This new pitch from Brad Thomas goes in heavy on the political signaling, which gives most of us a headache… so I’ll just repeat what I’ve said many times before: If someone’s trying to sell you something, and they lean heavily on a political figure or to do so, it’s just marketing. They’re trying to either get your attention with a controversial statement, or use some shared political affinity to shortcut their way to being “trusted” in your eyes.

All a marketer needs is attention and trust, and these days, our extremely divided politics gives them two easy ways to get that: Shock you by criticizing your favorite politician, or establish rapport with you by praising the guy you like and reinforcing what you already believe.

So I’ll try to skip over the long political-bait intro for Thomas’ current pitch, which is an ad for his entry-level Intelligent Income Investor newsletter ($49 first year, renews at $129), just because it’s kind of exhausting, even if he comes from the perspective honestly (he wrote a book about Donald Trump a few years back, and as a real estate guy seemed like a fan of his “brand building” power in that area), and get to the actual focus of today’s teaser.

If you’re not familiar with Thomas, he established a pretty big following by writing about real estate investment trusts (REITs) at Seeking Alpha over the past decade or so, and has more recently joined in with the Marketwise crowd to publish investment newsletters under the Wide Moat Research brand, and his first few ads use the same kind of wild hype (probably from the same copywriters) that we’ve long been used to from Agora and Stansberry and their offshoots. We’ve covered one of his previous teasers for this service so far, which promoted “Amazon’s Secret Loophole Royalty Program.”

With this new ad, he’s saying that President Biden is doubling down on President Trump’s use of the Defense Production Act (most visibly used to push for vaccine and COVID drug development in recent years), and that this time the focus is moving much more strongly to metals and mining, as the current push under the Inflation Reduction Act and other stimulus programs which prioritize “green” energy development and CO2 emission reduction will require vastly more “green metals.” Which mostly means rare earth metals, though there are some other “strategic metals” as well (including lithium, which isn’t particularly rare).

And the charts and graphs that Thomas uses all go up and to the right, of course, cherry picking some of the biggest winners of past executive actions — including all the vaccine makers who profited from the huge COVID funding push in 2020 and 2021, as well as the solar panel makers and rare earths producers who profited from government action in recent years.

And then we get to the stock Thomas is actually hinting at as a recommendation:

“The One Stock Biden Donors Are Buying …

“Once I discovered all this information, I started looking into what the big banks and hedge funds, who donated to Biden were buying….

“Ken Griffin, who was on Biden’s inaugural committee…

“I mentioned before how he had $20 million in his personal portfolio…

“What I didn’t mention:

“He’s loaded his hedge fund with over $400 million in this one stock!

“Then, I saw shortly after expanding the DPA to have limitless spending…

“Renaissance Technologies, one of Biden’s biggest donors… upped their stake by 200% in the same stock… as revealed in their 13-F.”

What else does he tell us about this stock?

“This company is one of the only companies in America that can provide the materials needed for the green transition. An essential monopoly.

“And now they control a super rich area of deposit, enough to supply almost all the lithium in the entire world.

“Not just America – the entire world.”

Some other hints and projections…

“Ford selected this company to supply them with the materials to build 3 million batteries for their vehicles…

“Elon Musk, who was thinking of starting his own rare earths business… has instead decided to become one of their biggest customers.

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“Even President Biden himself met with the CEO of this company, no doubt telling him they will get all the support they need….

“… my analysis reveals the company is about to undergo the most aggressive growth in its entire history…

“With the stock increasing up to 340% in value.”

And though he says it’s “already outperforming the market by over 4,700%”, it’s also not trading at a crazy valuation…

“Unlike some stocks with sky high valuations, this under-the-radar stock has a single digit Price to Earnings… the type of undervalued company guys like Buffett dream about.”

So what’s the stock? For his “Biden’s secret MAGA stock,” Brad Thomas is teasing an investment in Albemarle (ALB), one of the world’s largest lithium producers.

Which, yes, has outperformed the market over the very long time — though lithium prices are pretty volatile, and their relationship with Chile, where most of their low-cost lithium production takes place, has certainly had its ups and downs. This is the total return for ALB over the past decade (compared to the S&P 500, which is the orange line):

(I don’t know what timeframe he used to get the “outperformed by 4,700%” number, but the shares have always been very volatile so you can probably find that for some period of time if you start at a moment when ALB was particularly beaten down.)

And he highlights one of their US locations, which is Albemarle’s old Kings Mountain lithium mine in North Carolina — a project that’s been getting some government funding to finance a restart of mining (they have a lithium processing plant on site, and Albemarle’s headquarters is not so far away in Charlotte, they but haven’t actually been mining in the state for a long time).

