AIA Free Weekly Email 8.13.26 — LandBridge and the new "Permanent Portfolio" of scarce, non-replaceable assets

Horizon Kinetics Q2 2026 — and why he still reads it

• His lead-in, unprompted: "These guys are some deep thinkers. Even though Murray Stahl has passed, I am happy to see that the deep thinking is still present." The letter, not a stock, is what he is recommending here.
• Everything in the LandBridge section that follows is Horizon Kinetics' analysis, reprinted; Polomny's contribution is the framing around it and the disclosure that he owns the name through FRMO.

Energy at 3% of the S&P — his own mean-reversion call

• Off a Horizon Kinetics chart of the energy sector's S&P weight: "When things are this skewed, one must wonder if a reversion to the mean is coming sooner rather than later. I suspect that energy will not remain at just three percent of the S&P."
• This is Polomny's own view, not the letter's, and it is the same crowding argument he has been making elsewhere — the sector's index weight, not any single company's valuation, is the datum.
• Note the shape of the claim: a statement about weights mean-reverting, which resolves either by energy earnings rising or by the crowded end of the index falling. He doesn't say which.

LandBridge (Horizon Kinetics excerpt) — surface acres as a royalty

• "LandBridge embodies just the sort of rare hard assets, profitability, and business persistence that we seek. It now has over 300,000 acres of strategically assembled surface acres in the Delaware Basin of Texas."
• The core business today is leasing that land for water transportation, treatment and remediation — "which largely manifests as a royalty-like fee based on the volumes of water that are either piped across its acreage or stored in its subsurface pore space."
• The land position, not the operating business, is the asset: "It is from that land position that its current and future revenues will emanate."

The contract mechanics — inflation escalators and capex-free growth

• "The company's water handling and storage contracts, which typically run for 10 years, contain inflation escalators. Based on typical inflation indices such as the CPI, one can already anticipate 12% or greater revenue growth, which requires no capital spending by Landbridge."
• Second growth lever, on top of the escalator: re-pricing. "As demand for pore space increases in future years, new contracts are likely to be priced higher than the current roughly $0.11 per barrel."
• Read together this is a business whose revenue compounds from contract language and scarcity rather than reinvestment — precisely the property that makes it a "permanent" asset in Polomny's framing.

"Powered land" — the optionality stack on contiguous surface

• "LandBridge was the first company to introduce the concept of 'powered land' as a strategy to facilitate the development of private power generation and transmission, and ultimately large-scale data centers."
• What the contiguous surface can capture: "the data center itself, related roads, power lines, wind and solar, carbon capture, and water, all of which generate recurring, high-margin 'royalty-like' revenue streams."
• And the water underneath it: because the acreage "lies above a significant aquifer," the company can supply drillers with source water priced "in the $1/barrel range" — sharing some gross revenue with the handlers who extract it, but again taking "a royalty-like interest in it."

The "Permanent Portfolio" — Polomny's own project, announced

• "This is an example of the type of company I am looking to add to my new 'Permanent Portfolio'. I have discussed this a few times in the past. I am looking to create a portfolio of scarce, non-replaceable assets."
• The management criterion is explicit and is about optionality, not operating skill: "Management like Landbridge's that knows what it owns and how to maximize the optionality of its assets is an example of what I am seeking."
• Status: announced, not published. "More to come on this." No holdings list, no sizing, no relationship stated to the existing AIA Portfolio or AIA Dividend Portfolio.

The generalization — land banks host power, and control the water

• "One way many of these land banks will monetize their land is by hosting power plant projects. These can be renewable projects and steam plants (gas turbine, coal, or nuclear)."
• The second, less obvious asset: "A side benefit for many of these land companies is that they have large water resources they can control and use as cooling water for the power plants and data centers that will be hosted."
• This is the screen behind the archetype — it is stated generically ("many of these land banks"), so it is meant to be run on other names, not just LandBridge.

Robotti Q2 2026 (excerpt) — the market's obsessions have a history

• "The stock market has a long history of obsessions, and currently it is artificial intelligence… capital spending measured in the hundreds of billions, valuations that embed decades of flawless execution, and a daily news cycle in which every announcement… can move hundreds of billions of dollars of market value."
• The precedents named: "railroads, radio, conglomerates, the internet, and housing. Each was built on a real and durable change in the world. Each also taught the same lesson that the significance of a technology and the returns to its most celebrated stocks are two very different things."
• Attribution matters here: this is Robotti Value Investors' letter, reprinted by Polomny, not Polomny's own prose — though it aligns with the AI-capex bust case he argues in his own weeklies.

Robotti (excerpt) — the ignored physical economy is the asymmetry

• "The market has bid the recognized beneficiaries of AI to prices that leave little room for disappointment, while the physical economy that must be built to realize any version of the AI future remains largely ignored or valued… as though the last decade's indifference will simply continue."
• The key move is that you don't need to forecast the technology: "One does not need to predict which model wins, or whether today's spending proves too much or too little, to observe that the demand for machines, materials, energy, and infrastructure is rising, straining supply that cannot quickly respond."
• "That asymmetry, where enthusiasm concentrates in one place while necessity accumulates in another, is precisely the kind of gap between narrative and reality where we have always done our best work."
• Polomny's endorsement: "If you believe in investing in value or sectors that are out of favor, then Bob Robotti is your guy."

Circle of Competence (Smead Capital excerpt)

• Smead: "our team… has studied the thinking and investment careers of Charlie Munger and Warren Buffett. In today's Go-Go artificial intelligence-dominated stock market, we'd like to walk you through the concept of the Circle of Competence."
• The definition, verbatim: "a mental model that states you must know the exact boundaries of what you understand and stay within them to avoid costly mistakes. It is not about how large your circle is, but how well you define its edges."
• Polomny's one line on it: "Smead Capital Management has some wise words on the circle of competence investors should cultivate, a concept championed by Charlie Munger."

"Nothing stops this train" — the empire, the printing press, and metals

• In his own voice: "We are entering the final stages of the US empire. Many empires in the past succumbed to too much debt and military overreach. This is what is happening to the US."
• On the standing precious-metals question: "People often ask me in interviews if I am bullish on precious metals. Yes, the course is set, and this will continue until we get a crisis. The establishment will try to pull rabbits out of the hat to preserve the status quo. However, no matter what they do, decline is inevitable."
• The monetary mechanism he expects: "Expect more money printing and the FED to become the buyer of last resort for US Treasury securities" — the same yield-curve-control endgame he laid out in the 8.8.26 weekly.
• The political conclusion, stated flatly: "You will not vote your way out of this decline. Prepare accordingly."

Housekeeping — the In It To Win It interview

• "Steve Barton interviewed me for his channel 'In It To Win It'" — the copper-to-$12 / AI-bubble conversation, archived separately in this hub at 2026-AUG-13. No new content is added in the weekly beyond the link.