BT Global Growth's Podcast
BT Global Perspectives Podcast – Hosted by David Creighton, Chair of the BT Advisory Board, with Paul Beatty, Managing Director and Co-Founder of the BT Global Fund. This episode reviews recent investment performance and emerging market trends. The fund finished last year with record growth of 67% and is already up over 20% in the new year, driven by strong momentum in precious metals and hard assets like silver, platinum, and copper. Paul and David discuss the significance of hard assets, the surge in silver prices, and why the Asian physical markets are increasingly shaping the metals market. The conversation combines insights, humor, and actionable perspectives for investors.
BT Global Growth's Podcast
EP.29 - SpaceX valuation and No Slowdown in US
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In this episode, David Creighton (Chair of the BT Advisory Board) and Paul Beattie (Managing Director and Co-founder of the BT Global Growth Fund) discuss recent market volatility and investment opportunities across multiple sectors. They explore the impact of geopolitical tensions, analyze the controversial SpaceX IPO valuation, examine massive capital expenditures in AI and data centers, and assess the diverging economic trajectories between the US and Canada. The conversation also covers currency headwinds affecting the Canadian dollar, strategic opportunities in mining and rare earth metals, and potential bottoming signals in precious metals and cryptocurrencies heading into fall.
Welcome back to the BT Global Perspectives Podcast, where we've probe into today's investment strategies and have a look at what's coming over the horizon. In Montreal, I'm David Creighton, chair of the BT Advisory Board, and I'm with Paul Beattie, the managing director and co-founder of the BT Global Fund. Before we get going, I'll invite you to peruse our disclaimer, which can be found on the BT website. Great to be back with you, Paul. Tell me about your whiplash.
SPEAKER_00Good to see you, David. Does it look obvious? Yeah.
SPEAKER_01Well, it's been a pretty crazy couple weeks since we last got together. Trevor Burrus, Jr. Yeah.
SPEAKER_00Just uh basically since the war uh in Iran, uh a lot of our investment themes have um have just gone the other way. You know? So whiplash, uh I think we were January we were up 10, February up 10. I mean, uh you knew it wouldn't continue, but uh but now it's going the other way, right? So uh so we've given half of that back. It's no fun at all. But um it's summertime in uh Canada. It's officially summer, and that means you should have let go of uh 30 percent of your stocks uh a month or two ago and uh and cruise through the summer uh waiting for the fall.
SPEAKER_01Yeah, well and we have a unique position here in uh Montreal being entre les deux vacances. You got uh the National Holiday St. Jean-Baptiste last week and the uh Dominion Dave, if we still call it that, that's coming up in a couple of days. So uh it is quiet, but that doesn't mean that the markets are sleepy. Canada's sleepy, but uh the U.S. seems to be on fire. We had that SpaceX thing.
SPEAKER_00Yeah, amazing.
SPEAKER_01It was just crazy. Trevor Burrus, Jr.
SPEAKER_00I've never seen it before, right? Uh you know, a huge IPO, the largest ever, and no valuation metrics of any kind.
SPEAKER_01There were some really interesting uh sort of creative accounting numbers that I saw that you know just held no water. But the market seemed to like it at least for a while.
SPEAKER_00Aaron Powell Anyway, the uh they valued it at uh you know a hundred times revenues, right? That much we know.
SPEAKER_01And uh no mention of profit, though, or a dah, or any of those tedious numbers.
SPEAKER_00Aaron Ross Powell Anyway, the stock uh great uh IPO. I don't know if you knew this, but uh uh you could have got stock at the IPO price, right? Uh there were a bunch of Canadian brokers were offered stock, but there was just one little caveat that has never been put, or I don't know about never, but uh uh rarely ever put in the IPO documents saying if you get an allocation at the IPO, you cannot sell your stock for three months. So it's an IPO.
SPEAKER_01Lucky enough to have received it, but you can't sell any.
SPEAKER_00And so uh of course it went out at uh what 135? Yeah uh it did get to 210, I think. Yeah. But if if you had uh been an allocated, you you're still long, right? You can't you can't get out. Anyway, for us, uh we just thought the valuation is extreme. And uh at 200, we just picked the number. Well, if it goes through 200, that's great. But if it goes back, if you start if you see it you know no longer going up and fact checks back below this magic 200 number, we said, well, let's just short it. And uh sure enough, it went from 200 to 155 in two days, I guess, three days. I mean uh anyway, what do you do now? Because now they're going into all the indices and trades like crazy and the valuation metrics are still uh absurd.
