ALEXANDER STAHEL

So I grew up in Switzerland, also spent all my schooling in Switzerland, and then quickly left for the United Kingdom, where I started my career as an investment banker, as many like-minded people do. And then from there, I actually went operational. So I ran operational businesses for half my career – about 10 years – then went back into private and public equity investing.

MAGGIE LAKE

So were you always interested in finance as a young man, did you always know you wanted to get into banking somehow?

ALEXANDER STAHEL

My father was a cotton trader. And so we talked a lot about trading, and I never liked it –nothing about it. And so I said, “I don’t want to do that. I want to be somewhere else.” And I guess that’s why I thought early on, you know, “I need to learn valuations, I need to understand companies.” And then at some point, when I was, I think, 30, I had my first book about Buffet in my hand, and that’s where I really got interested and thought I’d like to be in the investment field.

MAGGIE LAKE

Isn’t it funny that we started out thinking we don’t want to do that. And then you have sort of a journey that brings you round trip again, because you’re doing you much of what you focus on is commodities, correct?

ALEXANDER STAHEL

Yeah, it’s funny. I always obviously had family access, so to speak about what commodities are all about. And then, somehow, interestingly enough, in 2014, when I started Burggraben and said, “okay, here is my accumulated money over my career, let’s reinvest it wisely.” I really couldn’t find value anywhere. And then suddenly, the cyclical stocks came back to mind, we had an oil crash, and I thought maybe I should look at oil. And obviously, I knew things about the oil for, you know, many reasons and family conversations, but then I really went about it in a systematic way.

MAGGIE LAKE

Yeah. So let’s go to your first trade, and that’s one of your best, and that’s Sangha Offshore. So set the scene for us, when did this trade happen? What was going on in the world at the time that put this on your radar?

ALEXANDER STAHEL

So we got familiar with the company at some point in 2016, and we had this in 2010, America started with the US shale miracle so to speak. And they started two oversupply the entire oil space. And that took a while for the market to realize what’s going on and then shale really took off more and more into and beat market expectations in terms of oil output. And in 2014, we had an oil crash and everything oil related went obviously into a spiral. Not just the oil producers, what we call the EMP – the exploration production companies – but the service companies too. And many of them had to restructure, had to right size the balance sheet or needed new capital and so on. And Sangha Offshore in its scope is nothing else but a full rig offshore rig comp service provider for the EMP companies that need to drill wells offshore, either in the North Sea or somewhere else offshore and so that’s when it all came together where they also had the same problems, and then they had some more specific problems when they got brand new rigs they got delivered when those leaks came finally to the company and everything got more and more awkward and then they became what I call a restructuring case. And that’s what helped when we paid a lot of attention to the situation, because we felt the market looking forward. And the contracts they had were actually very favorable. And the balance sheet could have been fixed. It was a question of equity and if you participate in that you should probably have a very good setup of a good industry outlook, a company that now becomes healthy again and then still quite a bit of debt but a very strong contract with, at the time, Equinor, the oil major in in Norway. And, and so we felt very comfortable with the situation.

MAGGIE LAKE

So are you a distressed investor at this point? Or always? Or does it sort of depend on the circumstance?

ALEXANDER STAHEL

No, it’s definitely a circumstance that makes us behave and find opportunities. We have four types of investments, a bit like what Buffett once explained, and we call it a wonderful company at a fair price. So let’s call it the Googles, right, that are just amazing compound – they grow, they need very little capital, and they create a lot of shareholder value on the way of it and on the way to it. But those are hard to find and once they’re out, often people understand them fairly early, and then they always become pricey, then you have to have a very good understanding, if you’re honest about it, about every single aspect of such a technology company, “oh, it can be enough.” It doesn’t have to be tech heavy. But I often feel that people then overestimate their ability to understand the outlook, or the competitive landscape of such an environment. And in hindsight, I knew Google would be the winner of this. And it just so happens that in 2001, from ‘96 to 2001, I did mostly tech. And I was reading, you know, 18 hours a day, about tech. And all those names that were important then, are not around anymore. And, by the way, we were even part of the Google IPO, so I knew the company fairly well and it wasn’t clear to me at all that those will be the winners. We were part of the Amazon IPO and it wasn’t clear to me at all. Although I knew exactly that Jeff Bezos was very good, was going to be the winner. So I think in hindsight, people make it a little bit easier on them when they were actually maybe lucky too.