So… will Albemarle post 340% gains from here? That depends on many things, of course, but one of them is the price of lithium — they’ve had good growth so far this year, and are currently expected to post earnings per share of $26.80 once 2023 is in the books, which is phenomenal for a company with a $180 share price (yes, it is a “single digit PE”, that’s about 7X earnings). The challenge is that this is widely expected to be their peak year, as revenue flattens out and earnings fall about 10% in 2024 and stay at about that level in 2025. The company most recently raised its 2023 guidance to forecast adjusted earnings per share between $25 and $29.50 this year, up about 20-25% from last year, in large part because of higher lithium prices… though they’re expecting to generate less cash from operations last year, and to have higher capital expenditures. Their headline is, “Improved Energy Storage Outlook More Than Offsets Economic Pressures on Specialties.”

Nobody knows what will happen to lithium prices, or to Chilean politics, but that’s the basic fear — that the growth has peaked and revenue and earnings might be flat to down a little bit in the foreseeable future. (“foreseeable” is just a phrase, obviously, none of this is really foreseeable.) And while the restart of Kings Mountain would help increase production a little, as is the case with their other US mining project in Nevada, neither is really going to move the needle for this gigantic company — the vast majority of their lithium comes from their evaporation projects in the Salar de Atacama in the Andes Mountains and from their spodumene mines in Australia.

But yes, if you want a mainstream, solid play on rising lithium prices, buying the world’s biggest producer at a low valuation seems quite reasonable. Even if lithium prices come down a bit, which is certainly possible as all the investments in expanded capacity to meet electric car demand finally begin to have an impact, they’re likely to be in reasonably good shape, given how much demand should be rising. No guarantees, and lithium demand is not rising so much right this second (partly because consumer electronics are in a bit of a slowdown post-COVID, as we’ve seen from the tepid response to the new iPhone and the lowered guidance from folks like Taiwan Semiconductor (TSM)), so I wouldn’t expect the kind of bubble pricing mania that was enjoyed by COVID vaccines or rare earth minerals stocks in past manic pricing eras… but this is at least far less speculative than the many startup lithium ideas out there.

As to who might be buying Albemarle because of any top-secret whispers they’re getting as a major political donor about a “boom” before the election next year, well, that’s mostly silly in this case — yes, Citadel and Renaissance have both owned Albemarle shares in the recent past, though in trivial amounts (Citadel actually owns more put options on ALB than it does call options or shares of stock — as of June 30, they owned $266 million worth of put options, $127 million worth of call options, and $28 million worth of actual shares… so yes, technically they’ve “bet” $400 million, but more than half of that was betting that the shares would fall). Mostly it’s just a way for Thomas to name-drop a famous investor, though — as with most large cap names, Albemarle shares are overwhelmingly owned by index investors and very diversified institutional portfolios.

And not to wade too far into this particular mire, but Ken Griffin at Citadel has historically been a moderate republican donor — he considers himself a “Reagan Republican” and has donated far more to republican candidates than to any other party’s nominees. It was widely reported that he soured on President Trump during his term, after backing him in 2016 to at least some degree, and he didn’t put his money behind Trump in 2020. He did donate to Biden’s inaugural, but has mostly been looking for a non-Trump republican to back, with his biggest donation for the 2024 campaign going to Ron DeSantis (so far, at least — that gift to DeSantis was 10X his donation to Biden’s inaugural committee). Most uber-wealthy folks and corporations spread it around and donate to both sides as much as they can — some are true believers in one way or another, but most just want to buy access and, they hope, influence.

I only harp on that point because Thomas included another supposedly Citadel-connected stock in this teaser pitch, too — here’s his second tease of the ad:

“America’s Secret Oil Pipeline….

“Despite Biden canceling the Keystone Pipeline and being cheered on by the coastal elites and liberal media…

“America has a secret pipeline few know about

“More pipeline than Exxon, Chevron, and Shell COMBINED – 91,000 miles, twice the size of the U.S. interstate system….

“And wouldn’t you know it… Ken Griffin, Biden’s best hedge fund buddy, has 6 MILLION shares of the company!”

There are close to three million miles of pipelines for natural gas and crude oil in the United States, what are those 91,000 miles he’s talking about? That’s pretty close to the estimate of the size of the natural gas gathering systems in the US (the pipes that connect gas production to the longer-run pipelines which connect to refining/processing plants)

The other clues he drops? He again implies that there’s some kind of Biden connection…

“And best of all, it’s one of the few energy plays I feel is safe from the government.

“Biden himself has said he likes this pipeline deal because it protects millions of acres of land, while still producing much of the world’s oil.

“He even called it ‘a hell of a trade off’ in one of the only times he’s mentioned it on record.”

