26) Mariusz Skonieczny on his way to a 10000% return
Mariusz Skonieczny found a remarkably interesting stock when it was trading at a couple of cents per share, today that stock trades a $0.43, and he think there is plenty more to come. Have you ever wondered how a 100 bagger looks like? yes, that is 100 times your investment. Well... here is the story.
Mariusz Skonieczny on his way to a 10000% return
Unknown Speaker: [00:00:00]
Welcome to Financially Free Podcast with your host, Ney Torres. One of the
reasons Ney could retire when he was 25 years old is because he was coached by
the best and now through this podcast so can you.
[00:00:18] Ney Torres: [00:00:18]
Welcome to the show today. I'm talking to Mariusz Skonieczny. Did I pronounce
that correctly?
[00:00:22] Mariusz
Skonieczny: [00:00:22] Yeah. Close.
[00:00:23] Ney Torres: [00:00:23]
How do you pronounce it?
[00:00:24] Mariusz
Skonieczny: [00:00:24] Skonieczny.
[00:00:25] Ney Torres: [00:00:25]
Skonieczny. I'm sorry about that. Thank you for your time, sir. And I wanted to
have this phone call with you because I find you have a lot of knowledgeable
stock and I was reading your books and I was really impressed with what you
have done, especially the last one is called How to profit from the
Coronavirus. You went through a whole year of looking at every public trading
company and then New York stock exchange, NASDAQ, OTC Markets and Toronto Stock
Exchange. Is that right?
[00:00:50] Mariusz
Skonieczny: [00:00:50] Yeah. Yeah. I went through them one by one
because I was mostly invested in Oracle resources and I was kind of preparing
for what do I want to do next and I didn't want to be in a situation where. I
needed to find something real quick. I know, I have various ideas prepared.
While I was waiting, I went through all these companies one by one I mean, you
can't possibly go very detailed through every single one, but you can look at
every single one, spend a few minutes on them and see if you're even remotely
interested and out of that list, which I mean, I think it was thousands,
thousands of companies out of the list. I narrowed it down to maybe like
200-250 companies. And out of that, I narrowed it down 50. And when Coronavirus
hit my girlfriend was like, "well, you went through all this work. Why
don't you write a book." And I, at first I was like, "Oh, I don't
want to write on out a book, not now." But then after thinking about it
for two hours, I was like, no, she's right. Let me write a book. So literally
within five days, I wrote the whole book, but obviously I already had the ideas
in my head, but I wanted to do it really fast because the markets were
declining really fast and I felt like about turn. I wrote it very fast. I had
it edited and got it out. And I mean, almost perfection when it comes to
hitting the bottom.
[00:02:13] Ney Torres: [00:02:13]
I was going to mention that it's like everything you pointed out, and these are
high quality company, 50 really high grade companies. And they're all like, can
you tell me before we start talking about this more about you, I'm very
interested to know your background. I know you are from Poland originally and
you went through hyperinflation.
[00:02:30] Mariusz
Skonieczny: [00:02:30] I was a kid at the time. I didn't know what
was going on, but yes. I was born in Poland. How was there since I was 16 years
old and then I immigrated to the United States and finished high school in the
U S and in college here right after college I was always interested in
investing, but first I went into the real estate industry. I was a real estate
appraiser both the residential and commercial. And then I became a commercial
real estate broker. I didn't have heart.I didn't have passionate real estate.
So when 2008, 2009 financial crisis hit, I just pretty much went to my bosses.
And I said, "I don't want to do this anymore. I'm quitting."
Literally. December 31st, 2008, my last day. That's when I started classic
value investors and ever since then, I'm pretty much a full time stock market
investor.
[00:03:28] Ney Torres: [00:03:28]
How do you come up with the investment?
[00:03:29] Mariusz
Skonieczny: [00:03:29] With the name?
[00:03:30] Ney Torres: [00:03:30]
The whole ideology
[00:03:32] Mariusz
Skonieczny: [00:03:32] Volume investments? Well, I mean, I would say
people invest in stocks different, different ways. Some people speculate short
term. Some people like to use technical analysis. Some people like to do
options and it's all fine. For me, personally, none of these other styles suit
my personality, value investing, independent thinking, contrarian thinking.
It's just something that comes natural to me. Following and at first as many
value investors, they start similar way reading about what Warren Buffett did,
how Ben Graham. So I started in a similar way and then over time, I would say I
gravitated towards smaller names, microcap companies, where I think I thought
that I could get more of an edge. Also, I prefer that space because it's not as
crowded as the big names. If you look at Microsoft or Apple or Tesla, I mean,
what am I going to add? Everyone is talking about these names. I don't want to
be involved in things like this. I want to go places where no one else is. I want
to be the one that is an expert in it by doing the work. I don't feel like I
can have any edge, any expertise when looking at the big names like Apple or
Microsoft or even Tesla.
