The Predictability Premium with Christian Lins (Part 1)

Welcome to the HC Comortis Podcast, a podcast dedicated to the Comortis sector and the people within it. I'm your host Paul Chapman. This podcast is produced by HC Group, a global search firm dedicated to the Comortis sector. Today is part one of a two-part series on both the value and how to communicate it, building a commercial trading group within an asset-backed organization. Oftentimes these discussions are very much within group and it's very obvious to many of the participants why such groups have moved from a nice to have to a must have. In part one, we're answering the question, can we see material increase valuations for asset-backed organizations that have trading capabilities? The so-called predictability premium, and in part two out next week we discuss interacting with the board, how to communicate the value of such commercial groups, the trade off the boards have to make, and some of the challenges of implementation. To discuss all this and more is our guest, Christian Lins, partner Oliver Wyman, the measurement consultancy, Christian's in their risk and trading practice, and leads it in North America and is based in Houston. As always, please do leave us a positive review on the platform you're listening on, and as always, I hope you enjoyed the episode. Christian, welcome to the show. Thanks for having me. A lot of time and effort has gone into this, and essentially the story we're trying to tell here is not the asset-backed trading story that we are familiar with and has been a constant theme of this podcast, which is over the last five years, miners, refiners, producers, organizations deep in the physical supply chain have been building out trading capabilities. And to us, within group, it seems quite obvious why they are. The challenge is really now how that story, that narrative, that essential need, which in our world is very much now seen as not just a nice to have, but a must have, translates to the out group, if you'd like. So board members, the rest of the organization, and as importantly as well, shareholders and investors, and where that story is. And essentially asking the question, are we seeing the trading organizations, the commercial arms of these asset-backed organizations generating value that investors value? And so that's quite a big lift. And actually the work that you've done, Christian, bears that out and we'll get there. Let's, I guess, start at the beginning, which is you've been there in the boardroom when energy companies, in fact, all types of asset-backed organizations are debating whether to scale their trading arms. You know, what is actually on the table when that conversation comes up, and essentially why do many boards get to the answer now? The conundrum is that trading ties up capital. It is very hard to oversee for many asset-backed participants, and it can cost a lot of money and trust, right? So the work that we've been doing is to prove that under certain circumstances the market actually can pay a premium for enhanced commercial operations, right, especially when they're linked to de-risking, and especially in the most recent years, in the most recent regimes of volatility, right? So what we've been observing also in a nutshell is that for the last few years, essentially since the end of the pandemic, for certain types of players, the market does play and pay a measurable premium for steady cash flows, right? So all trading operations need to be seen in their context. So some players actually succeed in leveraging their trading capabilities to enhance the flow predictability, and some others aren't there yet, and others even choose not to do so, right? But it's also becoming very, very clear, and over the years, now much better understood is that investors don't just look at volatility as one single definition, right? And the ability to guide, anticipate, and even plan for certain types of volatility is certainly something that is attributed to the quality of the management team, and consequently also something that needs to be considered. I would then also say that many boards have come to the realization that doing nothing, so in this case, for instance, selling FOB doesn't necessarily come as a risk-free option, right? And I've also seen that if they just do that, then there might be concern about their market chair, and they only get one type of counterparty that shows up, right? So there is a realization that some commercial sophistication is important, and that warrants investment, and so the role of trading in many boards is, I would say, can be attributed to four types of flavors, essentially, right? It's about value capture, it's about ensuring value, it's about harvesting information value, and it's about managing timing effects, right? And now, obviously, capture implies all the optionality, insurance means essentially having portfolio-wide and asset-backed plant bees and seas, right? Especially important these days, information means that you just essentially know where the physical market is, which especially in these days is very, very difficult to understand. For instance, freight has become such an important factor to understand, and then timing, right? And timing doesn't necessarily mean the option value, right, related to time, but also what it means for the realization of cash flows, right? And many of the asset-backed players are particularly concerned of the mismatch between a physical and financial activities, right? So the more a trading organization and asset-backed