“The real money is going to be made in the growing businesses, and that's where the focus should be.”

- Warren Buffett, 2012 Meeting

Let me tell you how close Warren Buffett came to missing the best investment of his life.

It was 1972. A candy shop in California. The owners wanted 25 million dollars. Warren and Charlie thought it was expensive. Twelve times cash flow. For two guys who had built their careers buying dollar bills for fifty cents this was pain. They almost walked away over 100,000 dollars. One hundred thousand. On a 25 million dollar deal.

“If See's Candies had asked $100,000 more, Warren and I would've walked. That's how dumb we were at that time.”

- Charlie Munger, 2003 Meeting

But they bought it. By 2026 that candy shop had returned roughly 3.15 billion dollars in pre-tax profit to Berkshire. A 130-bagger. From a candy shop.

“The ideal business is one that earns very high returns on capital and can keep using lots of capital at those high returns. That becomes a compounding machine. If you can put $100 million into a business that earns 20% on capital, ideally it would be able to earn 20% on $120 million the following year, $144 million the following year, and so on. You could keep redeploying capital at these same returns over time.

But there are very, very, very few businesses like that. We look for them, but they don't exist."

- Warren Buffett, 2003 Meeting

Today I want to tell you about a European software company that looks exactly like that animal.

It trades at 123 times earnings.

And I just bought it.

My name is Sandro. I run Cannibal Stocks.

You know my style. I buy hated companies in hated industries. Alpha Metallurgical Resources at 1.3 billion in free cash flow on a 2 billion market cap. Transocean at about 25 cents on the dollar of replacement value. Ugly cheap. So cheap that even if I am wrong about everything else the price saves me.

So when I tell you I just bought a stock at 123 times earnings you should probably check if someone hacked my account. 🙂

Nobody hacked my account.

What happened is that I spent two weeks inside this business and I found something I have been looking for my entire investing life. A machine that takes one dollar and turns it into twenty cents of cash every year. Forever. Into a market so big that the machine cannot eat through it in my lifetime. Or my kids’ lifetime.

The stock is called Topicus.

And the 123 PE is a lie.

Let me show you.

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For those who are caught up. At the end of that post I said I was not buying Constellation. Too big. The 140x is behind us. I said I was looking for the next Constellation.

I found it.

Its name is Lumine Group. It trades in Canada under the ticker LMN.V.

Let me show you what I found.

One Billion Devices

Before I tell you about Lumine I need to tell you about two phone calls.

The first call happened in 2018. Someone at Nokia picked up the phone and called Lumine. Nokia had a problem. They owned a video streaming software business called Velocix that they had inherited through the Alcatel-Lucent merger. It was a good business. Content delivery. Caching. Streaming personalization. Customers in 14 countries. But Nokia did not want it. It did not fit their strategy. They needed someone to take it off their hands.

Private equity would buy it. Gut it. Flip it in five years. Nokia did not want that. They wanted a permanent home for the engineers and the customers.

Lumine said yes. They bought Velocix. Restored the original brand name that Nokia had buried. Let the team run independently. Gave them capital and a playbook of 250 best practices.

By 2024 Velocix won the NAB Product of the Year Award. A business Nokia considered dead weight became an award winner.

Then came the second call. December 2023. Nokia picked up the phone again. This time the business was much bigger. Their Device Management and Service Management Platform. Software with roots in two prior Nokia acquisitions called Motive and mFormation.

This platform manages over one billion devices across 150 deployments worldwide. Broadband routers. IoT sensors. Multi-vendor device fleets. The software that telecom operators use to remotely manage every piece of hardware connected to their networks.

One billion devices.

Nokia wanted 202 million US dollars. Five hundred employees would transfer to Lumine.

Why did Nokia call Lumine a second time? Because the first deal worked. Velocix thrived. The engineers were happy. The customers were retained. The brand was restored. Nokia trusted Lumine.

Reputation compounds just like capital. I wrote that in Part One. This is what it looks like in practice.

The 90% Monopoly

Now let me tell you how Lumine was born.

In 2014 a man named David Nyland walked into Constellation’s Volaris Operating Group with a mandate. Build a communications and media software vertical from scratch. Nyland had the resume for it. Software developer at Accenture. Two CEO roles. Acquisitions across North America and Europe. He knew how to buy and build.

For nine years he did exactly that. Quietly. Deal by deal. Small telecom software companies. Billing platforms. Fraud management systems. Mobile optimization tools. By 2022 he had assembled a portfolio generating 228 million in revenue.

Then Constellation did something it had only done once before. They spun Lumine off as an independent public company. But the spin-off came with a gift. An acquisition so good it justified the entire separation.

WideOrbit.

WideOrbit is the system of record for over 5,000 broadcast stations and cable networks in the United States. It processes more than 35 billion dollars in advertising revenue every year. It commands 90% market share among US local TV stations for ad trafficking and sales.

Ninety percent. In an industry where the software is so embedded in daily operations that switching would shut down the station.

94% of revenue is recurring. Renewal rates are nearly 100%. Gross margins 70%. And here is the number that matters most. Before the acquisition WideOrbit’s estimated return on invested capital was 53%.

Constellation paid 490 million. Three times revenue. Eleven times EBITDA. Expensive by Constellation standards. But when you are buying a 90% monopoly with a 53% return on capital you are not overpaying. You are stealing.

The structure was genius. Lumine stock was used as partial payment. The founder Eric Mathewson joined the board and kept running WideOrbit as CEO. His wealth is now tied to Lumine’s success. Everyone has skin in the game.

One deal. Lumine nearly doubled in size overnight.

The CEO Who Came Back Twice

I have saved the best story for last.

In November 2023 Lumine bought two small business units from a Nasdaq-listed company called Synchronoss Technologies. Standard carve-out. 41.8 million dollars. Nothing remarkable.

Lumine did what it always does. Restored the heritage brand names. Openwave. RazorFlow. SpatialNetworX. Names that had been buried inside Synchronoss through years of corporate acquisitions. Lumine resurrected them. Gave the teams autonomy. Applied the playbook.

Jeff Miller the CEO of Synchronoss watched this happen from the outside. He watched his former divisions come back to life under new ownership. Two years later in December 2025 Miller called Lumine and said take everything.

All cash. Nine dollars per share. 258 million dollar enterprise value. Lumine took Synchronoss private. Delisted it from Nasdaq. Absorbed the entire company into the portfolio.

Miller himself said the former businesses “have flourished under Lumine Group’s stewardship.”

Think about what just happened. A CEO sold two small pieces of his company to Lumine. Watched them thrive. Then sold the entire rest of the company because he was so impressed. That is a referral. The most expensive referral in corporate history.

And it reveals something about Lumine that no financial metric can capture. When you are the buyer that makes businesses better instead of worse, sellers come to you. You do not have to chase deals. Deals chase you.

The Number That Changes Everything

The stock is down 58% from its all time high.

I spent days going through Lumine’s filings, Constellation’s shareholder letters, RBC equity research, and every deep dive I could find. What I found does not make sense.

There is a single metric that Constellation’s entire empire was built on. The metric Warren Buffett called the difference between a great business and a mediocre one at the 1995 Berkshire Annual Meeting. The metric that determines how fast intrinsic value compounds per share.