MAGGIE LAKE

Wow. So I think that’s really important. We’ve had many conversations about the difference between sort of acumen and luck on this podcast and opinions all over the place, although many are honest, that they think luck has a fair amount to do with it. Do you think that that is the case in all investments? Or is it particular to technology? And maybe things that are future leaning that don’t exist yet? Can you apply more sort of discipline and rigor to things that are in the tangible world and the industrial world in the commodity space?

ALEXANDER STAHEL

I think you’ll spot on, Maggie – if one is honest. Again, it’s a much more profitable and beautiful investment style, to go about these wonderful companies at the fair price and understand where they are going. And I understand why people obsess about it. However, it’s much easier to look at something that has intrinsic value XYZ because of you have hard data that you can attach to it – be that an offshore rig that you know has just come out of the audit, cost $600 million and you have a contract that’s going to give you $250,000 or in that case $450,000 a day, you have such and such costs, and these are the maintenance. So the moving parts in such an investment case are much smaller. Especially if you have, like Sangha Offshore, a 20-year contract with a major. You think about the contract and say A. Can the major go back? That was pretty unlikely event for the case of Equinox, which is one of the largest European oil and gas companies and one probably have the best managed too. And then and with the most beautiful assets, offshore Norway. And then 2. You go about the contract and the contract was just a very strong contract too, where it was very hard for Equinox to give Sangha a hard time when it comes to any contractual obligations and how they abuse the situation, so to speak, for their own purposes. And I think that’s just an easier investment style. It’s not without risk and you have to have knowledge – what I call circle of competence – but when you have that, I think you can reduce the variables or so to speak the risk parameter, and then you can have a firm view. And often you have a very clear, call it, the price that you pay and the value that you get for it moment. And then you have to be patient because the market doesn’t necessarily agree with you when you do that investment, but those long-term growth prospects can be profitable for 20/30 years to come forward. They, in my view, require so much knowledge and attention on an annual basis. That yes, they are wonderful when they turn out. But I wonder how many people have tried how many things and then, you know, and then they were okay, on one or two of them, and not on many?

MAGGIE LAKE

So what do you think your lesson or your takeaway was from that successful trade, you know, in a sort of tangible world with this offshore company? What did you learn from that?

ALEXANDER STAHEL

So it was for me, it was fantastic growth. I said we came about it in ‘16 and then we invested, and by the way, we took a very concentrated bet so it was a large part of our net worth, and our clients net worth. But for me, it was the first time I did it in my own name, it was my own shop, rather than a bigger shop where yes, you do probably the work, but there are many others that take care of you too, or that, you know, that matter in the process. And so, number one, that was the first real winner of something that we always wanted to prove to others too that we can find it and that we can do it and no one knew the name, and what is this and so on and so forth. So it was a gutsy play that worked out absolutely as advertised. And it was another way of showing that if you have circle of competence, if you go about that, if you go what I call the extra mile. I call it a private equity approach in public equity – really try and understand everything about it. And that approach served us extremely well. That was for me, kind of the moment where I decided this will work for us in the long term. And let’s do it. And it’s a bit of this Warren Buffett kind of thing where he says have you know, this punch card, food card where you can do 20 punches. Don’t be obsessed about having a view where every little trade and every little move too. Do a few things, do them right and then do them big. And that was my first time I really executed on that in my career in a very consequent way.

MAGGIE LAKE

Those are really wise words in this time when I think people did rely on a more passive, there is no alternative, just shovel money into one area of the market sector as opposed to doing that really, really deep dive down into companies. So your second trade is also one of your best. And this is PetroTal, and I believe this is one that you’re still in, but you’ll give us that at the end. So now you’re kind of looking for these opportunities where it sounds like there’s asymmetry, right? There’s something that you see that other people don’t. So how did this come on your radar?