player can guide on that and make the management team comfortable, the better, and the more trust they will be given, and the more trust they have is an opportunity to be re-earned over time, right? And what I find a lot in my work is that, you know, technology and processes can be all be built and designed, right? But trust cannot, right? And so having the right people and developing the right people is really, really important. I'm just to the thinking of, you're in that boardroom, and you do have a lot of key hurdles, right? And of course, talent is certainly one of them. That trust and validation is key this, you know, this will bring on entirely new performance regimes, bits that we've covered a fair amount. To nail on a couple of those before we sort of move on to kind of which organizations we have seen build these out first and why. The first is that, you know, tying up the company's money. That is obviously very, very legitimate. Can you just lean into that a little bit more for us? Just because I think, again, you're within a commercial organization, you probably, you know, if you're in a trading house, this is, you know, as other people's money you're tying up in some sense. But within the asset-backed organization, you're just, you know, you're using the company's balance sheet. That is an all-of-company effort. Can you just nail that a little bit more? Yeah, obviously, the balance sheet of the parent is a competitive advantage to these asset-backed players. But it's also something that is cherished and very well guarded, right? So the concerns are typically that, you know, any kind of daily market swings go up in what they need to report as accounting earnings, right? Working capital is a huge topic. You know, we've seen some credit losses in some, in some asset classes, right? If your board isn't necessarily, you know, hasn't been exposed to trading throughout their careers, they see also huge effort and just overseeing it and bringing on the talent to have a proper second land of defense is a huge challenge. And then in general, right? We've seen quite aggressive and healthy payouts over the years with a pure-play trading company's the independence, right? But also hedge funds, et cetera. So engaging in a talent war is certainly something that not every executive wants to do. Many of these executives have been in the business for 30, 40 years, right? They've seen, you know, they've started their careers when oil prices were single digit, right? They've seen even negative oil prices in some instances, right? So they know the fact that the street remembers these blowouts for much longer than, or these blow-ups to be on point, right? Not the blowouts in profits, but the blow-ups for much longer than the steady profits, right? Yeah. So there's their open burned and such. There is a innate skepticism to overcome. Yeah. And I guess the bit we're really trying to nail is obviously, so you kind of got these usual arguments, right? You know, it's expensive to build. It brings risk to it. You know, it uses the company's money up and can put significant and burns on that, I can close it. know, a number of those challenges, the bit that I guess we're trying to leap into is this argument that actually in part, you know, does Wall Street now start valuing this? Can we see a valuation put on on organizations that have these capabilities, particularly since 2020, since sort of this new wave of volatility? And in some sense, are we going to start seeing boards, you know, asking for this capability, being asked about this capability, this capability being talked about in earnings calls and all the rest of it. And so some of these, they are certainly very legitimate headaches and challenges, some of which can be overcome by great search firms like us, some of which can be overcome by platforms and all the rest of it. But I guess, you know, that is the bit that we're trying to answer. We get to 2020. Obviously, there were some participants, particularly the European majors that have had these capabilities for some time. Yeah. You've done some analysis that sort of starts to help understand why they did this and the results that is driven. Let's start with that story before we get to 2020. So it's a fascinating story, right? The Europeans built these capabilities because they needed to, right? The 70s essentially resulted in the collapse of the concession system, right? From Libya to Iran, right? Some of the players lost pretty much, you know, 40% or more of their supply while they still had to meet their obligations, right? And then, you know, the North Sea sort of imparts compensated that. And the sort of the cargo system and the tech system that was created there, then also resulted that it made a lot of sense to sleeve your own equity production through the market, right? And they drove a lot of liquidity in Brent, right? Now, the US majors also made, so they've also got their fingers burned, right? Through that, right? But they also had a number of export bans and also incidents that resulted in a sort of more cautious attitude towards trading. And trading was something that was oftentimes associated with something that might result in fraud or result at least in a governance challenge, right? You know, end-run and servants auksley and all these things, right? So they never put so much emphasis on the sort of international placement muscle, right? Now, what also certainly helped is to have a strong domestic purview and just in general high quality assets that the US majors had, right? So they got away with