Lumine scores higher than Constellation itself.

What follows is the full breakdown. The number. The formula Mark Leonard buried in his shareholder letters. A free cash flow model through 2035.

And my position.

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You will find two. Maybe three. That is it. No Twitter account. No LinkedIn. Nothing.

This man built a 300-bagger. And the world has almost no idea what he looks like.

His name is Mark Leonard. He is the founder of Constellation Software. He took the company public in 2006 at 17 dollars a share. By May 2025 that share was worth 5,300 dollars. A 34% annual return for nearly two decades. One of the greatest track records in stock market history.

Then the stock crashed 50%.

Today it trades around 2,300 dollars. And even after that crash it is still up 140 times from the IPO. Most investors would kill for a 10-bagger in their lifetime. Leonard delivered 140. After the crash.

This story is about the man. And about what he built. And about what happens next.

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The Terrible Banker

Leonard started his career as an intern at Barclays. A mentor pulled him aside early and said something that would change his life.

“You are going to make a terrible banker.”

The mentor told him to go study the firm’s clients. Find something else. Anything else.

So Leonard wandered into venture capital. And there he met a man named Steve Scotchmer. An advanced materials engineer who had successfully built and run his own business. They searched together for a company that Leonard could invest in and Scotchmer could run.

They never found one.

Scotchmer’s bar for quality was impossibly high. Nothing met his standard. But something more important happened during that search. Scotchmer became Leonard’s mentor. He fed him Buffett. He fed him Munger. He taught him what a truly great business looks like.

Leonard went back through his venture firm’s portfolio with fresh eyes. And he zeroed in on a category of business that checked every single box.

Except one. They were too small to matter on their own.

The Dentist’s Secret

Think about your dentist.

When you walk in the door there is software running the entire practice. Appointments. Patient records. X-rays. Billing. Insurance claims. Every single part of the operation.

That software was not built by Microsoft. It was not built by Google. It was built by a tiny company you have never heard of. A company that spent 20 years sitting next to dentists learning exactly what they need. Tweaking. Adjusting. Customizing. Building trust that took decades to earn.

That is vertical market software. VMS for short. One product. One niche. One deep relationship. Leonard described it in a single sentence that explains his entire empire.

“Vertical market software is the distillation of a conversation between a vendor and the customer that has gone on frequently for decades.”

Now think about the economics of that business.

The dentist is not switching. Ever. The software runs everything. Switching would mean weeks of chaos. Retraining staff. Losing data. Risking patient records. And for what? The software costs less than one percent of the practice’s revenue. The dentist does not even think about it.

Constellation retains somewhere in the mid 90s percent of its customers every single year. The average customer relationship lasts 20 to 30 years. The margins are high. The revenue is recurring. The capital requirements are low. And here is the part that really got Leonard excited. These markets are tiny. So tiny that there are usually only two or three players. Nobody else wants in. The addressable market is too small to attract big money.

Venture capital does not care about a 5 million dollar software company that runs bowling alleys. Private equity is not interested.

But Leonard was.

He found the one flaw. These businesses were incredible. But they were small. They could not absorb much capital individually.

So he came up with an idea. What if you did not just buy one? What if you bought hundreds?

The Machine That Never Stops

In 1995 Leonard raised 25 million dollars. Mostly from pension funds. He built a holding company called Constellation Software. And he started buying. The rules were simple. Buy vertical market software companies. Buy them directly from founders whenever possible. Pay fair prices. Never sell.

Take the cash flow. Buy more. Rinse and repeat. For 30 years.

Today Constellation owns more than 600 of these businesses. They have sold exactly one. Leonard still regrets it. The typical deal is 3.3 million dollars. These are companies so small they are invisible to the rest of the financial world. But inside each one is a machine that prints sticky recurring revenue from customers who will never leave.

And the supply of deals is endless. Some estimates put the total number of vertical software companies worldwide at 70,000. Constellation contacts them at least twice a year. They have a large team making phone calls and sending emails to founders. The message is always the same. If you ever decide to sell please think of us.

Most of these founders are between 40 and 80 years old. Every year a few percent want to retire. Others want to move on. Some need the cash yesterday. That means thousands of potential deals flowing into the pipeline every single year without Constellation having to chase anything. About half of revenue comes from government agencies. Free cash flow has compounded at 26 percent annually since the IPO.

What separates Constellation from every other software company? This is clean free cash flow. Real cash. No stock based compensation tricks. No adjusted metrics. Constellation pays its people in actual money. When you see a software company reporting 20 percent free cash flow margins remember that most of them are hiding massive equity compensation costs. Constellation is not hiding anything.

So why has nobody replicated this? After 600 acquisitions Constellation has a proprietary dataset that tells them exactly what a broken software company is worth and exactly how to fix it. They win the deals nobody else wants because nobody else has the pattern recognition. Add 30 years of reputation as a permanent home for founders and you have a moat that gets wider with every deal they close.

The Anti-CEO

Now let me tell you about the man himself. Because this is where it gets strange.

Leonard asked for his salary to be reduced to zero. Then he stopped taking a bonus. Then he started paying his own travel expenses. He explained that he used to fly economy and stay in cheap hotels because he did not want to freeload on Constellation’s shareholders. But as he got older and wealthier he wanted more comfortable travel. So instead of charging first class to the company he just paid for it himself.

More than 100 employees owned over a million dollars in Constellation stock by 2015. Leonard wanted that number to grow five times by 2025. Every employee above a certain pay threshold must invest 25 to 75 percent of their after-tax bonus into Constellation shares. Those shares are locked up for four years. More than 3,000 employees participate. Insiders today own nearly 1.5 million shares worth about 2.6 billion dollars.

There is no stock based compensation. The share count has barely moved since the IPO. Zero dilution.

Here is a story that tells you exactly who this man is.

In 2011 Constellation’s two private equity sponsors wanted out. To find buyers and keep the company independent Leonard made a personal guarantee. If Constellation did not compound at least 10 percent per year he would transfer a portion of his own shares to the buyer.

His own shares. Out of his own pocket.

It was never necessary. But the fact that he offered tells you everything.

He considers his second capital raise in 1999 one of his biggest failures. They did not need the money. They raised it just to diversify the investor base. The dilution was permanent. It has cost shareholders billions. It was the last time Constellation ever issued equity.

The stock kept going up anyway.

And about buybacks? Leonard has moral reservations. He believes management has more information than selling shareholders. His securities counsel told him that directors cannot legally do buybacks while holding material undisclosed information. To reveal enough to make buybacks legal would mean exposing trade secrets. That would hurt long-term shareholders more than the buybacks would help.

So he simply does not do them.

This is not a man playing the Wall Street game. This is a man playing a completely different game. And winning.

The Crash

On a Tuesday morning in September 2025 Constellation Software released a short statement. Mark Leonard was stepping down as President due to health issues. Effective immediately.

Thirty years. Gone in a press release.

His replacement was Mark Miller. One of the founders of the very first company Constellation ever acquired back in the 1990s. A man who had been inside the machine since day one. If anyone understood the culture it was him.

But the market did not care about culture. The market cared about one thing. The man who had compounded capital at 34 percent a year for three decades was no longer running the show.