SPEAKER_01Like just And it's already in the uh uh indices, except for the standard poor, I guess. Right.
SPEAKER_00Not the 500, but uh just today they announced they're going into the S P 100, right. Right, which is uh lesser known, but still a you know, huge index. So uh it's fascinating to watch. And and and Tesla, but he says he's gonna have to go buy Tesla now.
SPEAKER_01Well, you and I were chatting sort of a couple days after the the IPO, and you're saying, you know, what you should do is go out and sell SpaceX and buy Tesla because he's gonna use the valuation of one to buy the other. I mean, and they did.
SPEAKER_00Well, I I don't know how he's gonna keep I don't know how he's gonna keep all these balls in the air, right? He's in, you know, basically five different businesses and yet two different companies. I mean, I I I don't know. I don't I think they're gonna have to put these things together. And then he can have five balls in the air, five industries uh he's playing in, and uh all in one big organization that doesn't make any money.
SPEAKER_01Yeah.
SPEAKER_00But anyway.
SPEAKER_01Not that I'm gonna try and do this trade myself, but it's interesting. I was just thinking about um this lockup that the IPO uh recipients have. So 90 days. Um and I guess in theory, uh, especially if the stock was strong, you would probably see quite a bit of selling happening as soon as that lockup is over. But the other side of the equation is he's scrambling to get on all the indices. So the the the index funds are forced to take some of on. So maybe he's hoping that by 90 days um everything will sort of be evening out and it'll just, you know, it won't have a crash after that.
SPEAKER_00Aaron Ross Powell No, right. And then uh people have been able to get out of uh SpaceX for years, right? There's been a huge uh private market uh uh transactions, you know, taking place. And so you you you could have gotten out over the last five years. So it's not like they're all locked in. But the uh stocks up eightfold in the last two years. So uh maybe a whole lot of people just in the last couple of years would be will be anxious to let some go. Um I mean, I I'm sure that's gonna happen, but uh uh you know, it trades like water these days, so it's uh it'll settle out at at some price. But for us, it's just uh it's it's just a sign that things are overheated because once again, the valuation metrics, how do you value these things? Yeah. Uh and especially these, you know, this large organization, uh, you know, is it worth uh two trillion dollars? That's uh that's a very good question.
SPEAKER_01Just out of interest, we're we only just started to use the word trillion a little while ago. I mean, used it used to be like a billion was a really big number. And then we were sort of force-fed trillions, and now you know we've got an individual who's worth that. That's a 13-digit number. I actually looked it up. But just to uh just to put that in perspective, uh I was looking at an article the other day in in Korea. So Samsung and Heinex uh have announced that they are going to be investing two quadrillion one, not dollars, but you know, local currency, in uh chip manufacturing and uh data centers and all the rest of the stuff. Anyway, so that's the first time I've actually read the word quadrillion.
SPEAKER_00How many zeros in a quadrillion?
SPEAKER_01I don't know, but I'm I'm gonna say uh another three in truth. At least so hold on to your hat.
SPEAKER_00Anyway, one one thing we can learn from uh from all of this CapEx and the big spend is uh uh you know, the the Mag 7, right, used to used to uh produce uh hundreds of billions of dollars in cash flow. And now, of course, they're all raising money, raising uh debt financing, uh uh raising equity spending on one thing, right? AI uh data centers uh and and we're up into the trillions. So the one thing I think you can conclude is that we are not going into a a recession in the United States in 26 or 27 and probably 28, because with this kind of capex, most of it, you know, just a sheer wall of spending.
SPEAKER_01Aaron Ross Powell, Jr.
SPEAKER_00Yeah. I mean, uh the ripple on effect uh is gonna happen, right? I mean, we're talking trillions of dollars annually. So commitments, you can't build these data centers uh overnight. And uh and uh so uh I mean I think it's I think it's bullish for the economy overall in the U.S. And so that that threat of uh uh you know, everybody's always worried about the the looming uh next recession, but I don't see it in the U.S. Aaron Ross Powell, Jr.
SPEAKER_01Well, I mean it reminds me back in the sort of Cold War days when the defense industry out in California and various other places were just getting smothered with uh money. And I remember that the numbers were back at at big at the time. So there's like a billion dollars a day that was going into California for the defense industry, so into the Raytheons and so on of the world. Uh and as a result, the California economy was just ticking along because that money was going into the economy. Um so I I guess what you're saying is that with all this money that has been raised, it will be spent, we're gonna see the U.S. economy continuing to just shuffle along or move at the same speed for the foreseeable future. So not just six months, but you know maybe a couple of years. Aaron Powell, Jr.