[00:04:55] Ney Torres: [00:04:55]
How was your experience? You still do small stocks, I guess, because the book
talks about very big company.
[00:05:01] Mariusz
Skonieczny: [00:05:01] Yes. The book talks about the very big
companies because I wanted the everyone to benefit from it. So if you are more
of a risk averse than you would attend to gravitate towards more of the big
names. If you want it to be more income oriented, I included some dividend
paying stocks, and if you want it to be more adventurous Then gravitate towards
the smaller names. But as you went through it pretty much anyone interested in
investing would find at least 5-10 companies very interested out of the 50.
[00:05:39] Ney Torres: [00:05:39]
Yeah, for sure. I was thinking I'm going to put this, if I had a physically,
we'll put it for when the market crashes or something really bad happens in the
markets that will be like the first we can go to look like, "Oh, these are
good companies that probably out of this car now." So we'll start checking
them out.
[00:05:56] Mariusz
Skonieczny: [00:05:56] You see that's the idea. I think that if you
have a list of companies that you already are familiar with, you have some kind
of watch list, just the best. For me, the best thing is keep checking on them
every month or every two months, see what's going on and then when something
happens, you don't have to scramble you already know. You can just study it up
for an hour or so just to catch up and you're ready to go.
[00:06:23] Ney Torres: [00:06:23]
I wanted to ask you about the process of going through all the stocks. How do
you do it? Because that's what I call the price to pay you. You pay the price.
You go through all the stocks and check them out that took you a whole year,
right?
[00:06:37] Mariusz
Skonieczny: [00:06:37] Yes.
[00:06:37] Ney Torres: [00:06:37]
It was a full time job by, yes?
[00:06:40] Mariusz
Skonieczny: [00:06:40] It's hard to say, "Oh, I did something
eight hours straight." People love to say that. You do a few hours there,
a few hours there. I didn't count the number of hours. It was just an ongoing
process. I did a little bit every day, some days I did more, some days I did
less. But yeah, overall I just went many, many different companies and out of
that it was so easy to select so many different investment opportunities.
[00:07:15] Ney Torres: [00:07:15]
Reading your book at the end, I find this jewel called Oroco Resource. Can you
just play me a little bit how you came across this? What's the thesis behind
it?
[00:07:25] Mariusz
Skonieczny: [00:07:25] Well, I'm not sure if you're aware of it, but
this week I made --
[00:07:29] Ney Torres: [00:07:29]
Yup, I saw a video.
[00:07:31] Mariusz
Skonieczny: [00:07:31] A video series about Oracle and this is a
perfect example of you see, I used to write a new letter years ago and I
followed a different company and an Oracle did a transaction with that company.
They followed and that's how Oracle came on my screen. And I studied the
company that was 2013, and I wrote about it in the newsletter, but I didn't
invest in it at that point because I had money in other places. and it was
good. Something to write about, but it wasn't something that very much
excitement at that point but because Oracle and this other company shared the
same office. I would every month or so check up on Oracle and I will call them
in and say, "Hey, how is this other company doing? Did you hear
anything?" So that was my scuttlebutt on this other company. And while
you're talking about this other company, you also get to know Oracle, right?
Because it's hard not to talk about Oracle when you call in when you're calling
them. So over time, I became very aware of some of the things that were
happening with an Oracle and at one point in 2017, I noticed that the CEO of
Oracle was just cleaning up all the shares and that really caught my interest.
I started doing some research. And I discovered that Oracle was in a legal
battle, over a huge porphyry copper deposit called Santo Tomas and the more I
studied Santo Tomas as an asset, I mean, my jaw dropped because Oracle at the
time had a market cap of about $3 million and it didn't take me long to realize
that Santa Tomas could be worth 300-500 or even a billion dollars. And I just
told myself, "Oh my God, this is a hundred bagger and no one knows about
it. That's how I learned about it. And
then I formed it with several phone calls that yes, the company was getting
involved. There was a lot of information. Already available on the internet
about the legal process. I started buying shares. I bought a lot of shares and
I continue to hold them. I bought them about August, 2017. I continued to hold
them. It's my largest position, it's my biggest conviction and I will continue
holding it until the buyout.
[00:09:49] Ney Torres: [00:09:49]
Interesting. So long story short, somebody gets into a legal problem, Oracle
come and says, "We'll help you fight this legal problem with our
resources. And 20 years later, after 20 years of legal problems, they actually
get confirmation that the title is yours and Coronavirus hits, right?
