Our 4 Big Themes

Playing Out Very Nicely

At FMT Advisory, our core themes continue to revolve around bitcoin, energy, compounders, and a few special situations.

Bitcoin

If bitcoin isn’t the proverbial future money trend (FMT), I’m not sure what is.

Our bitcoin positions have been performing exactly as anticipated this cycle—skyrocketing. Because of our deep knowledge of the asset, combined with our extensive energy expertise, FMT Advisory believes bitcoin’s epochs (its characteristic cycles) remain well-anchored.

For now, let’s enjoy the massive bull market run. In the future, I’ll explain why its cycles are likely not a thing of the past, though they may become less volatile. (Hint: volatility around a year or less from now will likely depend on bitcoin’s premium to network security costs.)

Over the long term, bitcoin remains the asset to beat. Other asset classes will likely continue to struggle in performance comparisons, even factoring in bitcoin’s large drawdowns. (Re: friction is one of our four main characteristics of asset comparison, and bitcoin ranks number one in all four—including having the least amount of friction before value accrues to its unit holders.)

Long live the king, bitcoin.

Energy Themes

Our largest energy position (and equity position) by far has been CNX Resources. CNX Resources is an exceptionally well-run company and the lowest-cost provider of natural gas, thanks to its integrated midstream operations (pipelines), which its upstream competitors lack.

CNX’s takeaway capacity—its midstream operations—also supports other upstream producers in moving natural gas from wellhead to final sale. By consistently locking in the spread between its low operating costs and Henry Hub spot prices through programmed hedging, CNX generates significant free cash flow in nearly any pricing environment.

Management continues to execute the playbook from The Outsiders brilliantly, running the company for all stakeholders with a focus on per-share metrics. This approach is fitting, given that William Thorndike, author of The Outsiders—Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, serves as CNX’s Chairman of the Board.

Our capital has been in excellent hands with CNX.

Not only have we seen outstanding results in an energy-ignored world (a temporary state), but low energy prices have been advantageous. This overlooked sector enabled CNX to acquire Apex Energy in the stacked Utica region of the great Marcellus at a bargain. By Q1 2025, CNX expects an additional $150 million in EBITDA from this deal, acquired at just over a 3x multiple for $505 million, funded through its $2 billion credit facility.

This represents stellar capital allocation (the incremental EBITDA from Apex will boost 2025 free cash flow per-share and help with further share repurchases). If natural gas prices rise, as FMT’s research suggests, this deal becomes even more remarkable. And this is without considering CNX’s highly profitable and growing NewTech segment.

Broader Energy Trends

Jevons Paradox—where increased efficiency leads to higher consumption—is evident across the energy sector, as dense (high EROI) sources of baseload power are being pursued with urgency. Multi-billion-dollar deals are happening across nuclear energy:

• Microsoft’s $20 billion Three Mile Island nuclear restart project.
• Meta’s RFPs for up to 4 gigawatts of nuclear power by 2030.
• Amazon’s agreements for a next-gen nuclear plant in Washington and a significant deal in Virginia with Dominion Energy.
• Google’s partnership with Kairos Energy for multiple SMRs.

These developments are bullish for nuclear energy and the undersupplied uranium market. As our friend and energy consultant Mark Nelson from Radiant Energy Group notes, Meta may struggle to acquire its energy targets by 2030, let alone the rest of the country’s demands.

With nuclear projects taking years to build, and coal plants being decommissioned in favor of cleaner natural gas plants, natural gas will have to bear the primary energy load for the foreseeable future.

Given this, we have added another free cash flow-generative natural gas producer with long-lived reserves and less hedging than CNX. Instead of share repurchases, FMT is insisting the company start to balance sheet bitcoin for flexibility, which should give them vast future advantages over their peers.

Meanwhile, demand for energy is exploding. Bitcoin’s electricity consumption in the U.S. has doubled since 2019 to 10–11 gigawatts (roughly half from non-renewable sources). Elon Musk predicts that gas cars will become obsolete, replaced by at least 20 million EVs providing autonomous robotaxi services—all of which will need to charge on a grid that is already strained and poorly upgraded.

For context, a single gigawatt of electricity can power a mid-size U.S. city, such as Grand Rapids, Michigan, or Sacramento, California. Jevons Paradox is alive and well.

Our energy demands are simply voracious, with no end in sight, and we’re well positioned for further gains.

The GSEs

The path is clear for a smooth transition of Fannie Mae and Freddie Mac back into the sole hands of private shareholders. FMT believes this will occur through administrative action—because it can, and therefore likely will. This presents a strong potential for substantial additional gains.

Such a move could also greatly benefit the housing market by narrowing interest rate spreads for homebuyers by 75 basis points or more. The outlook appears favorable for all Americans and supportive of private property rights.

Chinese Businesses

Since I last wrote about undervalued Chinese stocks, I’ll simply say that everything is moving in the right direction since our recent stakes. As anticipated, Chinese citizens are beginning to shift their wealth into one of the only convex areas available to them: Chinese equities. I can’t think of a better-positioned equity market for the future, and our exposure also happens to offer one of the best long-term, uncorrelated connections to bitcoin imaginable.

Best Regards,
Nicholas Green