essentially a, I would say a frothy environment for longer, right? Well, the Europeans needed to tolerate the build-up of these capabilities to just keep the system wet, right? It's easy to be exon and say, "Our shareholders just want exposure to the underlying commodity and we are just going to sell FOB to use your earlier sort of generic answer." You just did not have that same capability if you were in Europe and you'd already been, again, we kind of know this narrative now a little bit more that, you know, a hydrocarbon short region or shorter region and a lot more flow instability and all the rest of it, right? You just didn't have the same luxuries that you would have if you were a US super major and had the US Navy sort of backing you up. Exactly, right? And then what happened in December 2015 is that the US lifted the crude export ban, right? Or the export ban in general for hydrocarbons and then that made the US a major exporter and essentially drove the US major to a more commercial approach. I at least consider over time how to become more commercial, which especially at these days and age is a particular value, right? If I was to summarize this, right, the euro majors built these trading operations because they were short and needed to optimize the US majors over time, built these capabilities because they need to become better at placing volumes, right? And such, you know, you see them behaving slightly differently in different journeys in the last decade, right? But there is a realization now that trading is a critical component, right? And everybody sees the returns on capital employed that the euro majors put forward in their in their quarterly publications, right? So everyone is stretching, stretching their organizations to be part of that, right? The question is just with what intensity and what what resource commitment eventually? Yeah, and you can see these companies, and we're just talking energy at the moment, we'll come onto sort of other markets in a minute. So we're just talking really oil, I guess. But these companies sort of sorted themselves out and put them on an axis of kind of resource endowment and sort of state relationships. So you kind of have the BPs and the shells with relatively little resource endowment and obviously no state relationship versus say an NOC. And you can sort of see where they sit on this spectrum of building trading because they had to not necessarily be, you know, and then in 2020, I guess we're sort of using as a roughly arbitrary date, but that's when we see sort of the world change and you get this sort of increased volatility. Can you just, I guess, tell us what happened in 2020? And then what did you start seeing? Because you did an analysis of kind of the various earnings calls of all these companies to see how often and who discussed trading? Yeah, after the pandemic, right? There has been a great realization, especially for hydrocarbon majors that they can essentially have a stable and consistent cash flow contribution, right? That's what the investor sought. That's not won't necessarily what we're seeing with the miners, right? Or in general with utilities. So from oil companies, they were specifically, they were looking for predictability of cash flows because they wanted to, was this the hedge in their portfolio? Or this is, okay, we were investing in this category because we just, this is our sort of stable inflation hedge and we just want, we're not looking for 50X multiples of increasing in share price because these aren't sort of those infinitely scalable asset like tech plays. Is that kind of where you're going there? Absolutely, right? The investor base realized that, you know, there's been an underinvestment in the sector and energy, especially refined products has become a major driver of inflation and one way to, at least in parts, hedge against it is to hold cash flow generating enterprises and the analysis that we did shows that there's a, there's some players that do it really, really well, right? That have a fairly low or comparably low water and water cash flow volatility and they get away with a much lower dividend yield. And a lower dividend yield essentially means that you're, you're not having to pay so much, right? Just exactly relative to your market cap, right? And why, why are we looking at dividend yield is because the dividend yield is something that management or the dividend and such is something that the management team can influence, right? If you look at, you know, your usual valuation metric and the price value were a bit there, for instance, right? You and I know that a bit there is oftentimes a bit of a tricky metric, especially when you have a great work of fiction, maybe? Yes, yes. Or, you know, when you have different fiscal regimes, right? Obviously, some cash flows and some charges come before the A.B. if they are lying, but there's also a bunch of stuff that is after it, right? So we did generalises against dividend yield and it shows a pretty strong correlation between the dividend yield that some majors trade at and the quarter and quarter cash flow volatility. So the lower the quarter and quarter cash flow volatility, the lower the dividend yield, right? And depending on who you are, that might mean a double digit billion dollar amount of potentially incremental market cap that you can realise by just managing that that quarter and quarter cash flow volatility a little bit more deliberately, right? Trading is part of this framework, this decision making framework, right? Trading can, if done