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Cycle Bottom Profile picture
@BULLReturns
Nov 11, 2022 • 8 tweets • 5 min read • Read on X
Thought of the day: Fighting #commodity price tops will just result in 75% plus stockprice retracements, #cyclicality music always stops, grab a chair early to avoid serious regrets and portfolio destruction. Easy clue to follow, is 65-80% margins above cost curves are peakish.
Those #commodities that are currently near bottoming (0-20%) for the next up cycle 2H2023-2025....

#tin -65%
#ironore -66%
#nickel -60% (moving up)
#Lumber -72%
#zinc -40%
#HRCSteel -67%

Know where you are in the cycle....
1st Quartile candidates for the next cycle...
A deep recession would see industrial metals decline to costs curves or into negativity for high cost producers, this is often around 75% down from 2021 peak levels.

Note we need to take into account those with historic low inventory levels currently.
#Commodities
#cyclicality
Generally zero or negative margins (supply shut down incoming) with low global inventories (lack of dumping overhang) offset with immediate recession demand destruction = #commodity bottoming 1st Quartile entry points

Demand destruction can offset low global inventories in S/T.
#ironore cycle 2H2023-2025

1st quartile $40-90/t = high probability of 4-8x gains in pre-production plays

2nd quartile $90-$140 = 2-4x returns

3rd quartile $140-$190 = 1-2x returns

4th quartile >$190 = high probability of 0-75% loss
#tin cycle 2H2023-2025

1st quartile $12k-18k = high probability of 4-8x gains

2nd quartile 18-28k = 2-4x returns

3rd quartile 28-38k = 1-2x returns

4th quartile >38k = 0-75% loss
Newcastle #thermalcoal cycle 2023

1st quartile $40-90/t = high probability of 5-10x returns from pre-production plays

2nd quartile $90-$130 = 3-6x returns

3rd quartile $130-$170 = 2-4x returns

4th quartile >$170 = high probability of 0-75% declines

#coal

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More from @BULLReturns

Cycle Bottom Profile picture
Jan 12
Not a 2025 impact, perhaps 2032-2035 #uranium Lets understand 2025 impacts to avoid misunderstandings on timing.
2025 #Uranium is about service bottlenecks (sticker shock to Utes) + Russian supply cuts to the US + unexpected supply cuts (KAP pivot to East + negative events)

2H 2025 several US Utes will likely require action on replacement supply sources = Spot buying (8-12lbs)
New data centres requiring speed of implementation will look for the quickest solutions likely gas powered module products avoiding long interactions with slow moving bureaucracy.
Read 6 tweets
Cycle Bottom Profile picture
Dec 30, 2024
What's a US$5m pre-production cap #gold #silver play with 2 mine $200m NPV (@ 2700 gold) worth as the following occurs in 2025?

PFS release on 1st mine in January 2025

1st mine offtake financing of $28m or strategic partner financing?

Dilution over 2025 likely to be $2m
Potential outcomes as #gold spot climbs through $3k:

A) no project funding and $2m dilution at cap lows (25% probability)

B) project funding secured & +200-400% rerate (50% prob)

C) dilutive project funding secured at the cost of 50% project stake reduction (25% prob)
Plus #copper play
Read 4 tweets
Cycle Bottom Profile picture
Nov 11, 2024
As our followers will recall, we used $GBTC at its 50% disc near cycle lows to achieve our #bitcoin exposure, our scale down for this cycle commences at $84k through $135k over the next 12 months. This will equate to >10x returns from GBTC over a 3 yr holding period from 4Q 2022.
The cycle continues to dictate our 10 bagger position, as it should do for our followers.
This will also complete a full exit from our #bitcoin miners, that were not fully scaled out at earlier 2024 peaks
Read 5 tweets
Cycle Bottom Profile picture
Nov 1, 2024
Pre-production micro cap #Commodity stocks rules to adhere to:

A) drill program to scoping study

Dilution funding (up cycle): 30%
Elapsed Time: 18-24 months

B) SS to Pre-feasibility

Dilution: 60%
Elapsed: 18-24m

C) Pre-feasibility to DFS/BFS

Dilution: 80%
Elapsed: 12-18m
D) DFS to production (compelling project)

Dilution (cumulative) 90% plus
Elapsed Time: 30-48 months

Total elapsed: 76 to 114 months

For a downcycle one can double the dilution.
<3% of projects are compelling
=

Scalable resource

IRRs > 50%

Location has existing infrastructure

Low on the cost curve

Capex intensity mild

Can move into production this cycle

Won't dilute shareholders down to near zero
Read 4 tweets
Cycle Bottom Profile picture
Oct 17, 2024
Without regards for the cycle, 10 baggers are mythical beasts.... With regards to the cycle they are 30% probabilities 🎯 with the following characteristics..

A) down > 95% from the previous cycle peak
B) trading < 3% NPV near cycle lows
C) implied 3-4yrs out trading on <0.4x CF
Active example there will be over 20 10 baggers from the #lithium space from recent cycle lows through the 2027 cycle peak.

Note the amount of 10 baggers from 2020 lows through 2021/22 highs compared with 2022 highs through 2024 lows.

The #cycle is everything
Recent China Real estate stock moves, many did >500% (even a few 10 baggers) in a < 2 months from being down >99% from cycle peaks.
Read 9 tweets
Cycle Bottom Profile picture
Sep 29, 2024
Top positions for us are ones near exiting as they have performed so well, where new top positions come in at 2% and can move to 15% by outperformance. Old asymmetric themes have performed and are on the chopping block, this is how to play cyclicals.
Cyclicals trading > 8x 2027 peak CF are an exit, those trading <0.3x are an entry.... Knowing the difference is the art work.
Only near cycle bottoms offering fresh asymmetric themes trade at <0.3x 2027 peak CF.... We can tell you what that isn't, most state their current major holdings which are over > 50% on their respective cycle clocks will deliver, they totally won't.
Read 5 tweets

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