ALEXANDER STAHEL

Yeah. And before we go to PetroTal, you just said something so important before that I’d like to emphasize again. There is an entire world out there that gave up about finding alpha, as if only passive works, and everything else is just, it cannot work. And I think that is really wrong. And I encourage all those out there to build a circle of competence, and then go about it and then, you know, find one or two good investments each year, max. You know, once every two years is fine. And on that basis, you can make a career out of it. But you have to be patient about it.

MAGGIE LAKE

I think this idea of “build a circle of competence is important.” How does one do that? I mean, you had the experience in banking and from different different perspectives, which is probably really important. And also, this sort of family knowledge that you came with. How do you think people can go and build a circle of competence? How did they figure out even where to start on that?

ALEXANDER STAHEL

Not sure any of the things you mentioned were relevant for the way I operate. I think what it is on my side is just this constant fear of not knowing something which is relevant. It’s also the belief that I can find out and that I can go about it and that I just have to really make sure that I don’t fall asleep at the wheel. And I think it’s those characteristics that define more than anything else. So, what does that mean for instance for the oil sector? I read every single book I could find over the last 20 years on oil. Just to make sure that I don’t miss out any oils that have a relevant aspect that I couldn’t see, or wherever blind spot, and I think it’s that that you need to bring. I like to say in the investment bank, we learned how to work hard. I started to work at S G Warburg, which at the time I would say as popular as Goldman Sachs. It was based in the UK and then it was taken over immediately by a Swiss bank – I never wanted to work for Swiss banks…

MAGGIE LAKE

Your past keeps chasing you Alex.

ALEXANDER STAHEL

and now I’m getting Swiss banks. I’m thinking “Oh no, I just wanted to escape that. I think the Anglo Saxons are so much more professional in this.” Anyway. So I’m there and we’re working 18 hours. And while I hated it when I was there, because I thought it was a very bad cultural, it was an elite culture but not a clever elite culture. It was like a local kind of “who can work the hardest culture” and I wanted to survive in it and I wanted to show myself I can do that and I managed it. But then after five years I felt like, “Let’s build a company. Let’s do the real thing.”

MAGGIE LAKE

So let’s bring this circle of competence, which I think is so important, into PetroTal. So you’re doing your due diligence, you’re scouring around in this area that you now feel like you really own. What was it about this company that sort of piqued your interest?

ALEXANDER STAHEL

So at that point, I probably covered 500 EMPs, I kid you not, in every aspect that you can possibly think. And the people that know me, know when we go about reservoirs, we go about them, right? We don’t say okay, “There is oil, so that’s done.” No. Let’s find out if there is oil. And not oil because management tells us, but because we have our own guys and they don’t have to work for books. We are not that big a shop that we can hire 1000s of geologists but we will find senior geologists that don’t like anything. And then, you know, do a job for me. And they probably, you know, they can do it usually quite quickly. It’s not even that expensive, they enjoy that and they are no bullshit, right? They just tell you, “don’t bother.”

MAGGIE LAKE

This is what we call “boots on the ground.”

ALEXANDER STAHEL

And we obviously join them, and we like it and we learned a lot over the years about that, and so on. But I’m still not a reservoir engineer, I’m not a geologist. Okay, so, at the end of the day, however, we care about exactly those to make sure that we understand the basis of the company and for an oil company, that’s the reservoir. And so by that time, I probably had 500 companies that I looked at in a lot of detail, and that excludes any of the US shale players because we never felt we could understand them. There are all these small little things that they do and then you know, and we never liked the cost structure and we never felt comfortable to understand how they make money when something decays 70% in year one. And on that knowledge, Maggie, I was in Norway at the conference and then there is a guy called Manuel Zúñiga of PetroTal. And I’m listening to him and I say, “if half of that is true, I want to be in that company.”

MAGGIE LAKE

So you already went in, saying yeah?