well, right? And we see some companies with sophisticated trading capabilities actually proving that they can manage volatility in a pretty sophisticated way, manage cash flow volatility. And others are essentially others don't just really care, right? Or they're essentially subordinated to national windfall taxes or other effects, right? They're pushed into markets where they don't necessarily want to go from an investor perspective, right? And just choose not to optimize for that predictability premium, right? So the point here is that if you are an ad, like the CEO of an asset-backed trading operation, right? You need to be aware of this, right? And you need to make the case for how you can contribute to that, I would say, volatility management, right? And you were looting to this analysis of how often is trading or volatility management mentioned in, in quarterly in 10Ks or 10Qs, right? And the There's an interesting binding here, right? And we did this sort of with, you know, AI semantic interpretation, right? So it's we're not going off the false positives here, right? What you see here is clearly the number of times that trading is mentioned in general has been increasing across the board, right? It's been, we see a particularly strong increase in the Euro majors, right? Obviously at the peak, he was in 21 and 22, right? But it's still interesting. They already had that capability, right? So, and maybe we can figure out how we can share this little bit of analysis that you did on a one page where I can put a link to it in the show notes. But essentially, you can see that, you call it the archetype ladder, but if you already had that platform capability, you really were talking about it in 21, 22. The counterpoint is obviously the US Super majors or even US EMP, but you can see that same trend rising, right? The US Super majors is a particular where they were talking about it less than 21 and now talking about it more in 25, 26 as they built that capability. And it's fascinating to me because I just really want to pound the point that if you're reducing cash flow volatility, that provides a reward in your valuation. And we can see that most clearly by using your dividend yield to market cap size, basically, right? As you say, that's the most external measure of that, right? And some of the management have a control of. Just before we move on from that, I don't know, we can talk about different types of volatility. People aren't necessarily deliberately connecting those dots necessarily, right? I know they're certainly talking about an earnings call, talking about trading and volatility in the need to manage it. Are we ever seeing any analysts on the flip side saying, I really like what they've done by building this capability? You know, can we see that in sort of the, and I really like the fact that these guys have a more stable cash flow. I mean, we're seeing a causative link now, is this at the moment sort of associated? It's a tricky question, right? So I think there is a realization with some analysts, that it is a capability that can provide a floor, especially when crude prices are low, right? And it can provide a disproportionate upside with high volatility, right? And you're seeing this across the board, right? It's the infamous 2% to 4% of a return on capital employed, that some of the euro majors are pushing out. You see some CEOs also in the US mentioning it more frequently, but in general, what I see is that people tend to be more, there's more consensus across the boards that trading can play a volatility management role, right? You know, you see the US majors more, more consistently mentioning trading in the context of volatility management and resiliency, right? Then as a pure growth story, right? Now, there might be deliberate, right? It doesn't necessarily mean that there's no growth capital for trading. I think there is in parts very significant growth capital, but they're still very cautious, because they still want their trading teams to make the case for actually providing it resiliency, and they're willing to pay for stability with upside and potential value. They're willing to forego value for more stability, and the analysis shows that it makes sense for some players, right? So if I am an S-EPECT CEO, or the CEO of an S-EPECT trading company, I just need to speak that language, right? Which is perfectly feasible, right? So we find ourselves a lot in situations where we actually prove the case that you can grow a trading organization, right? Doubling down on your risk management mandate, right? You contribute to a potentially, or relatively more stable cash flow, right? And this is done by providing essentially the Godrails and the steering levers for the finance group, right? But within that envelope, right? The CEO of the S-EPECT trading company has essentially remit to grow, right? And it comes with a working capital budget that comes with all the risk management limits and triggers, et cetera, right? But that needs to be understood, right? And I think it's a relatively novel thing that people realize that actually their investor's preferences are so dominant for their sectors that just maximizing trading profits, right? Is not necessarily what gets them off the ground here. The energy and resources sector is experiencing unprecedented change. To help navigate this change and capture its opportunities, H.C. Group launched ENCO insights. A global advisory network dedicated to the sector, providing senior advisors and subject matter experts to investment and infrastructure