Then in March 2026 Leonard announced he would not stand for re-election to the board. His last day would be May 15. The founder was not just stepping back. He was stepping out.

At the same time a wave of panic swept through every software company on the planet. Artificial intelligence was going to change everything. The narrative was simple and brutal. Why would anyone pay for niche software when AI could build a custom replacement in minutes?

Constellation fell 50 percent. From 5,300 dollars to 2,300. Billions in market value gone. Other software names fell 70 percent or more.

Thirty years of compounding. And half of it erased in months.

Now here is where most people stop thinking. The stock is down. The founder is gone. AI is coming. Sell everything.

But stop for a second.

Before he left Leonard addressed the AI question directly. He told the story of a prediction made years ago by an AI specialist who said artificial intelligence would eliminate radiologists. The specialist told young people to stop studying radiology entirely.

Over the following decade the number of radiologists grew 17 percent. Most of them are thriving. AI did not kill the profession. It made radiologists faster and more accurate.

Now think about what Constellation actually owns. These are not generic consumer apps. These are systems that run hospitals. That manage water treatment plants. That operate transit authorities and courts and schools. Systems built through decades of conversation with customers who depend on them every single day.

Your dentist is not going to ask an AI to rebuild the software that manages patient records and insurance claims and appointment schedules and regulatory compliance across three jurisdictions. Not this year. Not in five years. Probably not ever.

Will some of Constellation’s thousand-plus subsidiaries feel pressure from AI? Of course. But AI is far more likely to become a tool inside these products than a replacement for them. The same way it became a tool for radiologists instead of a replacement.

Constellation now trades below 15 times free cash flow. The cheapest it has been since 2014. For most of the last decade the market valued it between 25 and 30 times.

The greatest compounding machine in Canadian stock market history. At a decade-low valuation.

The Question

Can this machine keep running without the man who built it?

Here is what gives me confidence. Leonard spent 30 years making himself unnecessary. The decentralized structure was not an accident. It was the plan. Six operating groups run independently. Capital allocation decisions are pushed down to the people closest to the deals. The incentive systems are locked in. Over 3,000 employees own the stock. The playbook is not in Leonard’s head. It is in the culture.

But I will not lie to you. Losing a founder of this caliber is never nothing. Buffett is 93 and Berkshire investors still get nervous. Leonard is 66. He is stepping away not dying. There is a difference. But it is the biggest transition in Constellation’s history and the market is right to ask hard questions.

Here is what I think.

Constellation Software is one of the greatest compounding machines ever built. Mark Leonard is one of the most underrated capital allocators alive. The model is proven. The culture is deep. The track record is 140 times your money even after a 50 percent crash.

But at 50 billion CAD I think I am too late. The 140-bagger already happened. I am not here to buy what already compounded. I am here to find what is about to.

And that brings me to a new idea.

“Pay special attention to cannibals, cloners, and spin-offs.”

That is Charlie Munger’s advice.

Constellation spun off two companies. Most people know about Topicus. But there is another one. Smaller, less known, and with a growing presence in Europe.

A company born directly from Constellation’s DNA. Same playbook. Same incentive structure. Same acquisition discipline. But smaller. Much smaller. Thirty businesses today versus six hundred. A CEO who is in active conversation with hundreds of founders. A pipeline of over a thousand targets. And Constellation still holds 60 percent of the equity.

Mark Leonard said one thing about this company that stopped me cold.

“I hope my grandkids are still holding Lumine shares 50 years from now.”

Read that again.

This is the man who built a 140-bagger. A man so careful with words that he writes one shareholder letter a year and says almost nothing in public. He has never said anything like this about any other company. Not even Constellation itself.

I spent the last few weeks inside Lumine’s filings. The acquisition math. The capital allocation. The management incentives. The runway ahead. What I found changes how I think about this entire sector.

That deep dive is for paid subscribers.

If you want to see what I see, the link is below. And if you enjoyed this piece, give it a like and restack. I write about stocks nobody has heard of, so this is basically my only chance of convincing the algorithm I exist. 😅

Cheers, Sandro

Get 20% off forever

Note: When someone shorts a stock, they are betting the price will fall. But if the price goes up, they have to pay whatever it costs to close. That is how bankruptcies happen. The maximum upside on a short is a double. The maximum downside is generational debt.

When people talk about short squeezes, most remember GameStop. Reddit. Memes. Diamond hands. But that was a circus. The real squeeze, the one that actually broke institutions, happened in October 2008.

Volkswagen.

Back then, VW was one of the most shorted stocks in Europe. Hedge funds were piling in. The thesis was that the global economy was collapsing. Car sales were falling off a cliff. So they shorted it. Hard.

What they did not know was that someone had been quietly buying up everything.

On Sunday, October 26, Porsche dropped a bombshell. They announced they held 42.6% of VW ordinary shares outright. But that was not all. They also controlled another 31.5% through cash settled options. That gave Porsche economic control over 74.1% of Volkswagen. Then there was Lower Saxony. The German state held another 20.1% and had made it publicly clear they had no intention of selling. Not a single share.

Do the math. Porsche had 74.1%. Lower Saxony had 20.1%. That is 94.2% locked up. The entire tradeable float for one of the largest car companies in the world was somewhere between 5.8% and 5.9%.

And here is the problem. On October 25, roughly 12.8% of VW total market cap was a massive short position. So you had about 12.8% of shares sold short against a free float of less than 6%. More shares were sold short than actually existed for trading. And then it happened.

On Tuesday, October 28, Volkswagen opened and did not stop going up. The stock had closed around €211 the session before. It hit an intraday high of €1,005. It closed the day around €945. In less than 48 hours, VW became the most valuable company on the planet by market capitalization. Not because the business was worth that much. Because short sellers were scrambling to buy shares that did not exist.

Hedge funds were destroyed. Billions were lost. People lost careers. Some funds shut down entirely. When there are more short positions than available shares, there is no exit. There is only pain. Now here is why I am telling you this story.

I know, I know. Alpha again. This stock keeps me up at night so you are all going down with me. 😄

Volkswagen had about 13% of its shares sold short back in 2008. That was enough to create the most violent squeeze in stock market history. Alpha Metallurgical Resources today sits at 23%!

Are we looking at something even crazier?

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“If you find three wonderful businesses in your life, you’ll get very rich.” - Charlie Munger

Most people think safety is in numbers. Fifty companies. A little bit of everything. Like ordering the entire menu at a restaurant because you don’t know what’s good.

But look at how wealth was actually built. Sam Walton had one business. Walmart. Elon Musk had Tesla. Bernard Arnault had LVMH. Jeff Bezos had Amazon. They didn’t own fifty companies. They owned one. Or two. And they understood them better than anyone else in the world.

Three excellent businesses are more than enough to do very well in life. The average person rarely finds even one. But if you find three extraordinary businesses that are protected from competition and economic change, that is far more valuable than a hundred average ones. And safer. There is less risk in owning three clearly understood outstanding businesses than fifty big famous ones whose balance sheets you never even opened.

I love focus. I love focus more than anything else.

I own three companies. I would not sell a single share for ten times what I paid. This is every position in my portfolio.