ALEXANDER STAHEL

I’m just listening. I never heard about it. It’s the spin out, you know, which is often a good idea to stock, right. So I’m saying, “Ah, spin out, I like”. Another company that cannot handle a situation in another situation, in this case, it was a Colombian company called KanCare. They couldn’t handle the Peruvian setup, where there were already a lot of sunk costs. So there is another buzzword where I’m thinking “Ah, right. Someone invested 300 million that we can take advantage of right?” And then it goes on and on and on. And I’m thinking, “Oh, this is getting better by the minute,” you know, and then, and then I’ll say, “okay, so fine, like now.” Then, literally the same day, I called the troops and said, “Look, who understands Peru?” And this and that, and so on. And we’re putting a team together, and we literally claim to Peru. Once we smell blood we get very…

MAGGIE LAKE

I can tell! I can see your enthusiasm.

ALEXANDER STAHEL

And so we went about this, and we really tried to understand everything about it. And we did. And we made, I think one of the battle lists of all analytics on that. We said, literally, from day one, to all the analysts in the reservoir competent person reports, that “You guys are wrong. This is right.” They were like, “Who the heck is this guy?” And, and we were proven right because that was obviously in 2018 and now it’s 2022 and we know. And we were right about everything we said. Now here comes the lesson, Maggie. Nothing about it was easy, right? I was right about everything. And then it goes up a little bit finally, and then comes COVID. Boom! No one in oil. And we’re sitting there, “Okay, fine.” But that’s where the homework came in. Right? We had the homework done, we felt comfortable. But now the company needs more capital because everything changed with COVID, not just the oil price that went, as you know in America, even below zero. But it was just quickly getting awkward on the cost side. The company was lean and mean and now needed capitals. Okay, so we reinvested because we’ve done the homework, Maggie.

MAGGIE LAKE

So you doubled down I think is what they say. So this is interesting because what you’re talking about is not just an opportunistic investment, you’re really buying the company for a time, it sounds like. It requires commitment and patience because you did hit this unexpected, you know, row. But how do you avoid the temptation to just bail out? What is the rationale around doubling down?

ALEXANDER STAHEL

Again, you mentioned something extremely important. In our contracts with our clients, we say we don’t buy stocks, we buy companies. So for us, this is not the same thing, right? We may occupy a very small piece of that company, in the form of stocks that are publicly listed. But when I say we buy companies, I am referring to what Buffet explained, if you have this mindset of analyzing a company, buying the whole company, then you look at it differently than saying, “Oh, maybe the stock is a little cheap. And then maybe I make a gain here for 10% or 20, or 30.” It’s definitely now our DNA – as an operator, as private equity now public equity, as being obsessed with doing the homework. But then how do you decide whether you stay in or not, and it comes down to a circle of competence. And if you are in June 2020, and you don’t understand oil enough, you think now that was really a bad idea and I may as well take my medicine. And you will, in fact, kiss that goodbye. But if you understand enough on oil, and you’ve read all the books, you know there is no way we as human species are not going to consume more oil in the year two or three to come because we are all hooked on oil. And then you say, “Wow, this is an amazing, incredible once in 100-year event in COVID. Alright, the pandemic I have to go through, but okay, let’s get it done now, because we are in the right thing.” We had clients calling, in fact, a very large client who was run by a talented man, and he said, “Look, Alexander, I just don’t believe we need oil anymore.” And I said, “All you see is about this.” And he said, “Yes, absolutely.” And I said, “Okay, fine.” There’s nothing I can do about it. But I guarantee we will need oil next year, the year off, and for 50, 100 years to come. And a lot of it. And we’re not gonna have enough of it. But for me, this was like, not a question, it was just, “how can I explain it to people so that they can come around and look at this?” Because obviously, in June 2020, everyone said these oil prices are for years to come. On that basis, you don’t have a business case in PetroTal.

MAGGIE LAKE

Yeah, no, we saw that. We saw that huge debate. So, your circle of competence and your conviction of the work you’ve done, is what keeps you in the trade. How do you know when you close the book on a successful trade? So you stay with it, and I think you’re still in this one, right? This is a current trade right. Now you have a position? Yeah. How do you know when you’re going to get out?

