Welcome to Episode 38 of the Preferred Shares Podcast.
In this episode, we interview James Davolos, Portfolio Manager and Director of Research of Horizon Kinetics. James gives an overview of Horizon’s contrarian value approach, and we then discuss the broad topic of inflation. We then move onto the types of businesses James feels should benefit from a higher interest rate environment such which are in the portfolio of Horizon’s Inflation Beneficiaries ETF (INFL). Resource royalties, land, water, and financial exchanges are some of the major examples. The episode ends with James sharing some poignant advice for anyone interested in investing. We hope you enjoy.
02:05 Horizon Kinetics’ Contrarian Value Philosophy
03:07 James Devolos’ Background and Path to Horizon Kinetics
07:17 Lessons from Family Business and Risk Management
09:55 Structural vs. Cyclical Inflation Perspectives
11:21 Localized Inflation and Asset Scarcity
12:46 Interest Rates and the Fed’s Challenges
16:27 Investing for Absolute Performance in Inflation Beneficiaries
20:38 Portfolio Construction for Inflation Benefits
22:01 Asset Light Models and Royalty Business Advantages
24:06 Royalty Model vs. Operating Companies
26:24 Long-Term Scarcity and Optionality in Resources
28:18 Management Quality and Capital Discipline
34:01 Why Companies Sell Royalties
36:52 Aggregates and Water
39:48 Perpetual Futures and Exchange Risks
43:12 Emerging Opportunities in Inflation Beneficiaries
47:55 Nuclear Power and Uranium Investments
49:39 AI Bubble Risks and Long-Term Infrastructure Needs
54:13 Research Process and Idea Generation at Horizon Kinetics
56:40 Management Ownership and Incentives
01:00:04 Long-Term Thinking and Land Investment
01:01:29 Identifying Cyclical Troughs vs. Structural Impairment
01:03:24 Maintaining Continuity After Murray Stahl’s Passing
01:05:03 Advice for Investors and the Power of Listening
Resources
Horizon Kinetics 4th Quarter Commentary 2025, January 2026
Worth the Time, Murray Stahl, February 2024
Horizon Kinetics 1st Quarter Commentary 2023, April 2023
Horizon Kinetics 4th Quarter Commentary 2019, January 2020
How to Buy 1 Million Acres of Fine Texas Grazing Land for $20.00, Contrarian Research Report, May 1995
Additional Reading & Listening
Curious to see what else we’ve been working on? Check out some of the interesting things we’ve done recently:
Douglas Ott (Andvari Associates and @yesandnotyes)
Lawrence Hamtil (Fortune Financial and @lhamtil)
Devin LaSarre (Invariant and @DevinLaSarre)
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Disclaimer
All opinions expressed by Preferred Shares hosts and guests are solely their own opinions and do not reflect the opinions of their respective employers. This podcast is for informational and entertainment purposes only and should not be relied upon as a basis for investment decisions. None of the information contained in the podcast or this web site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person.
Clients of Andvari and Fortune Financial may maintain positions in the securities discussed in this podcast. Furthermore, from time to time, the Hosts may hold positions or other interests in securities mentioned in the Podcast and may trade for their own accounts based on the information presented. The Hosts may also take positions inconsistent with the views expressed in its messages on the Podcast.
