J Mintzmyer of Value Investor’s Edge, a financial markets research service for the shipping and energy industries, discussed how he hedges risk and outperforms industry averages by 20-30% in an interview with Benzinga.
About J Mintzmyer
Mintzmyer began trading during his studies at the United States Air Force Academy.
"I just started investing right as we had that big crash. So, I kind of jumped in there and was able to, you know, look at all these stocks plunging."
“That taught me lesson one: to look for companies that are strong, sustainable and can withstand downturns. Lesson two: just because something is cheap doesn’t mean it's good.”
In 2015, Mintzmyer found Value Investor’s Edge, a research tool that exploits market disconnects and provides insights and analysis for overlooked markets.
Learning To Trade
Outside of accounting and finance courses, Mintzmyer said he spent time outside of school reading about and studying the markets.
“Basically, the books that every single value investor reads. That was kind of my foundation when I was 20 and 21 years old,” he said.
To learn about shipping and energy, Mintzmyer read everything available.
His go-to list includes "Maritime Economics" by Martin Stopford, "The Box" by Marc Levinson and books by Peter Lynch.
“It’s a mix of formal education and a lot of self-study, and then, of course, getting your hands dirty investing for 11 years,” Mintzmyer said.
The Efficient Market Hypothesis
The efficient market hypothesis is the idea has priced everything in, meaning there's no point in picking stocks, Mintzmyer said.
The thesis doesn't hold, he said, adding that certain sectors are overlooked due to their size.
“If you go to a stock like Apple, or Tesla or Amazon — the odds that I know something more than the market knows is super small, because there are thousands of super smart people that are all over those stocks,” he said.
"The smaller the stock, the less likely people are covering it."
The majority of stocks in the shipping and energy sectors have market caps of less than $1 billion, he said.
“They aren’t microcaps, where the average stock is $100 or $200 million to $2 billion.”
Many leaders in the trading space fail to identify the value that's present, in Mintzmyer's view.
"Sentiment is awful, but we are seeing record high rates in the container markets; we are at eight-year highs."
Day To Day
“I have a day job. I’m actually in the Air Force. What I do here is actually a hobby right now,” he said.
Every weekend, Mintzmyer updates his portfolios and fundamental models.
“Throughout the day, I don’t do a lot of trading. I’m a fundamentals guy. I position myself based on the models [and] where the shipping rates are going.”
Strategy Talk
A profitable trade is made up of a few steps, in Mintzmyer's view.
The first entails looking at supply and demand.
“It takes two to three years to build a ship. So, you look at the sectors where the forward supply is the lowest and the far demand looks healthy and promising.”
Then, Mintzmyer analyzes shipping routes, taking note of variables like travel distance, volume and ton-miles.
By taking note of increases in volumes and distance traveled, Mintzmyer said he can capitalize on hidden growth opportunities.
Value Investor’s Edge
Value Investor's Edge is a research service with analytics available on every company, Mintzmyer said.
He founded Value Investor’s Edge with the intention of disseminating actionable reports that uncover disconnects in overlooked sectors.
The reports critique factors such as management quality, balance sheet leverage and price-to-net-asset-value.
"I can tell you, on any certain day, this company is worth $15-a-share, and that’s a legitimate liquidation value, not just some guess work."
You can see J Mintzmyer Oct. 11-13 at the Traders4ACause conference in Las Vegas.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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