SPEAKER_00No, no, for years, for sure. And the governments are spending too, right?
SPEAKER_01Yeah.
SPEAKER_00Which uh makes me a little bit nervous about what's gonna go on here in Canada compared to the U.S. Trevor Burrus, Jr. Because we're just not seeing the same thing. I mean, we don't have any AI players in Canada. Remember, back in uh everybody refers back to the dot-com era. Well, we had a lot of big communication companies up here.
SPEAKER_01Sure, Nortel and BlackBerry. Yeah.
SPEAKER_00Uh also a bunch of bunch of good-sized uh operators. Anyway, we participated. Canada did its share. But uh in AI, I'm not sure we're even close to that. So we're not gonna participate as much. The money is not gonna be spent as much, it's all gonna happen south of the border. And um and uh one just has to uh pay attention to that. Um it's uh our economy is is clearly we have been uh underperforming for years now. Uh I don't see any sign of that stopping. Do you?
SPEAKER_01So I guess that probably explains why the Canadian dollar's weak and and Canadian um interest rates. We're just looking at the two-year and five-year tenure. I mean, they're all significantly below U.S. So you know, I mean, that's that's just not where it should be. Canada traditionally always trades at a bit of a premium over the U.S. But we're in a position right now, Canada can't raise interest rates because the economy is soft. The U.S. is actually talking about raising interest rates because they're in in uh you know in great shape, um, which I think is going to put continued pressure on the Canada-U.S. spread.
SPEAKER_00Trevor Burrus, Jr.: Yeah, I think so. I mean, it's uh it's fallen quite a bit, right? We're uh we're down to 70 cents, right? 70, 73 and a half to 70 cents in what, uh a month, six weeks, uh two months maybe. Anyway, quickly, uh it's going one direction. I don't see how that stops. It's our you know, in the fund, we you know, have to can't just sit and watch this happen. So you know, by far our biggest shorts, the Canadian dollar, right? Just just own U.S. dollars and and be short the Canadian dollar, right? So uh I don't think that stops.
SPEAKER_01Aaron Powell And so we're down at sort of 70 cents uh or 140 if the you look at the reciprocal. Um going back over the last 25 years or so, we had that period and you're talking about dot com. So after dot com, when everything kind of fell apart. So in 2002, we were sort of just starting to dust ourselves off. And at that point, the Canadian dollar uh was at its weakest at about 62 and a half cents against the U.S. So we we're we're not in uncharted territory here at 70 cents, and there is room to go further.
SPEAKER_00Aaron Powell I mean what what could what could save it? Uh well for sure, energy. Uh the energy industry is the one power powerhouse that uh they could take our dollar to back to par, right?
SPEAKER_01If oil prices go up and stay up.
SPEAKER_00Trevor Burrus, Jr. Right. And uh and and we get a little more active, and of course, uh the federal government gets completely on side uh with a with an uh you know a good uh proactive energy policy, right, to get energy to the rest of the world. If we do that, uh terrific. But aside from that industry, what could it be? Mining? A lot of people have talked about uh we have all these resources, we could uh we could uh move that all along. Listen, uh we've met, Jacques and I have met with, I don't know, 50 companies that have viable projects here in Canada in the metals business, uh a lot of them in strategic metals, right? This all-important uh uh rare earths, uh, silver, copper. We have it all. And uh all of these things could be done, but guess what? Uh we we move it to snail space in this country, uh permitting and getting financing. And yet look at what's happening in the U.S. The White House itself uh is meeting with mining uh CEOs. They've got their little team, not a big team, but a small team, all powerful, saying, we'll meet with you, we will discuss permitting uh with you, and we will talk about financing. And from what we understand, uh they're gonna finance all sorts of companies. They're gonna write checks, uh, and they're gonna do it very quickly. And so Canada needs to, uh, you know, you you want to build an industry, you've got to compete with the Americans, I think, now in uh uh in the mining industry.
SPEAKER_01Trevor Burrus, Jr. Well, the uh the Americans are motivated. I mean, the when we had that uh trade spat between Canada or uh the U.S. and China, um, China just said, yeah, sure, but you know, you can't have any of our rare earths. And the the U.S. backed off immediately. Trevor Burrus, Jr. I mean, uh tungsten.