funds, law firms, and corporates. ENCO Insights leverages H.C. Groups 20 years of connections in energy and commodities to give clients the expertise they need when the stakes are high and insight matters. Learn more at ENCO Insights.com. Yeah, yeah, what the market is actually valuing through this analysis is that relatively stable cash flows performance compared to peers that do not have this capability. And again, in a world where we've had such volatility events and so forth, being stranded, selling the next nearest liquid point when suddenly you can be captured by a downstream customer. So it's not that it's not conducive to that before we move on. One of the other challenges is that mismatch between, say, gap accounting and management accounts, right? Where gap accounting might require you to immediately disclose a market-market loss, but your actual sort of physical inventory earnings are going to show up at a much later date with, first in last hour or whatever I can't remember, in the end. But, you know, but the fact that the investors that analysts that boardrooms are sort of seeing through that also suggest a level of sophistication that wasn't around just a few years ago. - Absolutely, and the volatility level that we've seen in the last few years have just been so many learnings across the board, right? The NACA has realized that you can't just close your eyes, you can't just retract, right? And you need to be able to manage your positions, right? And we see a regionalization of crude markets, right? We see, you know, the cost of freight dominating, right? If you just look at paper spreads, right? You're completely misguided, right? If you're not into, if you're not accounting for freight these days, right? People realize that it's not just, you know, I'm going to run the tender and I'm expecting the best price to materialize itself, right? So, you know, when I started my early days in the career, it was one homogeneous market and the null hypothesis was always, well, how much are we going to make if we just tender it out? Well, you're only going to be, you're only going to have a very, very limited number of buyers if you do that, right? And you certainly don't understand the value and use of your products, right? So, we've come a long way, right, in that sense. The challenge is that, you know, in order to navigate all of this complexity, you need a relatively mature operating model. Yeah, you need the whole system in place and that's that activation energy is quite high from a investment in platform, people, processes, capabilities, you know, scale and reach as well, right? Which is why there's lens itself, too, if you are a super major and you have offices around the world, right? It lends it to that. So, it's a big, you know, in chemical terms, a big activation energy and there's a lot of validation required as well, right? I mean, this is the story telling that, you know, obviously, Oliver Wyman, your advisors and we have Enko that provides some of those, you know, who can help sort of overcome some of that peace. I guess that what we are actually seeing, though, is through this analysis, that you don't just have to rely on kind of the in-group trying to persuade and use sort of these devastating examples of when someone got trapped and lost whatever, but you can actually see it flow through into, into actually investors now recognizing and valuing this. Just moving along a bit, we've been really talking about oil. So, my question sort of here are kind of like, firstly, is this just an oil phenomenon or can we see this in mining and utilities and so forth? And to some extent, therefore, is kind of all volatility viewed the same, you know, in that context? - Yeah, good question. What makes it particularly significant for the oil majors, right, is that they have a, you know, relatively progressive dividend scheme that they defend, right? Management takes pride in defending the dividend, right? In addition to buybacks as acting as sort of the breathing room, right, but they defend of the dividend, right? And they're proud about that. So, that means that you actually did the decision-making of the commercial engine, right? How well you place products and croods and how well you manage work in capital and hedging and the portfolio were all really matters, right? Now, when you look at some of the pure play downstream players, right, you still do see some of that, right? But the correct spread is just dominant, right? And it's more about how well they run the crude to product conversion rather than just the crude placement, right? right now I'm coming to the other as the classes right metals and mining is different right they have decided that the investors want or you know need to accept the commodity price volatility right so they path through in for the most part to share holders the commodity price volatility right so they essentially opt out of the so called predictability premium right which is also management choice right my sense of that is that that is changing right my sense on that would be that they are further behind the curve and say your oil major in part because of the liquidity in those markets and sort of you know the sophistication of those markets do you expect to see that change or do you think that save a firm rootedness I think as they mature right and as they you know probably want to attract more even more institutional investors right I could we could see this change definitely right as they control more of the the value chain and become more integrated similar to to integrate