves of lithium, the second-largest reserves of cobalt, the largest identified deposits of nickel sulphide, and is one of the world’s dominant iron ore and copper producers.

The boom for mining is a boom for ASX listings, IPOs, secondary capital raises, derivatives hedging, data licensing, and clearing volumes. The ASX doesn’t need to pick the winning commodity or the winning miner. It just needs the activity to continue and structural global demand for critical minerals suggests it will, and for a very long time.

There is also the matter of the gold price. Australia is the world’s second-largest gold producer. Gold is at or near all-time highs. Gold companies are raising capital, hedging production, and listing new vehicles and the ASX is the primary venue for all of it.

Blunder Down Under

Given the positive nature of the aforementioned, the reader may be wondering why a business with such a privileged position would sell off so heavily?

This is because, to quote the spider man movie, “With great power comes great responsibility”. Continuing the logic: with great responsibility, comes even greater regulatory scrutiny.

Unfortunately, a failed technological gambit threatened to disrupt trading activity and pushed ASX into the crosshairs of the Australian Securities Investment Commission (ASIC).

A few years ago the ASX attempted to replace the 1994-era CHESS system using distributed ledger technology. The project which began around 2015 was abandoned in November 2022 resulting in a $250 million write-down. ASIC subsequently sued ASX in the Federal Court, alleging that statements made in February 2022 that the project remained “on-track for go-live” and was “progressing well” were misleading and deceptive.

A truly embarrassing error occurred on Christmas Eve 2024 when a group of trades failed due to faulty code in CHESS. Apparently this code contained instructions that had existed since 2014. Not a good look.

A formal inquiry into ASX was launched in 2025 and the results are now known:

• ASIC has imposed an additional $150 million capital charge on ASX, to be accumulated by June 2027 and held until remediation milestones are met to ASIC’s satisfaction.

• Consequentially, the dividend payout ratio has been cut. Return on equity targets have been trimmed. Attempt 2 at CHESS replacement is underway with a new consultancy team and is targeting a new clearing system by mid-2026 and a settlement system by 2028-29.

Longer term readers will recognise these dynamics, that is: a situation in which a quality business model is experiencing a temporary difficulty and a dividend cut which the market does not have the patience to see through even when a fairly solid timeline is available.

Similar situations can be found in the archive including, but not limited to: $MSB, $HE, $SJT, and so far, as of the time of writing, patience and extending one’s time horizon past the standard calendar year and out towards 2-3 years has paid off.

The opportunity arrives thanks to the market, which is fixated on the ASIC run-in and is pricing this as a tired infrastructure stock. What it actually is, when you strip away the noise, is a royalty on the Australian financial system, backstopped by a compulsory private retirement scheme and an endowment of resources that the is growing more valuable by the day.

The ASX is not losing its position as the central counterparty for Australian equities settlement next year, or the year after.

Now let’s cast an eye over what it might be worth to an investor with a view towards the future.

Read more

An informal dispatch on markets, money, and the mindset behind it. Free, always. For those who want to go deeper, the links are at the bottom.

Get your tickets to the RULE SYMPOSIUM 2026

Market Musings

The big story: Middle East conflict dominates

The week was defined by a rapidly escalating conflict involving Iran, which rattled risk sentiment across all Asian markets. Oil prices surged after Iran reportedly closed the Strait of Hormuz, and the shockwaves hit export-heavy, energy-importing economies hardest.

Asia is bleeding. Is this a flush or a fracture?

Asian markets are selling off hard this week. My take: Likely due to the region’s reliance on products which transit the Strait of Hormuz.

The question I ask is how much of this is due to leverage?

Because depending on the extent of this being the result of levered liquidation and who is being closed out, there may be forced selling across the board.

Owning exchanges is a nice place to be during volatile times.

Asia’s Pain is Texas’ Gain

Meanwhile, West Texas is quietly becoming one of the most interesting infrastructure stories on earth. Data centres need land, power, and water and the Permian Basin has all three in abundance, and the landowners sitting on that acreage are starting to look like the new landlords of the AI age.

Which brings me to two names I've been long on since late January: LandBridge (LB) and Texas Pacific Land (TPL). As of this morning they're up +51.32% and +75.94% YTD respectively.

Iran And The Icarus Setup

Brent has ticked up to around $81/bbl. Here’s the scenario I’m gaming out:

If the US and Israel succeed in redirecting control of Iranian oil flows — roughly 1.8 million barrels per day — that supply tilts westward and away from China (not completely but in theory). On the surface: bullish for the West, a strategic headache for Beijing.

This is where I keep coming back to two ideas.

Doomberg’s Icarus print: the idea that a forced supply surge could create a price spike before leading to an eventual crash.

