The Misfits: U.S. Lime and Minerals (USLM)
Even in industries not known for great returns, there are true standouts.
Bibémus Quarry, Paul Cezanne, circa 1900, oil on canvas (Folkwang Museum)
Each of us has that one investing lesson that we cannot ever seem to learn. You know, that one blind spot where you’re convinced you’re right despite years of the market telling you that you are wrong.
Mine is investing in mining companies. I somehow keep convincing myself that demand for commodities will drive returns and that there are too many cheap mining companies to simply ignore them.
There’s no getting around it, mining is a crappy investment. It can take years and huge amounts of capital for a mine to produce, and commodity markets can turn so quickly that it will strain your neck.
Mining is made even more complicated by the reality that Chinese demand has been the driving force for several decades. China has been, to be generous, an enigmatic customer for commodities over the past 15 years, and I – nor anyone else I know – can remotely consider themselves a Chinese commodity demand expert.
And yet, here I am discussing a company that specializes in mining and producing limestone and lime-based products: U.S. Lime and Minerals (NASDAQ: USLM).
Lime is a very different business than conventional mining, and U.S. Lime and Minerals isn’t your conventional mining company. Perhaps that is why it has run laps around the broader market while so many other mining companies have languished.
Let’s dig in.