Warrior Met Coal — No change Alpha Metallurgical Resources — Add

These two companies make up close to 70% of my portfolio. If you look at their reserves and resources and value that coal, subtract all in costs and everything else, you end up with truly crazy numbers. It makes absolutely no sense for Alpha to be at $200 per share and Warrior at $90. I did not buy two companies in the same industry because I don’t know what I’m doing. I did it because I couldn’t decide which one I liked more.

If you ask me which is the better business, I would say Warrior. Historically Warrior has had better realized prices and lower production costs. And those costs are still falling. So generally speaking, over a long term, Warrior will generate more cash than Alpha.

Alpha has higher all in costs, some railroad dependency, and a few domestic contracts that are not ideal. Warrior has the edge there. Warrior is the better business, but Alpha could be the better investment. Alpha has something that could cause an explosion in the share price.

Let me explain.

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“Several times in the past we have thought that we were running out of oil, whereas actually we were only running out of ideas." — Parke A. Dickey

The world runs on energy. When energy breaks, everything breaks. And when everything breaks, something new gets built. Every major energy crisis gave birth to something new. First the shock. Then the pain. Then capital moves to fix exactly what broke.

• 1973. Arab oil embargo. The IEA was born.

• 1979. Second oil shock. Nuclear and gas expansion followed.

• 2008. Oil spiked to $147. The shale revolution was born.

• 2014. Oil collapsed. Shale got leaner. OPEC+ was created later.

• 2020. COVID sent oil below zero. The industry learned discipline.

• 2022. Russia invaded Ukraine. Europe built LNG terminals in months.

• 2026. The US attacks Iran. And what comes next is yet to be decided.

Every crisis on this list created an industry worth hundreds of billions. So the real question is not whether this crisis will create the next one. It will. The question is what it looks like.

What kind of revolution is born when the lights go out?

The Man Everyone Laughed At

Thomas Gold.

He said something that sounded absurd. He said oil was not created from dead dinosaurs and plants. He said oil has been inside the Earth from the very beginning. From the formation of the planet itself. And that it slowly moves toward the surface through cracks in the rock.

As proof he pointed to Titan. Saturn's moon. No plants. No life. Yet NASA confirmed that Titan has hundreds of times more liquid hydrocarbons than the entire Earth combined.

Was he right?

For commercial oil, probably not. Oil contains biomarkers that only exist in certain living organisms. You cannot fake that. The science is clear. But one thing has been proven. Abiotic hydrocarbons exist. At the bottom of the Atlantic, in a formation called Lost City, methane seeps from rocks with no biological origin whatsoever. In a Canadian mine nearly three kilometers deep, the same finding.

Gold was wrong about 99 percent of oil on Earth. But he was not crazy.

He convinced Vattenfall, Sweden’s state energy company, to invest 40 million dollars drilling the Siljan crater. The largest meteorite impact structure in Europe. The well reached 6,800 meters. Into granite. Where classical theory says nothing should exist.

They found hydrocarbons. Gases from methane to pentane. And helium concentrations so high that at times half of the gas coming up was pure helium. Commercially it was a failure. But the hydrocarbons were real. They were exactly where no one expected them. And Gold was proven right about at least one thing. There is far more down there than anyone assumed.

He died in 2004 never knowing just how right that instinct would turn out to be. But it is not important whether Gold was right about where oil comes from.

What matters is where oil keeps showing up.

Oil Keeps Showing Up Deeper

Every time science says “nothing exists below this point,” someone drills and finds oil.

Brazil. The Búzios field sits beneath 2,100 meters of water and then thousands more meters of salt and rock in the Santos Basin. Twenty years ago nobody looked there. The prevailing view was that no commercially viable oil could exist beneath such massive layers of salt. In October 2025, Búzios produced one million barrels per day. It is going to reach nearly two million barrels per day by 2030.

Guyana. In 2015 ExxonMobil made a discovery in the Stabroek Block off the coast of one of the poorest countries in South America. In ultra-deepwater. A decade later Guyana is on track to pass one million before the end of 2026. The block holds over 11 billion barrels of recoverable oil across more than 50 discoveries. ExxonMobil and its partners have committed over $60 billion to develop it. By 2030 capacity is expected to reach 1.7 million barrels per day. Guyana went from producing zero oil to becoming South America’s third largest producer in six years.

Namibia. Until 2022 Namibia had never produced a single barrel of oil. Only about 15 offshore wells had been drilled in 50 years, all dry. Then Shell found oil at Graff. TotalEnergies found oil at Venus. Galp found oil at Mopane. In deepwater. Suddenly the Orange Basin held potentially 10 billion barrels or more. Namibia now has a realistic shot at becoming a top 10 global oil producer within a decade.

Vietnam. The Bach Ho field. Oil in fractured granite. Granite is a crystalline rock where oil according to every classical model simply cannot exist. No pores. No permeability. And yet Bach Ho produced roughly 1.5 billion barrels from a reservoir that was not supposed to be there. Deep below the surface.

Gulf of Mexico. BP has drilled to a total depth of over 10,000 meters. Chevron’s Anchor project operates at 20,000 psi. A pressure threshold that was considered the hard limit of what equipment could handle. Now it is in production. US offshore oil production hit a record 714 million barrels in 2025, driven almost entirely by deepwater. And shale is showing its age. The GoM is becoming America’s primary engine of oil growth again.

The pattern is impossible to ignore. Deeper. Bigger. More productive. Every decade the frontier moves further down and the discoveries get larger.

Is Offshore the Next Revolution?

I do not know. Nobody does.

After 2008 it was shale. Maybe after 2026 it is something else. Maybe China unlocks its own shale. Australia is heavily dependent on imported fuel. Yet it sits on an estimated 400 billion barrels of oil equivalent in-place. Maybe we will see its own shale revolution. Maybe small modular reactors finally work. Maybe fusion gets closer than anyone expects. All of these are possible.

But what I do know is that, due to the situation in the Middle East, trillions of dollars will be invested in diversifying away from the Middle East, and all of it at great speed.

And the largest remaining oil discoveries on Earth are offshore. In places where you need the most sophisticated rigs on the planet to drill the first well. Every time they drill deeper, they find more.

And there is one company that has been waiting its entire life for exactly this moment.

Cheers, Sandro

“When you short a stock, your maximum upside is a double … and the maximum loss possibility is infinite.”

— Mohnish Pabrai

Last time I was sitting in the cafeteria alone with my coffee while my German colleagues turned their backs on me because I told them I invest in coal.

This time I didn’t even try. I went to a café alone. With a pen and paper. Ordered a coffee, took the corner seat by the window, and started writing down everything that is happening with Alpha.

The waitress asked me if I was okay. I said yes. I lied. I recently had to explain to my wife that I put everything we own into a coal stock that went through bankruptcy a few years ago. She took it well. She only cried twice. 🙂

But jokes aside.

I sat down and started writing. First I wrote the risks. Every way I could lose my money. Then I kept writing. Every filing. Every transaction. How much Courtis bought. How much Gorzynski bought. How much Pabrai added. How many shares are even left to buy. How many are shorted. Then the macro. The Strait of Hormuz. Australia running out of diesel. Then I wrote down what has been happening inside the company lately. Cash flow potential in the coming years.

But let’s not get ahead of ourselves. Every good investment starts with the risks first. So let’s read this paper together, in the same order I wrote it.