That doesn’t help much — those references are to Biden’s grudging approval of ConocoPhillips’ (COP) Willow project in Alaska, with the “hell of a trade off” being that he was trying to block any future production from the areas to the North of that, in the Beaufort Sea area. There aren’t any real pipeline owners that are direct plays on expanding Alaska production — COP does own a chunk of the Trans Alaska Pipeline, as do a couple other companies, but it’s mostly owned by the private oil company Hilcorp, which bought out BP’s Alaska business a few years ago. And, of course, that’s not very long in this context — it’s mostly just a straight shot, moving oil from Northern Alaska down to the Valdez terminal, about 800 miles. COP’s total owned pipeline network is somewhere in the 27,000-mile range, in case you’re curious, so they’ve held on to more of their pipes than many operators… but he’s clearly not teasing ConocoPhillips.

So… there’s not a perfect answer here… but I suspect this is a reference to Energy Transfer (ET), which does own the largest single collection of pipeline assets (well, longest, at least), if you include gathering systems, which is their strength, they own about 125,000 miles of pipeline (~90,000 or so miles of which is gathering systems, which I guess are kind of “secret” or “hidden” if you want to play that game, they’re not as well-known as the big interstate pipelines). Next in line is probably Kinder Morgan (KMI), with about 82,000 miles. Energy Transfer is a popular play on natural gas collection and transmission, particularly with an eye toward future growth of LNG exports, but you could say much the same thing about the other big and reasonably interesting pipeline operators, like Enterprise Products Partners (EPD) and MPLX (MPLX), which were both teased by Brad Thomas as good buys a month ago in his other newsletter.

And yes, Ken Griffin’s Citadel did have exposure to more than six million shares of ET — though most of that was from call options. As of the end of the June quarter, Citadel owned 1.5 million shares and call options on another 6.2 million, along with put options on 2.75 million shares. (In case you’re curious, no, Citadel did not own “6 million shares” of any other pipeline company as of the last quarterly filing… and there are more than 14,000 lines on Citadel’s last 13F filing, so it won’t surprise you to learn that this position, which is worth about $60 million, rounds down to 0.0% of Citadel’s portfolio).

Energy Transfer is a reasonable MLP bet if you want exposure to growing consumption (and transportation) of natural gas, particularly out of Texas and the central US and the Gulf, and it also owns the Lake Charles LNG export facility, though that’s not likely to be in operation for at least several more years (originally the expectation was for exports to start in 2026, though they say they can’t reach that deadline and have asked for a permit extension to 2028). It currently carries a distribution yield of about 9%, and it’s one of the largest MLPs in the US (market cap around $44 billion). I’d be a little more confident in Enterprise Products Partners (EPD), but that’s also got a lower yield (7.5%), and most of the time the two will trade similarly. I generally prefer to avoid the complication of dealing with partnership tax filings (MLP owners get a K-1 report instead of a standard 1099, so it can take a little extra work at tax time), so I typically just settle for average and own the Alerian MLP ETF (AMLP, current yield 7.5%), which owns most of the large pipeline MLPs… or you could also focus on the non-partnership options if you don’t want to deal with K-1s, which would still leave you with some solid options like the Canadian leaders Enbridge (ENB, 7.5%), TC Energy (TRP, 7.5%) or Pembina (PBA, 6.4%), or the US pipeline owners that have converted to become regular corporations, like Kinder Morgan (KMI, 6.7% yield), ONEOK (OKE, 5.6%), or Williams (WMB, 5%). Brad Thomas previously teased TC Energy, Enterprise Products Partners and MPLX in ads for his higher-cost Fortress Portfolio, in case you’re curious.

So… no big secrets here, but certainly the pipeline operators have been popular income options for a long time… and while they do tend to be somewhat sensitive to commodity prices (falling oil prices probably means there’s also less oil moving in pipelines — so the pipeline companies collapsed in price during the COVID shutdowns), they’re not as directly sensitive as the producers (they charge a toll for moving the stuff around, and that toll isn’t directly dependent on the price of natural gas or oil). There are good reasons for some people to choose traditional MLPs like ET or EPD, too, they come with some meaningful tax advantages that counteract the hassle of some additional tax-time work and record-keeping requirements (principally, that much of the distribution you receive is tax-deferred until you sell, or sometimes even until your heirs sell, because depreciation charges for pipelines are so high). And regardless of what happens with green energy, we’re almost certainly going to need to use a lot of oil and gas for at least another few decades… but nobody wants to allow new pipelines to be built in their neighborhood, or in some cases built at all, so most of that future demand will have to flow through the existing pipeline network, with any “expansion” just being upgrades to the existing pipes. That should make these assets more valuable, over time… at least until gas and oil begin to really get phased out, assuming that happens at some point in the decades to come.

Any of those investments ring the bell for you? Have high hopes for lithium or for gas pipelines? Do let us know with a comment below. And if you’ve tried out Brad Thomas’ Intelligent Income Investor, please click here to visit our Reviews page and let your fellow readers know if you liked the service. Thanks for reading!