ALEXANDER STAHEL

So, Maggie, it’s actually the other way around. We went out – now we have some left – and we were in it another week. I think, at some point, we owned nine and a half percent of the company, or even 10, almost. And the point there is including walls, right? We also received awards in that capital increase. And so I went out this summer, this July, and I’m making four and a half times. Okay, between ‘18 increasing, increasing again, and now, I think if you look at it all the time adjusted, it’s more like two and a half years. So that’s a good trade. Yes. Now, at the same time, I’m saying to everyone that looks at that, I’m saying it’s wrong. It’s grossly undervalued – still, it should go up another two, three times. So how come I sold it? There are two things there. First of all, when you are acting as an institution and you want to pass the baton on, you have to go out when you still have a lot of upside. That’s my view. Otherwise, don’t do that! If you do Mickey Mouse little steps, you’re never gonna get out in big ways, right? So first of all, give yourself enough room to make three to four times the money so it’s risk adjusted. And number two, give others the chance also to make money. Someone from a very small team in Switzerland told me that – and when I was actually quite young, and it always made sense to me – “many people think they’re so much smarter than everyone else.” But that’s not the full story here. In fact, the other story here is that I, in 2018, fell flat on my nose on the oil patch, where we had a quite a big correction and I was also heavily loaded in oil stocks and not because we only do that, but because in that moment, I believed I understand all the moving parts. And you know what, maybe I didn’t understand the macro. Because when I think about my career, I’m coming from all this micro, micro, micro, you know, looking at each page of everything buying firms. Some say macro, you know, that’s for the kids, not for me, I’m buying firms here, long term. Then in 2018 I’m thinking like, “where did they slap come from?” Right? I didn’t see it coming. And so I said, “Okay, I need to beef up my game. I’m having a blind spot here and I need to become much better in macro.” And so we engaged in an external company, which helped us understand, and build what I call a macro process. And since then, we included that in our investment process. So now it’s company, it’s commodity level, where you need to understand the sector inside out, almost like a big data company – and I think we’re very good in this, in the first two. And then macro, we have a partner where we listen very carefully to what they have to say, where they give us signals. And the three combined makes us act. And in this case here, also my knowledge in other commodities makes me careful, because I see the energy crisis, and not just you know, gas, but mainly electricity. And I’m getting very careful here, where this is taking us. And I think the damage will be much bigger than many expect. The gas presentation, we had also for Real Vision, now the electricity comes on top. And so everything is slowing down. And so I’m saying “okay, no one will ever go bankrupt by taking profits here. Let me be humble and let me make sure my investors have a good track record here.” And then we can go into a more difficult patch rather than me, you know, saying “no, this is fantastic. It has so much more upside,” and then everything corrects again, because we are perhaps in a disorderly market in the not-too-distant future. And then we have to wait again for a year or two to make it all work. And so again, I cannot say I’m bothered when I say “look, my preferred holding time is forever.” We wish. But we have clients and as you know, clients, they don’t do the same work as you do. You can explain them, but it makes them insecure when the price action goes the wrong way.

MAGGIE LAKE

Sure. And they have a different time frame.

ALEXANDER STAHEL

I tell them all the time. And with PetroTal I didn’t see this anywhere else with COVID.

MAGGIE LAKE

That is so interesting. And it shows, that’s a that’s a growth mindset, righ? When you know what you’ve been doing, or what you do. You see your blind spots, you know, the blind spot you have, and you try to correct it. So that brings us to a very interesting – because your third and your fourth are some of your worst trades. And I’m curious as to how they came about. So one of them is Serica.

ALEXANDER STAHEL

Serica Energy is a UK gas pure play. Actually, it’s a very successful trade for us, but why do I put it on the not so nice list? This is because this was a trade company that we discovered in ‘15 when it was Mickey Mouse small, and the company became a 30 times success. So a Google And what did I do? I went in and out, in and out, like a cheap day trade. How much did I make on it? I don’t know, three times my money – not 30. So everything I just explained, I actually didn’t practice in that specific example. And it was important for me to tell your audience that too, because I don’t want to sound like this wise old man that did everything – absolutely not. When I look back to Serica, I’m saying “why on earth do I think I can time this market?”

