Invest Like the Best with Patrick O'Shaughnessy

[REPLAY] Deep Basin – Earning Alpha in Energy - [Invest Like the Best, EP.81]


Listen Later

My guest this week are Matt Smith and Ian singer of Deep Basin Capital, a hedge fund specializing in the energy sector.

I first met Matt almost 10 years and, in that time, I’ve grown to respect him as much as any investor that I’ve ever met. Now having spent time with Ian, who specializes in oil and gas field exploration companies and the rest of the Deep Basin team, I have similar respect and admiration for all of them.

Deep Basin does almost the exact opposite of what us quants do. In fact, their entire goal is to build a portfolio of mostly idiosyncratic or stock specific risk, the very thing us quants mostly remove from portfolios. Deep Basin positions the portfolio to make a series of carefully constructed bets, long and short, without taking market risk, style-factor risk, or even commodity risk. They use a hybrid fundamental and quantitative process which we explore in detail.  This is definitely another good example of who we are all up against in public markets.

What makes this story unique is that we are investors in Deep Basin’s management company and so have a clear interest in their ongoing success. Listeners know that I want to be as transparent as possible on this podcast so we event spend a little time telling the story about how it all came together a few years ago.

I have learned a ton about investing from my countless hours with this team and hope that this conversation gives you a glimpse into what is happening at the cutting edge of investing in the world of hedge funds.

Please enjoy my conversation with Deep Basin

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Books Referenced

Expectations Investing: Reading Stock Prices for Better Returns

 

Show Notes

2:47 – (First Question) –  Looking at the universe of the energy space that they are focusing on

7:48 – Breaking down the important components and their labels in this space

10:27 – What makes energy companies distinct from the broader market.

12:52 – How the isolate unique value creation

14:58 – Ian’s take on the upstream part of the business where he has spent a lot of time

18:35 – How does Deep Basin use data and what edge do they derive from it.

21:31 – What insight are they looking for from updated well data

23:59 – How do they use combine the business value that they measure with the market price that is being forecasted

            24:40 – Expectations Investing: Reading Stock Prices for Better Returns

29:34 – How do they build an actual portfolio

31:51 – Their systematic approach to energy investing

37:53 – What are their thoughts about using leverage when making investments in the energy space

40:53 – A look at the changes to the hedge fund industry over the entirety of their careers

45:46 – Defining the culture of Deep Basin

49:15 – The story of how OSAM and the O’Shaughnessy’s came to be investors in the Deep Basin

54:13 – Kindest thing anyone has done for each of them

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

...more
View all episodesView all episodes
Download on the App Store

Invest Like the Best with Patrick O'ShaughnessyBy Colossus | Investing & Business Podcasts

  • 4.7
  • 4.7
  • 4.7
  • 4.7
  • 4.7

4.7

2,210 ratings


More shows like Invest Like the Best with Patrick O'Shaughnessy

View all
Masters in Business by Bloomberg

Masters in Business

2,173 Listeners

a16z Podcast by Andreessen Horowitz

a16z Podcast

1,032 Listeners

We Study Billionaires - The Investor’s Podcast Network by The Investor's Podcast Network

We Study Billionaires - The Investor’s Podcast Network

3,366 Listeners

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch by Harry Stebbings

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

519 Listeners

Odd Lots by Bloomberg

Odd Lots

1,780 Listeners

The Meb Faber Show - Better Investing by The Idea Farm

The Meb Faber Show - Better Investing

937 Listeners

Founders by David Senra

Founders

1,906 Listeners

Capital Allocators – Inside the Institutional Investment Industry by Ted Seides – Allocator and Asset Management Expert

Capital Allocators – Inside the Institutional Investment Industry

802 Listeners

All-In with Chamath, Jason, Sacks & Friedberg by All-In Podcast, LLC

All-In with Chamath, Jason, Sacks & Friedberg

9,095 Listeners

The Memo by Howard Marks by Oaktree Capital Management

The Memo by Howard Marks

410 Listeners

Business Breakdowns by Colossus | Investing & Business Podcasts

Business Breakdowns

346 Listeners

Making Markets by Colossus | Investing & Business Podcasts

Making Markets

65 Listeners

ACQ2 by Acquired by Ben Gilbert and David Rosenthal

ACQ2 by Acquired

212 Listeners

50X by Colossus

50X

79 Listeners

Return on India by Colossus | Investing & Business Podcasts

Return on India

16 Listeners

Making Media by Colossus | Investing & Business Podcasts

Making Media

21 Listeners

Joys of Compounding by Colossus | Investing & Business Podcasts

Joys of Compounding

97 Listeners

BG2Pod with Brad Gerstner and Bill Gurley by BG2Pod

BG2Pod with Brad Gerstner and Bill Gurley

461 Listeners

Glue Guys by Colossus

Glue Guys

83 Listeners