OI6: A Fundamental Approach to Commodities ft. Ricardo Leiman & Pedro Marion

2024-03-20

In this episode, Moritz Seibert is joined by Ricardo Leiman and Pedro Marion from KLI Asset Management, a UK-based commodities-focused hedge fund. Ricardo and Pedro explain why KLI’s trading approach is rooted in deep fundamental analysis of commodity supply and demand and how they integrate commodity equities into their portfolio. Furthermore, they mention that the strong diversification across their portfolio of about 30 markets allows them to hold directional positions longer term, avoiding stop-outs on short-term price reversals – a feature that’s also an edge. Ricardo and Pedro also provide color on markets which they believe are currently interesting, inclu...

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Episode TimeStamps:

02:09 - Introduction to Ricardo and Pedro

06:18 - What is their edge?

07:57 - What commodities are they trading?

08:46 - Why they don't trade cocoa

11:09 - Acquiring information through networking

13:40 - Why and how do they trade commodity equities

17:15 - What do they consider long-term?

19:38 - Why isn't copper sky rocketing?

22:01 - Their approach to options

22:50 - How they incorporate trend following in their trading

25:24 - Global macro perspectives

27:28 - No hard landing?

28:35 - Is the coal market dying?

31:14 - The outlook of EUAs

35:03 - Do they formulate a price target in their models?

37:08 - A disconnect in the green transition

38:58 - Natural gas market integrating with LNG

40:55 - Their view on the grain markets

43:34 - A quick touch on other markets

44:20 - Thanks for listening

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