[00:10:09] Mariusz
Skonieczny: [00:10:09] Yes. So Oracle didn't get involved 20 years
ago. The legal problems started about 20 years ago because the owner of Santa
Tomas, a Mexican gentleman, in 2002, he sold the property to pretty much a
crook and that was in 2002. And then that crook pretty much stole the property
without -- he paid out of $8 million that he was supposed to pay. He paid only
in like 200,000 and then he didn't make any other payments and because of some
other shenanigans that he did. He pretty much knew that that Mexican gentleman
wasn't going to be able to get the property back. And also the gentleman, I'm
not sure exactly the age, but he was getting up there. He's 80 something years
old. So that crook didn't even think that this guy was gonna try to get the
property back. But in 2006, he informed that he wanted the property back
because that was part of the agreement. Obviously, the crook didn't want to
give him the property back and this gentleman already had a relationship with
Oracle's management because he sold Oracle a prior property so they already
knew each other and Oracle's management came forward and said, "we will
help you win this battle." Because it was in three different jurisdictions.
It was in Bahamas, Mexico, and the United States, but in return for helping win
the property back, we will earn 50% interest and the property. And so the
lawsuit, I would say lasted about 10 years or so. And then Oracle was
victorious but then even after they won the legal battle, there was issues
concerning to the title and that another three years and all of this got
completely 100% resolved, I think it was January, 2020. And literally weeks
after this thing gets resolved, the whole Coronavirus hits and puts pretty much
everything on hold.
[00:12:03] Ney Torres: [00:12:03]
They only have to confirmthe deposits, right?
[00:12:06] Mariusz
Skonieczny: [00:12:06] But when you look at an exploration company
in general, I don't get involved in exploration because it's very high risk and
I'm a value investor. I want to have
some kind of idea of value and with exploration companies, the way it works is
someone says, "Oh, here we have very interesting piece of property. Please
give us some money and we will drill with the whole finding something."
Well, with Oracle, it's completely different. The property has been already
drilled with 90 holes historically, and we already know the results of those
holes. We already know how big it is but during the time that this whole legal
mess, which really started 1,002, so we're talking 20 years during that time,
there was no work done on the property cause they were busy fighting each
other. And during the same time, sometime it remember exact date, late 90s,
there was this brilliant scandal and it was a company that pretty much fake the
exploration results to make their stock valuable and the stock went up a lot.
But then it crashed and it was a lot of money. So because of the scandal, a new
regulation was put in place called 43-101. And as a result of this regulation,
Oracle's results are historical. We have this deposit, but it's historical and
in order to bring it up to date, Oracle has to confirm the historical drill
historical results, and it has to update the technical so they are compliant to
101 and only at that point, you can expect to get a serious and full price
offer for the property. So that's really where we are. We won the legal battle,
or I should say Oracle and the legal battle, the deposit is huge. The deposit
is very valuable. Otherwise, they wouldn't be fighting in court for 15 years if
they didn't think it was valuable and now the next step is raise some money
with some holes in the ground, fund the resources and attract a buyer for the
property.
[00:14:04] Ney Torres: [00:14:04]
I've noticed they have two ticker symbols. They are the same company. One is
the OTC market and the other one is --
[00:14:11] Mariusz
Skonieczny: [00:14:11] It's the same shares because the company is
headquartered in Canada. It trades on TSX venture and to an OTC market is a
quotation system where brokers can take those same shares and sell them. You as
investors don't have access to the TSX venture, but it's the same shares. They
are just one shares trade in Canadian dollars and the US shares trade in US
dollars.
[00:14:40] Ney Torres: [00:14:40]
I understand. Very good. Changing the subject now, is there anything else that
you would like to mention about this episode right here?
[00:14:47] Mariusz
Skonieczny: [00:14:47] No, if you are interested in looking at
Oracle, I would suggest, watch my video series about the company and the
property and then of course, your own research confirm everything don't believe
in anything I say until you confirm everything and then make your own
decisions.
[00:15:06] Ney Torres: [00:15:06]
Thank you very much. That will l do, that will do. Where can people find you by
the way?
[00:15:10] Mariusz
Skonieczny: [00:15:10] Well, I have a website,
classicvalueinvestors.com, and then I have channel you go to my website, you
can just easily find it. And then I'm on Twitter. That's pretty much the three
platforms that I use the most.
[00:15:23] Ney Torres: [00:15:23]
Well, thank you so much. I'm definitely following you and I'm reading all your
books and again, thank you for your time.
[00:15:29] Mariusz
Skonieczny: [00:15:29] Thank you.
[00:15:31] Unknown Speaker: [00:15:31]
Did you learn something today? How can you apply your insight? What's next for
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Transcription: by Arianne Elnar