oil major right there certainly a lot of room to become more cash generative engine right my point was historically right when you look at the empirics right it wasn't there but I would say that it's a normal course of of integrated natural resource company that at some point as you institutionalize and become more corporate right that this is becoming a much more important consideration in your commercialization activities okay so so when the lens of that predictability premium this core tenet that we're arguing here you're arguing it's the least noisy of this is oil and gas is the argument yes yes like statistically right if I'm allowed to say that right there's a very very strong relationship there's a slightly weaker relationship when you look at the downstream pure place there is purely from a data not a lot to see structurally from metals and mining right it's almost the opposite historically right but we're seeing it from when we speak to management teams it's obviously much more front and center and there was a different shareholders etc so the world is changing right and when we look at utilities right and and and renewable companies right we also need to we also need to differentiate it between between sort of before AI and now with the I right really when you look at when you look at wires and sort of midstream right there is a discernible relationship right but now some of these utilities have pivoted to be essentially become they want to be seen as being part of the AI ecosystem right and all of the sudden the story is all about essentially you know participating in the upside right and and and so that clearly drives a little bit more volatility into how they think about you know dividends and and and actually an element of of like a big tech growth growth player here yeah and there's also different you're much more localized for the most part and have different regulatory regimes and all the rest of it right but so just in order for you to get this predictability premium sort of you've noted there are four key conditions that kind of had to be present yes so the what's important is that there needs to be a payout promise that the company is willing to defend right now we're seeing this particularly with the oil majors they take pride in in the stability and sort of the through the cycle performance of the dividend and some players even differentiate between the base dividend and the performance dividend right so it's it's reasonably well guided right then also what oftentimes helps is when you have a real difference between peers so the counter example is for instance fewer staples right so you know some of the staple players right so consumer goods companies such are also value stocks right but in this world they've been delivering dividend growth for decades right so any kind of other performance would be heavily penalized there's almost no upside for these guys in having a predictability premium right because they're okay it's a fairly so you've got to have a stable you've got to have a peer who has sort of like a terrible quarter visibly tied to some kind of commodity market event that you didn't experience and therefore the market is going to be able to say well and you know whether it's explicit or not somehow company a didn't manage that volatility company B did and therefore we are going to apply a premium to company B because that would suggest they're more resilient to use that border or they're less exposed to political influence and so on right so differentiation in your peer group actually helps to claim that predictability premium right so everyone the wrong ones at least one of these super majors we're already names here to not do it so that they can be yeah for example it's a paradox yes right yeah and then it's that we can't go too far down paradoxes but when all of them had this capability and yeah you know very you carry on okay so you've got to have a dividend regime that you know that people are valuing you for and you've got to have a sufficient sort of comparators to be able to say you know in examples of how that they can invisibly see that risk being that cash flow being managed what's the 3 and 4 yes so management quality right so the the actual print of some of these companies has I would say inherently relatively limited information right because like under normal circumstances right every equity analyst to be able to be able to pretty much approximate it is like realize price times number of barrels you know and maybe there's a bit of refining capacity to consider as well right but these structures of these companies oftentimes especially in oil majors right if all of them have pretty gone have gone back to a you know much simpler structure right even those that have chosen to do something else for a few years right there's a trend towards simplification again right to make to make this actually easier for the outside world to understand what's going on right and so there is there's a diversification discount right so the more you can as a management team show that that you actually deliver and that there is a positive surprise right or guidance against what your typical equity analyst could predict in terms of cash flow right the better right okay so this is okay so that is managed that is the quality of your platform your people and so forth so this is the market expecting this is kind of what we've gone through this year with refinance right which is oh my goodness oil prices shot up in q2 and you know people could Google see which one I prefer into here