SPEAKER_00You want to talk about tungsten? I was with the Trevor Burrus, Jr.
SPEAKER_01Well, there's this big deal in Kazakhstan, Paul Paul Trump.
SPEAKER_00We met with uh CEO of a tungsten company last week, and uh he goes, you think you can you think you can re-arm the uh the U.S. military, the uh the munitions side of the uh equation without tungsteam? You think you can you think you can build cars without tungstein? Like there's you can't do anything without it. And by the way, we don't have any, right? Uh so yeah, uh every tungsteam project around the world has uh has got the U.S.'s attention. And anyway, I think it's good news, right? That uh you know if if they get proactive, Canada can get proactive too. Uh we just we just have to I think in Canada our biggest problem is well, we have seven layers of government that are affected by infrastructure projects. You know, seven layers, imagine. And uh what we need to do is is get moving, right?
SPEAKER_01So uh that's what they say. So I think I think I'm gonna have to with that under our belts, I think we're gonna have to wind it up. Uh are you gonna take any time off this summer? I mean, you never really do. You've always got your own.
SPEAKER_00Oh, but we're going to this year because uh I'm looking forward to the fall, right? Um so I think I think uh the great news is we're gonna uh well we should talk about it. I mean, uh what what's happening with gold, silver, by the way, Bitcoin, they're all doing the same thing. They've all come off uh quite a bit. They're all at their sort of key support levels uh as we speak this week. And uh and and what's going to happen? Uh I suspect uh uh we support um in here or around here, maybe, maybe five, ten percent lower, but we're not going uh gold's not going to zero, silver's not going to zero. And uh uh uh I'm not as bullish near the uh Bitcoin, all the whole crypto world. Uh I think there's a there are problems there we've talked about. Uh so we're avoiding that. But I think uh it's all the same thing. They're all coming down for the same reason, you know. Um uh rising U.S. dollars uh certainly not helping. But when does it bottom? And uh we suspect uh it'll happen over the this summer. Trevor Burrus, Jr.
SPEAKER_01Probably we're all looking somewhere else.
SPEAKER_00Well, yeah. I mean, but the thing is US dollar goes up, you know, gold goes down. Uh it makes perfect sense. So the question is how low does it go? I can tell you one stat came out uh uh late last week. The Chinese bought more gold last month than ever. Okay. So I know who the buyers are, right? The uh the East is buying and the West is selling. And uh and uh that's gonna probably continue for the next 20 years. But but uh uh anyway, we're gonna zero, right? So we've come off silver's down like 50 percent from its peak. So they they've all good size setbacks. When does it bottom? I think you just watch, wait for it to bottom, wait for it to start moving up, and then uh and you buy that dip. And uh and I think that's all gonna happen uh this fall. So looking forward to that.
SPEAKER_01So not this summer. Well, kind of when we're all as I say, when we're all at the beach kind of looking the other way, you can all of a sudden get back and on Labor Day and say, hey, hmm, I missed that one.
SPEAKER_00It could it could certainly happen.
SPEAKER_01Yeah.
SPEAKER_00Uh anyway, the stocks are the stocks are cheap. I mean, uh like Agniko Eagle, I don't think, you know, easily the best-run gold company in the world. Uh the stocks down uh, you know, 35% from its high. Uh we looked at uh IM Gold is a company we will buy. We don't own it yet, uh, but we are going to buy this company. This thing now trades at like three times EPTA, right? So it's a $10 billion company producing $2.5 billion in uh cash flow. And their free cash flow is just under that. Like, you know, 17% of their enterprise value is free cash flow. Like there are very few stocks that are that cheap anywhere. So uh, you know, how long is it gonna stay at that? Why isn't it, you know, if it why isn't it trading at 10 times cash flow? So um uh free cash flow anyway. Uh so I think it's gonna be an exciting, uh exciting next run, but when does it start? Uh I wish I knew.
SPEAKER_01Well, let's watch. Let's watch. Paul, love that enthusiasm. Um, you know, and this is how you got to where you are. So um we're gonna have to leave it there. As always, we appreciate the feedback that we've had from you, our listeners, um, and uh we'd be happy to tackle any topics that you've got on your mind. Just give us a call or send us a note to um the btglobal.ca website. And thanks to our recording and production engineering, our cost and post-production, which is overseen by our very own Mary Ann Mount and Karen Valderama. Until next time, be safe out there.