The risks I see are three. Some new technology replaces metallurgical coal in steelmaking. A very long recession and stagflation that destroys demand for steel. And a black swan. Something nobody can predict.

Let’s go through each one.

And if you missed my first piece on Alpha, please read that one first.

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Three Technologies That Are Supposed to Kill Met Coal

There are three methods that theoretically replace metallurgical coal in steel production. Every single one of them looks great on a PowerPoint presentation. None of them look great in reality.

Flash ironmaking.

This is a new process from China. You take iron ore powder, blast it through an extremely hot reactor, and the whole thing supposedly finishes in 3 to 6 seconds. Instead of hours in a traditional blast furnace.

Sounds amazing. The problem is that it only works in a lab. Scaling it is brutal. When everything has to happen in a few seconds, even a tiny mistake ruins the product. The particles stick to the reactor walls and clog everything up. And even if you solve all of that, you still need to rebuild the entire steel mill around it. New equipment. New infrastructure. Billions in capital spending. Nobody is doing that.

DRI with green hydrogen.

Direct Reduced Iron. Sounds beautiful. But for DRI to be globally adopted, electricity and hydrogen need to be practically free. Not cheap. Free. Because if you think this is a real risk, then you have to believe that people in sub-Saharan Africa and Southeast Asia will soon be making steel with green hydrogen. So far, the world is at about 0.3% of the required buildout for green steel. Zero point three percent. Just so we know where we are starting from. Here we are talking about at least 20 years. Maybe 30.

EAF, or Electric Arc Furnace.

This is essentially a giant microwave where you put in recycled iron and make “new” steel with electricity. The problem is that you are not actually making new iron. You are recycling old iron. If you want to build India, or rebuild Ukraine, or if you pause for even a moment to consider that Western countries still want economic growth, you need new iron.

Small anecdote. Last year I received a job offer from Swiss Steel. They work on EAF technology. Green steel. The future of the industry. I read their financials before the interview and asked them, very politely, whether bankruptcy was part of the five year plan. Everyone in the room laughed. I was not joking. The stock has since been delisted and the company is on the edge of collapse. Turns out I was the only person in that room who could read a balance sheet. 🙂

As for recession and stagflation, Alpha is one of the lowest cost met coal producers in the industry. No debt. A swing producer that can cut production and wait. If high cost producers go bankrupt around them, that is not a big risk for Alpha.

And as for a black swan, well, I can’t help you there. Nobody can. 🙂

That was how I lose money. Then I flipped the page.

What I found on the other side is the reason I bought more shares the next morning. It is also the reason Courtis has spent $41 million. The reason Gorzynski has never sold a single share. The reason Pabrai holds 27% of his entire portfolio in a coal company that lost money last year.

These people are not guessing. They did the same math I did.

I want to show you that math.

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“To me, it’s obvious that the winner has to bet very selectively. It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.” - Charlie Munger

As many of you know, I live and work in Germany.

Germany is a country with one religion. No fossil fuels. Own less. Consume less. Want less. Build less industry — and paradise follows. I don't have a clean name for this ideology. Green degrowth? Eco-utopian self-destruction? Whatever you call it, the core belief is this. We don’t need fossil energy. People don’t matter. Children don’t matter. Industry doesn't matter. What matters is a beautiful planet.

Germany has been so convinced of this vision that it exported it. To Australia. To California. To Brussels. The ideology now has citizenship in places that should know better.

So picture this. It’s 2022, maybe 2023. I’m sitting with some German colleagues — smart, educated people — and they ask me what I’m investing in.

I tell them I found this coal company in America. 🙂

Every single one of them turned around and walked away. No argument. No debate. Just silence, and then empty chairs. I sat there alone with my coffee, completely abandoned. And I remember thinking — man, I am completely alone here. Nobody wants this. Nobody. Not my colleagues, not the funds, not the media, not the politicians.

One guy even came back to give me that look — you know the one. Polite smile. Slow nod. Mental note: this guy is gone.

(Reader, it was right.)

Share Sandro | Cannibal Stocks

Everything That Could Go Wrong Is Going Right For Alpha

I don’t want to spend too much time on macro. But right now, the tailwinds behind Alpha are enormous and I would be doing you a disservice if I didn’t mention them.

Australia is running out of diesel.

The world’s largest coal exporter burns 12 million liters of diesel every single day just to move that coal. Trucks. Trains. Ports. All diesel. If the Strait of Hormuz stays closed, Australia may not be able to physically export coal. I don’t know what happens to met coal prices when 50-60% of global supply disappears. But I know it is not nothing.

Taiwan, Vietnam, South Korea — days of energy reserves. Not months. Days.

When ideology meets an empty tank, ideology loses. Every time. They will burn whatever they can find. And here is something most people don’t know — metallurgical coal is caloric enough, clean enough, that you can generate electricity from it in an emergency. Demand that was never in anyone’s model suddenly shows up. We saw this movie in 2022. Russia invades Ukraine, gas flows stop, everyone panics, and met coal trades above $600 per tonne. Nobody had that in their spreadsheet either. And Germany — the country that spent two decades telling the world that coal is a moral catastrophe — wants to restart coal plants at full speed. 🙂

There is also a real chance of a serious recession. Maybe stagflation.

Most people see this as bad news for coal. I see it differently. A prolonged downturn destroys high-cost, debt-laden producers first. Supply disappears. Alpha — no debt, $500 million in cash, one of the lowest production costs in the industry — walks out the other side alone. For low-cost producers, a wave of bankruptcies is a gift. The result will be significantly less metallurgical coal on the market.

Don’t Tell Me the Upside. Tell Me How I Lose My Money.

For Alpha, I see some risks.

The first is technology. Someone finds a cheap alternative to coking coal. This is the only risk I take seriously over the long run. But we are nowhere near that. The second is demand collapse. A recession so deep that construction and steel mills stop for years. Possible. The third is a black swan on infrastructure. An attack, a natural disaster, force majeure.

And then I ask myself one question.

What are the odds that India won’t need met coal for the next ten years — compared to the odds of a nuclear war? Because if the answer to the second is higher, we probably shouldn’t be talking about portfolios at all. At the end of the day, you have to make a decision and weigh probabilities between risk and reward. Nothing is guaranteed, and nothing comes without risk.

What is unfolding right now is, in my view, one of the most important developments for Alpha. So please — find a quiet corner, put everything else aside, and read what comes next slowly. That is genuinely all I ask.

Because if this plays out the way I think it will, it could change your financial life.

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Every major country that has something valuable has started keeping it for itself.
China has stopped exporting refined products. Russia has banned ammonium nitrate exports. Gasoline stays home from April through July. Everyone is hoarding. And that’s exactly what should worry you — because when the big players close off, the rest of the world is left with crumbs.

This is a survival order.

Europe imports energy. Japan imports energy. Taiwan, New Zealand, Australia — these are all island economies dependent on imports. And then there are poorer countries that don’t even have the money to compete in this market when prices surge. Nigeria, Pakistan, Bangladesh, Egypt. The wealthy will outbid everyone for a barrel. The poor will stand in line and take whatever is left.

