Forget the fads and go for gold: Lamm

The co-founder of one of the nation’s most profitable fund managers, L1 Capital’s Rafi Lamm, has urged investors not to get ‘sucked in by current fads’ such as the explosion of AI.

By DAMON KITNEY

L1 Capital founders and co-chief investment officers Mark Landau, left, and Rafi Lamm: ‘Try to take a long-term perspective.’

From Wealth

1 hour ago

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The co-founder of one of the nation’s most profitable fund managers, L1 Capital’s Rafi Lamm, has urged investors not to get “sucked in by current fads” such as the explosion of artificial intelligence, as the firm sees fresh opportunities for gold, energy and copper stocks.

Mr Lamm and his co-founder Mark Landau have made almost$300m in net profits for their privately held firm since 2020, far more than some of the biggest stock pickers in local funds management.

Over the past three years L1’s $3.5bn long-short strategy portfolio has returned 14.2 per cent, versus the 7.3 per cent return of the ASX200.

In April Mr Landau said that he would take a medicalleave of absence for three months, leaving Mr Lamm in charge.

“I think the most important thing is to not get sucked inby current fads. Now, whether it’s AI this year or EVs last year, or cannabis a couple of years ago, try to take a long-term perspective on what the cash Flow generation is going to be for companies,” Mr Lamm told Future Generation Australia chief executive Caroline Gurney in a podcast being released on Monday.

Future Generation Australia is a listed investment company that waives its management fees and donates 1 per cent of its assets to youth-focused charities, and L1 is one of its many managers.

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“The most important question to always ask is ‘what is already priced into the stock?’ It can be a fantastic company, but if everyone knows that information that’s priced in, there’s probably no opportunity. We always ask that question. If we think we can see opportunities that aren’t priced in, that makes us excited,” Mr Lamm said.

In the podcast Mr Lamm said L1’s long-short fund had recently increased its net long position to gold.

Recent geopolitical developments around the world have provided a significant boost to gold prices, reflecting its status as a safe haven asset and its appeal during periods of low interest rates.

Additionally geopolitical tensions, such as the ongoing stalemate in ceasefire talks between Israel and Hamas and escalating conflicts in regions like Ukraine, have further elevated gold’s appeal as a safe haven investment.

The price of copper has risen 17 per cent this year on fears of shortages, with ageing mines around the world forecast to struggle to keep up with demand. Picture: Bloomberg

“We invested across a number of names on the long side, but also on the short side. We see gold stocks having some of the best free cash flow yields across the ASX 200, which really attracts us to the sector,”Mr Lamm said.

“In terms of the recent rise in the gold price, it’s always hard to explain or predict gold prices, but a few of the things that we’re seeing in the background include very strong buying by Chinese consumers, very strong buying by Chinese and other emerging market central banks, and very limited production growth. We think all those factors are likely to continue over the medium term.

“We see a higher gold price over the next few years than we’ve come to get used to over the last couple of years. I should also add that we’re seeing increasing nervousness around the sustainability of the US federal government budget. The deficits are massive, and they’re set to continue into the medium term. We think this is going to be inflationary and again provide upside contribution to gold prices.”

L1 also has exposure to leading copper stocks. The price of copper has risen 17 per cent this year on fears of shortages, with ageing mines around the world forecast to struggle to keep up with demand.

“We think the market is currently in modest undersupply and we see that undersupply growing between 2025 and 2030, and even beyond. So,we think this investment idea has a very long duration to it,” Mr Lamm said.

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Bring on the gold and copper DT