but you know q2 guidance comes out with mark to mark losses of whatever you know because oil prices have gone up and the hedges have gone the other way etc and then actually the real results come out and it's absolutely astounding because those organizations have been able to manage that volatility outperform expectations were all set out perform prior years because of now the cracks spreads whatever you know the terminology and not only are getting rewarded for the predictability premium but you're also getting rewarded for actually kind of the out competing your peers as well yeah and and some of it is even out communicating right and consistently communicating right so it's the management team is not just remunerated for or expected to essentially provide a nice narrative after the fact right but but also proactively communicate the expectations right and obviously the risks they see and and there's a they are having this is where having your ELT and your board like if you know communicating clearly and understanding the value as the commercial group is bought right this is where having you see your backing the commercial group and a board member who's familiar and understands exactly why and how these earnings were were defended and produced is so key because if you don't get that communication bit right you're not going to get the predictability premium either because analysts aren't going to be convinced that this was anything other than luck yeah and it's also trading team being able to you know make the management team aware of this right it's the quality of the interaction between trading and finance and risk management right there's a lot of communication that needs to happen in order to make executive sufficiently confident to guide the market right and yeah in some way that language yeah so it's gonna say and in some way that language and I guess coming out of this podcast is kind of the language there is is not look how much money we made it's look at the smoothing of the cash flows that we've done and the management of the you know of the volatility that's produced that smoothing that is the key I guess that's the key sort of translation from within is whereby this book's done this and wow is not amazing translating that to the broader leadership team to the other relevant groups like finance and planning and so forth, but also to the board using that right terminology. So that terminology ends up in the, it presentate in the 10 queue, rather than others, right? Is the key bit there? Yes, absolutely. I mean, some of these executives would be willing to forego hundreds of millions of potential trading or smart, and if they could just make it a little bit more predictable, right? And it's a fascinating utility function. And the predictability premium of the analysis proves that point, right? It's not the trading unit in achieving its most stellar performance, right? It's the trading unit maximizing, right, on behalf of the enterprise, right, which implies that through essentially the predictability premium, they're able to drive up market capitalization, right? And there is a relationship that, until a few years ago, very few have actually had on the radar screen. Yeah, we're going to wrap up. This is going to be part one. I'm going to do part two because although this is one of those episodes that's definitely not going to do, it's going to get like one or two listens on YouTube. It certainly, I think of one of the most consequential stories that's yet to be really told within the industry, right? I mean, within the group, it seems so blind and obvious why you have this capability outside of the group. And I include obviously other divisions, the board members, the broader leadership team and investors. It is not clear why you would have this group. It seems risky. It has a significant three-year activation build to get it to the point where it has that capability. And maybe even the language we're using to describe this, these capabilities is not what is is wanted by that, the board members, as you say, who are who value predictability quite rightly. It turns out over earning spikes, which I guess final question on this section, a number come back in part two and kind of discuss again, how to build these cases out and kind of where it works and where it doesn't. But so that's board members communicating and seeing that there are some types of volatility that's obviously predictable, like seasonality, right? Gas prices go up in winter usually and down in the summer. I assume you're not getting paid out for predicting the, you know, sort of the capturing the normal seasonal volatility. No, you aren't, right? It's really understanding essentially what's communicating what is making, what is making the difference there, right? And any kind of surprise is not necessarily positive here, right? To the more you can avoid surprises, the better. Come back and we'll dig into that a bit more because I know there's some differences between the different tight miners and utilities and so forth. So that's part one that's fantastic. I think we've made you've made the case for the predictability premium. Now we're going to go into part two, how you actually tackle some of the thorny complications and where it shows up and where it doesn't. So Christian, thanks so much for that and see you again in part two. Thanks very much for having me, Bob. Thank you for listening to find out more about HC group, our global offices and our expertise in search within the commodity sector. Please visit www.hcgroup.global.