Nassim Taleb’s observation that he has never seen a shortage that wasn’t eventually followed by a glut.

If Iranian supply is not interrupted for a prolonged period and is redirected, we could be setting up the perfect bull trap in energy. Spike first. Then the floor gives way 12–18 months later. The tail risk is that this time is ‘for real’ and the conflict drags on and results in large scale infrastructure damage, negatively affecting supply and this would send oil prices to the moon in sharp fashion.

I’m positioned well in any event.

The Royalty King’s Remarks

LB Earnings: Sensational. Exactly What I Expected.

LandBridge reported and the numbers were, frankly, everything I laid out in my preview piece.

The market reacted well. I wasn’t surprised. When you do the work, I mean really do the work, earnings are a confirmation.

If you want to understand how I built that pre-earnings thesis, the full walkthrough is in my previous piece:

MEDIA

Rick Rule | A 1-on-1 Lesson With A Legend.

Growing up, I never imagined I’d have access to someone like Rick Rule. Ultra-wealthy. Decades in resource investing. A genuine legend in every sense.

Above is the link to yet another immensely valuable conversation where Rick literally helps me work through my framework for valuing mining companies in real time. Not so much a polished interview but rather a working session where you’re all invited.

If this landed with you, the single best thing you can do is forward it to one person who you think would get something from it.

All the best.

— Benjamin, The Royalty King

If you enjoy this kind of analysis, you might also like

I’m offering founding member rates for a limited time.

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Portfolio Snapshot — March 2026

*The Croupier Collection is still being quietly built in the background.

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.

I’ll be attending the Rule Symposium (online) this year.

If you’re serious about commodities, capital cycles, and long-duration thinking — this is where the real conversations happen.

Join us here: https://cvent.me/XOqdLa?via=BenjaminDemase

Two main investment themes have dominated the thinking in this publication for some time now. The first is monetary debasement. The second I loosely call ‘consumer commodities’: the idea that years of underinvestment in supply will eventually collide with surging localised demand, potentially in spectacular fashion.

2025 was a big year for the debasement angle. Gold along with Royalty & Streaming companies featured so heavily that along the way I stopped being the ROI guy and became ‘The Royalty King.’ When your own readership rebrands you, effectively the market has spoken and it seems wise to listen.

2026 turns the page. The consumer commodities thesis moves to the foreground and within it, one asset class above all others demands attention.

Water.

Mirar el río hecho de tiempo y agua y recordar que el tiempo es otro río, saber que nos perdemos como el río y que los rostros pasan como el agua

— Jorge Luis Borges, ‘Arte Poética’ (1960)

(To look at the river made of time and water and remember that time is another river to know that we are lost like the river and that faces dissolve like water.)

Of all the commodities one might consider, only two can genuinely claim to be perpetual in the state in which they’re naturally found: land and water. Gold is timeless yet it requires refining and processing. Oil also is refined before use and undergoes a complete state change once consumed as does every other commodity in practical terms.

Land simply exists. It’s immovable, unreproducible and indifferent to the passage of time.

And water?

Water is even more peculiar. In its usable state, it too is naturally scarce and constrained by geography and infrastructure. It is also consumed and can undergo state changes - like most other commodities. Yet unlike any other commodity, water possesses a natural refresh rate in its state of end-consumption. (Sticklers may point out lumbar has a refresh rate through forests etc. yet a tree requires a phase transition of sorts before being consumed: from seed to tree, which is in turn milled etc.)

Given the right conditions, nature replenishes water. The aquifer refills. The river runs again. It is the only commodity in existence where scarcity and renewal coexist but only when nature’s schedule is allowed to run uninterrupted.

Just as available land per capita shrinks alongside population growth and forces human ingenuity to constantly find higher and higher uses for every acre, the same growth, and the technological appetite that accompanies it, is now bearing down on water with a force that may test the limits of nature’s ability to refresh it. This convergence appears unique in human history. The stakes are not abstract given humans survive only days without water. History has consistently demonstrated, those who provide solutions to civilisation’s most pressing problems tend to be rewarded handsomely for doing so.

This mini-series will focus on exactly those companies — the ones positioned to solve and monetise the coming water constraint in various ways.

Newer readers can get up to speed with the demand pressures of water from ‘AI’ datacentres here:

Today’s company is on the cusp of relieving demand pressure in southern California. And as it happens, it does so through the signature business model that regular readers of this publication will recognise immediately: capital-light, toll both-type economics.

Cadiz Inc. (NASDAQ: CDZI) has existed in various forms since 1983, sitting on 45,000 acres of land in California’s eastern Mojave Desert, above one of the largest undeveloped groundwater aquifers in the American Southwest. Long time shareholders have been decimated by the ‘California risk’ as this genuinely impressive asset has unfortunately been encumbered by regulatory delay, political opposition, and a balance sheet that required a patience that few investors possess.

