Joe Boskovich and Brian Laks, Old West Capital (Episode 6)

Episode Summary

Executive Summary: Old West Capital’s Brian Lacks and Joe Boscovich explain their value-oriented, owner-operator investment process and why it led them to uranium. They argue uranium is a classic supply-demand dislocation with years of underinvestment, shrinking supply, and improving demand from reactor restarts and life extensions. They also discuss portfolio construction, the role of catalytic insider ownership, and their dedicated uranium-focused opportunity fund.

Main Topics: Old West Capital’s owner-operator value investing process (Priority: 5/5): Joe Boscovich describes the firm’s core approach: identify smart, highly aligned managers with meaningful ownership, scrutinize proxies and filings, and only proceed when a clear catalyst can close the value gap. Brian Lacks’ value investing background and generalist approach (Priority: 4/5): Lacks explains his background in energy and commodities, and argues that all investing is value investing: buy assets at a large discount to intrinsic value with an identifiable catalyst. Howard Jonas, John Malone, and capital allocation as an edge (Priority: 4/5): The discussion highlights serial spin-off and capital allocation excellence, especially Howard Jonas’s track record at IDT and related businesses, as a model for finding mispriced assets. Portfolio construction, risk management, and exit discipline (Priority: 4/5): They emphasize thesis-driven exits, willingness to hold winners as fundamentals improve, and the importance of not relying on stop-losses or arbitrary price rules. The uranium bull thesis (Priority: 5/5): Lacks lays out uranium as a supply-demand imbalance: demand is steady/growing, supply is constrained, and prices have remained too low to incentivize new production, creating asymmetric upside. The dedicated uranium/opportunity fund (Priority: 4/5): Old West launched a concentrated opportunity fund because uranium exposure had grown too large for its diversified funds; the new vehicle is designed to own the highest-conviction asymmetric ideas rather than remain sector-neutral. Where the uranium opportunity sits in the value chain (Priority: 4/5): They explain that the biggest opportunity is in miners/resource owners, though they also hold exposure to enrichment and related processing businesses and discuss lower-risk ways to gain uranium exposure.

Key Arguments: The best investments come from a large gap between intrinsic value and market price, plus a catalyst that closes that gap. Insider ownership matters most when management is the largest shareholder and compensation is aligned with shareholder outcomes. Capital allocation skill and patience can create extraordinary returns, as shown by Howard Jonas’s multiple spin-offs and long holding periods. Debt is a major red flag in cyclical/resource businesses because it can prevent companies from surviving downturns. The uranium thesis is fundamentally a supply-demand argument: demand is stronger than supply, and low prices have suppressed new production. A long downturn and market neglect have created a small, illiquid sector where prices can move sharply once sentiment turns. The firm prefers thesis-driven risk management over stop-losses, because volatility often creates opportunity rather than signaling permanent impairment. The opportunity fund is meant to concentrate capital in the most asymmetric ideas, not just uranium forever. Utilities’ uncovered future uranium requirements should force price discovery over the next few years. Demand-side risks, such as a major nuclear accident or large-scale reactor shutdowns, are the main threats to the thesis.

Data Points: Uranium price decline: ~$70/lb in 2011 to below $20/lb in 2016 - Used to illustrate the severity of the post-Fukushima uranium downturn Uranium companies remaining: Only a few dozen left, down from several hundred about 10 years earlier - Shows industry contraction and supply destruction Portfolio exposure to Howard Jonas-related companies: About 12% to 15% - Joe describes the firm’s combined holdings in IDT-related businesses Portfolio exposure to John Malone companies: About 6% to 7% - Adds to the concentration in owner-managed capital allocators Total exposure to spin-off style businesses: About 22% of portfolio - Combined exposure to Howard Jonas and John Malone-style structures Abbott Labs purchase price: $40 per share - Example of insider buying and capital allocation analysis Abbott Labs current price at the time: $85 per share - Illustrates a successful large-cap value idea Miles White insider purchase: $31 million and then $15 million - CEO buying in Abbott Labs, reinforcing the ownership thesis Straight Path sale price: $3.1 billion - Howard Jonas-related spectrum asset sold to Verizon Windstar spectrum assets purchase: $50 million - Initial bargain purchase that later became Straight Path Howard Jonas spin-off returns: 50% annualized vs 10% for S&P 500 - Performance cited for IDT shareholders who held and collected spin-offs Raphael Holdings spin-out balance sheet assets: ~$100 million real estate + ~$50 million cash - Used to show that the market cap was below hard assets at spin-off Raphael Holdings market cap at spin: ~$100 million - Compared against hard assets to argue for undervaluation Raphael trial results: 18 patients, 3 complete remissions - Phase 1 results for CPI613 in pancreatic cancer discussed as unusually strong Uranium fund performance: Assets up more than 10x since launch - Brian notes strong reception and performance after launching the dedicated fund Uranium industry concentration: Most companies sub-$100 million market cap - Explains illiquidity and why large investors have difficulty participating Uranium miner example: One portfolio name up 50% in a day; another up 5x in two weeks - Illustrates the magnitude of equity re-rating when positive catalysts appear Cameco and Kazatomprom: Named as the biggest tradable producers - Suggested as relatively easier entry points for investors seeking uranium exposure Paladin example: Bought at 10 cents, fell to 1 cent, later reached $10 - Extreme historical uranium example used to show asymmetric upside and volatility

Pivotal Quotes: "All investing is value investing. I mean, you're trying to buy something for less than it's worth." — Brian Lacks: Explaining the firm’s philosophical foundation for all ideas, not just uranium "The elevator pitch is it's a commodity where the demand is much greater than supply and the price is too low to bring new supply on." — Brian Lacks: Concise summary of the uranium bull thesis "If you don't identify a catalyst, cheap stocks usually get cheaper." — Joe Boscovich: Describing why value alone is insufficient without a path to value realization

Implications: Listeners should take away that the uranium opportunity is being framed as a rare, asymmetric cyclical trade with improving fundamentals and limited competition. The episode also shows how aligned ownership, patience, and catalyst-driven value investing can uncover neglected sectors before they re-rate.