North America is in a different position. Oil, diesel, jet fuel, fertilizers, helium, uranium. Fortress North America survives. Trump won’t allow their consumers to pay global prices for long while the rest of the world burns.

If the U.S. and Canada shut themselves off, and everything suggests they will, the rest of the world will burn.

Olive oil in Australia already costs $65. 65 bucks! That is what the early edge of this crisis looks like. When energy shortages deepen, it is about empty shelves. Crime goes up when people cannot afford to eat. Supply chains break. And when they break, the panic that follows creates shortages far beyond energy. Medicine. Food. Basic goods.

We are preparing for global shortages of nearly everything, a financial system under stress it was never built to handle, and a level of social disruption most people in the developed world have never experienced in their lifetime.

The closure of the Strait of Hormuz is a historical event larger in its economic consequences than COVID. COVID shut down demand. This shuts down supply. And shutting down supply is far harder to fix with a stimulus check.

The only question that matters now is not whether the pain arrives. The pain is already here. The only question is how bad it gets and where you are standing when it does.

Most people will spend the next six months confused about why everything keeps getting more expensive and nothing seems to work anymore. Most people will watch the Strait. A small number are watching something else entirely. Here is what they already know.

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"Invert, always invert.” - Charlie Munger

Everyone is buying energy stocks right now. And honestly, I get it. Hormuz is closed. Qatar is damaged. Europe is desperate. The thesis writes itself. But here is the thing about obvious trades. By the time everyone sees them, someone else is already thinking about the exit.

I started asking a different question this week. Not how high can this go. But how does this end badly. Munger always said: invert. So I inverted. What I found made me a lot more cautious. Here is why.

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A man in Queensland siphoned fuel from a stranger’s car last Saturday. Not because he was poor. Because there was no diesel left to buy.

This is Australia. A G20 country. A functioning democracy with a stock exchange and a central bank and a defense treaty with the United States. And last week, 107 of its gas stations ran completely out of diesel while ordinary people crawled under other people’s vehicles with a hose and a plastic container.

Nobody on CNBC mentioned it. I’m mentioning it.

Because what happened in Australia is not an accident. It is the inevitable result of a thirty-year decision made by the Western world to feel good about energy rather than think clearly about it. Close the refineries. Ban the drilling. Import the rest. Trust the system.

The system just broke.

And Australia didn’t run out of oil. The world has plenty of oil. Australia ran out of the infrastructure to get it where it needed to go, processed the way it needed to be processed, at the moment it was needed. They outsourced that to China. China took care of itself first. Australia waited in line.

Four of the world’s ten largest economies are European. Sounds like a solid result. But if I’m right that we’re entering a decade of structurally expensive energy, that list will look completely different by 2035. And I think I am right. Which is why I only care about one thing: who has their own energy, and who has to beg for someone else’s?

United States

The United States will be fine. They produce their own oil, their own gas, their own coal, their own food, their own helium, their own sulfur. When the rest of the world scrambles, America tightens its belt one notch and keeps moving.

When this crisis hit, the Trump administration didn’t hold a summit. They used the Defense Production Act and restarted the Sable Offshore system in California the same week global fuel prices started climbing. That’s what energy sovereignty looks like in practice. It’s not green. But it works.

The rest of the hemisphere is sitting on roughly ten million barrels of untapped daily production from Argentina to the Arctic. Washington knows this. Washington is moving toward this. When North America turns inward, the rest of the world competes for what’s left.

China

China has no oil. China has everything else.

16 to 17 million barrels per day of refining capacity. Control of nearly all global rare earth processing. A solar supply chain so dominant that even their competitors buy from them. Australia learned this the hard way. You can own the raw material and still lose if you don’t control what happens to it next.

China has 300 days of strategic reserves. That number matters more than anything else in this crisis. It is the exact length of time before Beijing stops being patient and starts being dangerous. After 300 days, China will pressure whoever closed Hormuz to reopen it.

That ceiling is the most important fact in energy markets right now.

Europe

Europe is an energy disaster waiting to fully arrive.

In early March, Iranian drone strikes hit Ras Laffan and knocked a massive chunk of global LNG supply offline. And Europe, the most LNG-dependent continent on Earth, had no emergency lever to pull. But what makes it genuinely hard to watch is what European leaders are doing about it.

Nothing. Or worse than nothing.

The US pays three to four dollars for gas. Europe pays twenty. In 2022, during the peak of the crisis, TTF hit €350 per megawatt hour — ten times what Americans were paying at the same moment. American fertilizer companies, chemical plants, steel mills — every industry that runs on cheap energy — have a structural cost advantage that widens every single year.

The continent consumes roughly 14 million barrels of oil per day and produces three. The rest is imported. And the political response?

Don’t drill. Don’t build. Keep the continent pretty.

The politicians behind the nuclear exit, the reliance on Russian gas, and the erosion of domestic production capacity haven’t disappeared. They’re still winning.

It’s insane. Absolutely insane.

On March 3rd, Trump sat knee-to-knee with German Chancellor Merz in the Oval Office. At one point he turned to his advisors and asked — half joking, half not — “How are we going to treat Germany? I think we should hit them very, very hard.” Then he slapped Merz on the leg. Merz smiled and shook his head. That image tells you everything about where Europe stands right now.

Where This Is All Going

Saudi Arabia has spent a decade building export routes that bypass Hormuz entirely. Not because they saw this war coming. Because they understood that whoever controls the flow controls the price. Full stop.

The next twenty years will see the largest investment wave in energy transport, storage, and processing in human history. New pipelines. New terminals. New corridors across continents that haven’t moved hydrocarbons before. Trillions of dollars chasing infrastructure that doesn’t exist yet because nobody thought they’d need it.

They need it now.

I’ve spent the last few weeks going through balance sheets looking for the companies that collect tolls on this wave regardless of where oil prices go. Ten names. All profitable. All paying dividends or buying back stock. All completely ignored by mainstream financial media.

The full breakdown is below the paywall.

But before you go there, I want you to sit with one question.

When Australia ran out of diesel, the oil was still in the ground. The ships were still sailing. The refineries were still running somewhere. The problem was never supply. The problem was getting it there. Processing it. Moving it. Storing it. Delivering it.

That problem does not go away when this war ends.

It gets worse.

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The Department of Energy recommended the addition of metallurgical coal and uranium, citing the use of these minerals in domestic steel production and projections for steel production to grow.

U.S. Federal Register, November 7, 2025

The United States government has officially recognized that metallurgical coal has no substitute. There is no green alternative. No synthetic replacement. No workaround. You cannot make steel without it. And by classifying it as a critical mineral, the US has given itself the legal and strategic framework to restrict or ban met coal exports in the event of a supply disruption. Think about what that means. The same way politicians today talk about banning oil exports to protect domestic energy security, the US can now do the exact same thing with met coal. And if that ever happens, if the world’s second largest met coal exporter pulls supply from the seaborne market, prices would explode. Every tonne of met coal shipped from Australia, Canada or Russia would instantly reprice. It is now an official policy option. And it changes the entire calculus for anyone investing in seaborne met coal.

The met coal macro no one is talking about

For the past decade, China dictated met coal prices. It had Russia and Mongolia next door. Whenever it needed more coking coal, it simply stepped onto the seaborne market. That single buyer was enough to keep premium hard coking coal averaging around $250 per tonne for five years straight.