That patience is now being rewarded.

What Cadiz owns is deceptively simple: land, water, and pipe. Specifically, 2.5 million acre-feet of water supply, 220 miles of pipeline infrastructure threading through the corridors between California’s major water systems, and the rights to extract, store, and deliver water to agricultural and municipal customers across Southern California. The asset is not depleting given the aquifer recharges. The pipeline, once built, will move water for decades. This is precisely the kind of infrastructure that fits the perpetuity framework outlined above — not a mine that exhausts itself, not a well that pressures off, but a system that, once operational, functions more like a toll road than a commodity centric company.

The business model reinforces the analogy. Through the newly formed Mojave Water Infrastructure Company (MWI), Cadiz is bringing in outside capital to finance construction — up to $450 million in total equity — while retaining 49% of water storage rights and all existing water supply purchase contracts. The company monetises the flow. Long term readers will recognise the architecture immediately. The infrastructure carries the water. The aquifer replenishes.

Construction is no longer theoretical. The Northern Pipeline is targeted for completion at end-2026, the Southern Pipeline by end-2027. The first tranche of project financing — $51 million from the Lytton Rancheria of California — has been executed under a definitive agreement. Steel has been secured, repurposed from the cancelled Keystone XL pipeline. The permits are advancing under federal emergency water infrastructure provisions. The pieces are falling into place with a specificity that distinguishes this from the Cadiz of prior years, when the same assets existed but the path to revenue did not.

The market, far from being efficient, appears completely oblivious to an opportunity which, based on management’s own NPV estimate for already contracted cash flows, is 4x the current market capitalisation. Let’s now take a deep dive into the valuation.

Read more

An informal compendium of Market musings trade updates and personal insights.

The Royalty King’s Remarks

The year has started strongly, with performance across all portfolios already well into double-digit territory. I don’t usually highlight this—by design. In 2026 I’m operating with an almost religious commitment to shutting out noise and avoiding short-termism. That said, an exception is warranted for the new publication .

As a one-man operating company, its explicit mandate is near-term income generation through options selling and more exotic structures, where transparency around results matters. To the early founding members: thank you. Year-to-date returns now stand at 32.34%, achieved with only partial capital deployment and the core allocation still to be put to work. The theme is simple:

Funding freedom through borderless cashflow generation.

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A Lesson In Grip Strength.
Texas Pacific Land spent much of the past year grinding through a deep drawdown—testing patience, headlines, and weak hands—before sharply recovering as fundamentals quietly reasserted themselves. Those who sold near the trough did not lack intelligence; they lacked understanding. They had copied the thesis without internalising the business. TPL’s value does not hinge on quarterly sentiment or commodity noise, but on irreplaceable land, water, and infrastructure that compound regardless of market price action. This pattern is not even new, in fact TPL has experienced ~5 50% drawdowns in price over the last 10 years (depends on how you count) on its way to deliver a 33X return!

The same pattern repeats across markets. The investors who sold TPL at the lows are often the same ones who will sell Bitcoin in volatility—not because the asset changed, but because their conviction was never earned. You can copy trades, models, and ideas. What you cannot copy is understanding. And without understanding, conviction fails precisely when it is needed most.

Market Musings
The two main forms of debasement - resistant money in my view are gold and bitcoin.

YTD gold is + 14% vs the USD while BTC is -24.6%, with bitcoin denominated in gold terms being down 33%.

Over the last 5 years the scorecards sits at 177%, 18% and -54% rounded, respectively as seen below.

I maintain my view that we are in for a period of short term price weakness possibly across the board as debt/liquidity ratios appear to be tightening in western markets and Bitcoin is acting as the ‘crypto-canary in the coal mine’.

It’s worth re-iterating my thesis here:

For the TLDR crowd, I’ve stated my target range for BTC Jan 26-27 at $40-70k and that I’ll be loading up with very levered ways to play should BTC drop <$60K.

Media

Chinese opportunities came up in my latest conversation with Louis Vincent Gave. If you found value in the discussion, I’d appreciate you subscribing and sharing it.

My key takeaway is this: a period of strengthening Asian currencies would have second-order effects that matter—most notably a firmer bid under commodity prices and higher trading volumes across those markets. Given the scarcity of royalty and streaming companies listed in Asian public markets, I continue to express this theme indirectly via exchanges. If commodities—particularly gold—are bid higher, trading activity rises, and the royalty and streaming businesses I own should benefit materially.

Wishing you all the best.
— Benjamin
The Royalty King

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.