MAGGIE LAKE

That’s so hard, isn’t it? So many of us fall victim to that. Why do you think you did it in that case? Was there something going on? Or is it just the habit that all of us have to break, especially when you have knowledge? Like, then you think you know – it’s almost dangerous, right?

ALEXANDER STAHEL

I don’t know if I have the explanation yet. I think it takes more time to understand oneself. And I think I understand myself, but I would say that probably 355 days a year, I’m the man I’d like to be, and then 10 days I’m not.

MAGGIE LAKE

And those 10 days are the days that you executed the trades on that company!

ALEXANDER STAHEL

On those days we can do all sorts of silliness. But in this case, that may be an explanation. I don’t know how else to put it, right? I mean, there is also – I looked at the situation and said, “I understood everything here. It’s all fully valued. What should I do here?” And yet, I understood that the management did great things. And then, boom! The thing went up again and I’m saying, “Why do I not give these guys a bit more credit, and let them do what they want to do?” And actually, they’ve proven again out the third time that they can. Two gentlemen from England, I mean, they are the most wonderful group of people that you can think of, and I was trying to become too smart. And funny enough, by the way, let me say that – not about me – there is a English carpenter, or something like that, who discovered the company about the same time as I did and invested half a million pounds or a million pounds. It is now worth, I don’t know 100 million, or 30 or 40 million pounds. Everybody knows him now in the brokerage circles, you know, Dr. Hart is his name. Everyone knows him and everyone likes that guy. You know, I think he picked the single biggest winner in the UK stock market, there is for the last 20 years.

MAGGIE LAKE

Incredible. You said a lot of information is dangerous, but do you think when you get this level of competency that you can overthink things? How do you prevent yourself from doing that, you know, there’s like, it’s really helpful to a point and then you can almost sabotage yourself with that.

ALEXANDER STAHEL

I think we have to look at it a little different. I think you have to accept that in this game, it’s not going to be what many people call the game of golf, it’s not a game of perfect. And you’re gonna have these beautiful rounds, but don’t expect it to become the next 20 years where each and every time you do beautiful rounds. You can still have the same analytics, the same rigour, the same discipline, and yet at times your emotions play games. And in hindsight, you don’t know exactly and so you play badly. And then maybe some you hold too long. And then you don’t pay attention, you have too much confidence in whatever is around the industry or the management team and you become lazy about it. You don’t read up anymore, you say, “oh, that’s gonna be fine.” And then suddenly, things change. So, it’s not a game of perfect, let’s not be too tough on ourselves of always having everything, you know, bottom to top. Let me ask you, do you think from here, Apple is ever going to go higher again? In is the history of Apple. I’m talking about the next 500 years.

MAGGIE LAKE

If I knew that.

ALEXANDER STAHEL

I think that was the peak for Apple. I think that was as good as it gets.

MAGGIE LAKE

Really? What are you basing that on?

ALEXANDER STAHEL

So from a monetary perspective, from this money printing perspective, we are now in a stagflation environment for 5-7 years. So it’s never going to reprice to that level, when interest rates, when the tenure is at five. We also saw almost zero or one or half a percent. Then the company – think about it, what a wonderful run it had with Steve Jobs getting this right. And then the next guy executing beautifully on the few products that made him winners. And so all of that was in a perfect 15 year alignment. And now comes a time, I mean, why should it be that this company is also not disrupted by something new? By some new Steve Jobs that is coming. It’s very hard for me to imagine. At the same time, we have to call it the macro side, the monetary side – what’s the liquidity for that stock that all works against it? So I think that’s probably as good as it gets.