Now forget China. Look at India.

India’s steel production surged 10 percent year on year to over 150 million tonnes in 2025. The government is targeting 300 million tonnes by 2030. And 500 million by 2047. But here is what matters: India has no Mongolia next door. No Russia. Every single extra tonne of steel requires coking coal that must arrive by ship. India is about to overtake China as the world’s largest seaborne buyer of met coal. By 2028 at the latest, the seaborne met coal market will be structurally short. And there are no meaningful new supply sources coming. Australia is the anchor supplier. The US, Canada, and Russia fill the gaps. That is it.

I wrote about the met coal industry in this post.

That is the macro backdrop. Now let me show you what Whitehaven Coal looks like through that lens.

A monster hiding in plain sight

Whitehaven Coal is a textbook Cannibal Stocks setup. Unknown to most investors. Deeply undervalued. Operating in an industry everyone loves to hate. Exactly the kind of stock I look for.

Let me walk you through what this company has already proven it can do.

On a USD EBITDA basis, Whitehaven generated roughly $2.6 billion in 2023, $2.0 billion in 2022, $0.6 billion in 2024, and $1.4 billion in 2025. Read those numbers again. This is a company with a market cap that barely reflects a single good year of cash flow.

But that was the old Whitehaven. Smaller. Primarily a thermal coal producer. Narrower asset base, less diversification.

Then everything changed. Whitehaven acquired two major metallurgical coal mines from BHP. Blackwater is a large-scale, long-life mine with massive reserves and strong infrastructure. Daunia adds high-quality met coal exposure with established production and export capacity. Together, these acquisitions transformed Whitehaven from a mid-tier thermal coal miner into one of the most powerful diversified coal producers on the planet.

The one thing management must get right

Share repurchases can be the smartest thing a company ever does — or the dumbest.

Warren Buffett, 1999 Meeting

I get it. Some investors love the dopamine hit of a dividend landing in their account. But here is the truth: dividends are the last resort of capital allocation. You pay a dividend when your stock is trading at nosebleed valuations and buybacks no longer make sense. That is the only time.

Here is the simple math. Whitehaven could realistically generate $1 billion, $2 billion, or even $3 billion of free cash flow in a single year depending on coal prices. Management plans to return around 50 percent to shareholders. They have already launched an A$72 million buyback program.

That is a start. But it is small. Far too small.

What Whitehaven should be doing is killing the dividend entirely. Every single dollar should go into buybacks while the stock trades at these levels. This is a once-in-a-decade window.

So I built the model myself. And the difference between the two paths is not small. It is staggering.

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The stock did not move.

A simple life-of-asset calculation on the met coal alone produces a number so far above the current market cap that it either represents the most obvious mispricing in Australian mining or there is something very wrong hiding underneath. BHP did not sell these mines because it wanted to. I spent days on this one. The reasons to say no are real, and some of them are ugly. Below, I walk through the full deal mechanics, the liquidation math, the operational risks that almost made me walk away, and what ultimately tipped the scale.

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Helium is tricky to price. There is no transparent spot market like there is for oil or natural gas. Most helium is sold through long-term contracts, so price discovery is opaque. Official spot prices usually appear only after industry reports are published, and for March 2026, I have not found any official report yet. What I get comes mostly from media reports, analyst notes, and broker commentary. It can be inaccurate.

With that caveat clearly stated, here is what just happened.

IMARC Group reported that European helium prices in February were close to $56 per cubic meter. That number has been confirmed by other sources.

On March 12, a new report claimed that European spot helium has jumped to $450.

“As of March 12, 2026, spot helium prices in Europe hit $450 per thousand cubic feet, a level unseen in over a decade, signaling persistent pressure on industrial and scientific sectors reliant on this irreplaceable gas.”

Source: The Deep Dive

From $56 to $450. In weeks. Do you understand what that means for companies with fixed production costs?

I want to be careful here. The source is not the most reliable, and I have not been able to independently verify this number through official channels. But even if the real figure is half of that, the move is extraordinary. And some analysts are now modeling scenarios above $2,000 per Mcf if the Middle East disruption holds through summer.

Let me explain why this is happening. And why the timing matters more than anything else in this trade.

The United States of Commodities

The United States is the world’s largest oil producer. The world’s largest LNG exporter. The largest helium producer. And a major exporter of fertilizers.

Every single one of those markets has repriced sharply since the conflict began. Oil is up roughly 40%. Fertilizers up 77%. Helium spot prices have jumped approximately 50% on the conservative end, and likely much more based on the latest reports.

You do not have to be conspiratorial to notice this. You just have to be honest.

I have written about helium extensively over the past week. If you missed those posts, start here:

The short version: Qatar produces more than one third of the world’s helium as a byproduct of LNG production. The Ras Laffan facility — the heart of that operation — has now been hit by a drone strike. The LNG complex is effectively offline.

And here is where it gets interesting.

[Curious where this leads? The two companies I am watching — both of which flew completely under my radar until recently — are below the paywall. One is already generating cash. The other is weeks away from it. Both could deliver brutal returns if this disruption lasts even half as long as the historical average suggests it will.]

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“It is the policy of the United States to sustain and enhance America’s global AI dominance…” and to “…solidify the United States as a global energy leader long into the future.”

The White House, “Removing Barriers to American Leadership in Artificial Intelligence,” January 23, 2025; and “Unleashing American Energy,” January 20, 2025.

War is deception.

No one truly knows what is happening in the Middle East. Headlines change every hour. Narratives shift by the day. But when governments act, not speak, the truth becomes visible.

I would argue that Iran did not close the Strait of Hormuz. Their currency has practically collapsed. Their economy depends on exports through that same strait. And they import enormous quantities of food through it. Ninety million people. A desert country. Seven days without food shipments and the regime faces something far more dangerous than any American airstrike. If Iran had truly closed Hormuz, every neighboring country whose economy, food supply, and water imports depend on that passage would turn against them immediately.

Someone else closed it.

The United States does not need to fire a single shot. All it takes is for insurance companies to declare war risk and refuse coverage. No ship moves. The strait is closed. Legally.

Now look at what happened next. Four hundred million barrels released from member countries’ emergency reserves. Never in history has that number been reached. If you think the conflict will end in two weeks, you release 30 million. If you release 400 million, you know something the public does not know yet. The West holds roughly 1.8 billion barrels in combined strategic and industrial reserves. Hormuz could remain effectively closed for four to six months. That would be catastrophic for Middle Eastern exporters. It would be catastrophic for China.

America’s plan to dominate artificial intelligence runs through one element that almost no analyst is discussing. Not oil. Not lithium. Not copper.

Helium.

Helium is the gas without which TSMC cannot manufacture chips, MRI scanners cannot operate, and rockets cannot be pressurized. Semiconductor fabs cannot operate without it. With the closure of Hormuz and the drone strike on Ras Laffan in Qatar, roughly 35 percent of global helium supply has disappeared. This is a major shock for all countries, especially China, which now has limited options because most of the remaining helium production comes from the United States.

China has almost no domestic helium production. It cannot sanction its way out of this. It cannot build a pipeline around it. Oil has strategic reserves. Helium does not. I think that the market has not priced this yet. And when a market has not priced something real, that is where serious money is made.