MAGGIE LAKE

That’s a very bold call. I like that you made it because most people don’t. Because they don’t want to, you know, they don’t want it to come back on them. The thing that’s interesting, and I think this underscores the whole process you described is so very difficult. I covered the release of the first iPhone, and every single person said, “Who needs this? Nobody needs a phone.” And everything they’ve released has been met with naysayers all along. So you sit and say, “that has to be the peak, you know. They rode it, it was a good wave, but how could they possibly–” and we’ve been proven wrong all along. So you may be right. But this is why it’s so hard, right? Like, there are a lot of people with all this knowledge of that and they can come up with a million reasons why they might…

ALEXANDER STAHEL

And so many smart people too. They have sophisticated explanations for it, and then maybe it’s all wrong. But anyway, I was just teasing. Look, it’s not the game of perfect – and maybe Apple has another 20-year round and it doubles from here. Because it just doubles revenues and profits. I won’t put my thoughts on that. But what I’m saying is, it’s not the game of perfect. So sometimes I took my cards of PetroTal, and that’s just fine. I’m never the guy that then looks at these things and if they go up, I’m saying, “Oh, my God. Why did I–” for me, I’m at peace. I did exactly what I wanted to do. I executed my process and I’m at peace.

MAGGIE LAKE

We’ve got one more trade I want to get through. And this is another one of your trades that didn’t work out for you. And I wonder if it’s a similar situation, or if there was something different about this one. And that was Polarcus. Yeah, so what happened here?

ALEXANDER STAHEL

Yeah, it’s a seismic data company that collects data at the bottom of the sea for audits of the oil and gas industry and they actually have wonderful shapes and wonderful technology to go about this. And interestingly a bit like some Sangha Offshore, they had an upside-down balance sheet and because of Sangha Offshore, I got maybe a little bit too comfortable about the situation. And so I see this again – the cycle is going to be fine and this is all going to work out. And remember, often when we lose money because we invest in a bad balance sheet. Regardless of the circumstances of the business a bad balance sheet is always a very risky investment where you really have to go the extra mile. We thought because we also went to see the company in Dubai and went the extra mile, but we didn’t go about it properly when it came to certain basic fundamental aspects such as: Is there a long-term contract? Yes, or no? And we said “Oh it’s fine, not everyone needs this seismic data so it’s always going to work.” It obviously didn’t and there we simply lost out. It went against us very quickly, too. Luckily there we quickly started to understand – this just didn’t make sense with all the hours we spent in it. And we cut our losses, but they were losses, right. I mean, this was a very bad trade and I should have known better. So as a general comment, you know, if you don’t have that much time, try and pick the best balance sheets, not the worst ones.

MAGGIE LAKE

Yeah, which sounds basic, but it’s not easy to do. As you get more experience and the more you know, does it make you worry more or more or worry less when you make these decisions?

ALEXANDER STAHEL

Well, we feel much more comfortable in making decisions. What I do however, is I get very little excited about anything. I mean, before I start to say, “Wow, that let’s do now all, everyone away here. I want to type and do and think–” that takes a long time. Because I’ve looked at so many companies and so many pages so quickly, in so many ways. Talked to so many managers, that at some point, you just – you know, Malcolm Gladwell wrote the book about, you know, the 10,000 hours that you need to put in the process. I definitely have that in here. And it just makes me very skeptical of many things very quickly. I don’t see the edge; I don’t see the day. And then often things become a macro trade, and I don’t want to just have a macro trade. So there has to be a clear hole or clear angle about this company that others haven’t yet discovered, and so on. And so it’s hard to find them. But again, I’m a guy that is happy with one or two good ideas a year. I don’t need five things at every moment in the month.

MAGGIE LAKE

Yeah. Do you think it’s the nature of the environment we’re in right now that you feel so skeptical all the time? Is it the nature of the energy space? What do you think that is?

ALEXANDER STAHEL

No, the energy space is actually getting more and more and more interesting. I just think the macro side at the moment is so difficult that I think time is my friend, not my enemy. So let’s wait a little. And then when we look outside the energy space – we’re not just do energy – we do a lot of energy, but we do metals, we do a lot of things commodity related, and even outside commodity. I just find it hard to find value. Again, I’m going back to Apple, I mean, Apple has no value. By the way, Burggraben, my holding company, we’re named after it’s called moat for the economic moat that Warren Buffett explained.

MAGGIE LAKE

That’s awesome. I was wondering that…

ALEXANDER STAHEL

So that we have a logo here and it’s an incomplete moat of a company it’s supposed to show.

MAGGIE LAKE

I love it.