A few small companies are sitting directly on top of this opportunity. Most investors have never heard of them.

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It was 1992. Yugoslavia was falling apart. Before a single shot was fired, the dinar was already dead. I remember my grandmother counting stacks of bills — millions of dinars — just to buy bread. The paper meant nothing. The numbers meant nothing.

Then the war came.

Think about it. What do you want to own when the world falls apart? Most people never ask this question. They assume stability is permanent. I cannot afford that assumption. I have seen what happens when it breaks.

Gold? Try taking gold through an airport or across a checkpoint. They will stop you. They will take it.

Real estate? You cannot carry a house.

Cash? Which cash? The dinar became toilet paper. The same thing is happening right now with the Iranian rial.

"Poor returns in the old economy meant capital was redirected to the new economy. Investors favored Netflix over the Exxons of the world. You couldn't grow the supply base and you had supply shortages."

Jeff Currie

That single idea rewired how I think about everything.

Commodities and cyclical investments interest me most because if you catch the cycle early the returns can be spectacular. What matters in cyclical investing is understanding the relationship between supply and demand. Most people obsess over demand. But I obsess over supply.

Metallurgical coal, deep water oil rigs — I look for assets where supply cannot respond. Where years of underinvestment meet structural demand.

Now scale that logic up. Money is the biggest commodity of all.

I used to hate the idea of alternative money. I avoided it for years. I trusted the system more than I should have. I realized there exists a form of money that is absolutely limited. It cannot be printed. It cannot be scaled. It cannot be diluted. It disappears from the market instead of multiplying.

And despite all that, most people still don’t see it.

Your Cash Is Bleeding

Most investors obsess over demand. "Oil demand is rising, so prices must rise." But that is only half the equation. Supply is what determines price.

Look at this chart:

The dollar has lost 97% of its purchasing power over the last century. Not because demand for dollars fell — demand has never been higher. The dollar lost value because supply expanded. The Federal Reserve can create unlimited dollars.

This is the fundamental problem with all state money. Supply is unlimited. Purchasing power decays.

The one asset I trust most is the one nobody can print.

The Hardest Cash on Earth

I hold my cash in Bitcoin. Not in dollars. Not in euros. Especially now because of the events in the Middle East, and due to the assumption that the euro could lose significant value this year. Why do I think the euro will lose value? If we just look at gas, the EU currently pays around 600% more than the USA. If this price stayed the same and did not increase, that means about 300 billion euros more would go only for gas every year. That money will simply be printed, which creates inflation and destroys the euro.

Bitcoin is not an investment in the traditional sense. I am not buying it for dividends, buybacks, or management execution.

Some people make Bitcoin their entire identity. That is not me. Some people avoid it completely. That is their right. I am somewhere in between — and I got here the hard way.

Strip it down to first principles. What is money?

Money is a claim on real things — food, shelter, energy. Printing more money does not create more food. It does not build more houses. It only dilutes every claim already in circulation. More money chasing the same goods means each unit buys less. Always.

Bitcoin is different. There will only ever be 21 million. That number cannot be changed by a politician, a central banker, or a crisis meeting on a Sunday night.

The euro is state money. State money is not capped. A central bank can expand supply whenever it wants. That is why purchasing power keeps leaking over time. Bitcoin has no central bank. Nobody controls it. That is the point. Yes, there are other cryptocurrencies. Most of them are not money. They are projects, companies, or marketing campaigns with a token attached. Many are controlled by insiders. That is just a central bank in a hoodie.

The Argument That Broke Me

Many people avoid Bitcoin because it is still relatively new and closely associated with speculation, scams, and hype. That was my view as well. After openly criticizing Bitcoin, I spent more than a year studying it seriously, and every single argument I had against it failed.

But what really changed my mind is that Bitcoin is the only asset I know that you can carry in your head. I remember during the war in the former Yugoslavia we had to flee and walk long distances. The first thing they took from us was everything we had. Our money, our savings, everything.

Your Bitcoin lives on the blockchain. All you need is your seed phrase — the 12 or 24 words. Memorize them, and you can flee any country with your entire net worth. No gold to confiscate. No bank to freeze. No border guard can find what exists only in your memory. You just need to cross into a country where there is internet. For someone who grew up watching money die, this matters more than any chart.

I could write an entire book about why Bitcoin matters. But you don't need a book. You need to answer one question:

What is Bitcoin worth?

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Forget the headlines. Forget the “nuclear threat” narrative. Forget the cable news generals drawing arrows on maps. What is happening between the United States, Israel, and Iran is not primarily about nuclear weapons. It never was.

This is about energy dominance. And the United States has almost already achieved every single objective it needed to achieve.

Think about what has actually happened in the last few weeks. Qatar declared force majeure on its LNG contracts after the Ras Laffan facility was hit. Shipping through the Strait of Hormuz has ground to a near halt. Insurance premiums on Gulf tankers have exploded. Asian buyers are scrambling for alternative supply. European gas prices are spiking again.

And where does all of this leave the United States?

Sitting on top of the largest LNG export capacity in the world. Sitting on top of massive shale oil reserves. Sitting on top of a domestic energy infrastructure that does not depend on a single chokepoint controlled by a hostile regime.

The war did not need to “succeed” in the traditional military sense. It just needed to show the world one thing: the Persian Gulf is no longer a safe bet. That single realization, once it enters the minds of energy buyers in Tokyo, Seoul, Berlin, and Mumbai, reshapes global energy flows for a decade. American LNG becomes more valuable the moment Qatari LNG looks unreliable. American crude becomes more strategic the moment Gulf crude feels risky. The United States does not need to conquer Iran. It just needs the world to question whether the Gulf can deliver.

The panic has already done the work. Prices are rising. Buyers are rerouting shipments mid-ocean. Countries are hoarding whatever they can get their hands on. Nobody trusts the supply chain anymore. That alone is an economic blow to Europe, to Asia, to every developing nation that depends on Gulf energy. And it is a windfall for every American energy producer.

There is another layer to this that most people do not want to say out loud. The goal was never the total destruction of the Iranian regime. Nobody wants that. Not Washington. Not Riyadh. Not even Tel Aviv. A total collapse of Iran means millions of refugees, sectarian chaos from Iraq to Afghanistan, and a power vacuum that makes Libya look like a minor inconvenience. What everyone actually wants is a regime that is sufficiently cooperative. Not a puppet government. Just a government that will not threaten the Strait of Hormuz every time it feels cornered. A government that plays within acceptable boundaries.

Think of it this way. You do not need to burn down your competitor’s factory. You just need the market to believe his supply chain is fragile. That is enough to redirect orders to your door.

If I had to compress everything into one sentence, it would be this: the war is not being fought to destroy Iran. It is being fought to show the world who controls energy security and who profits when the Gulf looks dangerous.

But here is where my thesis goes further than anything I have heard from any mainstream analyst, any podcast, or any geopolitical commentator.

I believe this entire conflict has a hidden beneficiary. There is one specific resource, one form of energy that nobody is talking about, that the United States now controls more tightly than ever. A resource without which the entire AI revolution, the entire semiconductor supply chain, and the entire future of advanced computing simply cannot function.

And Qatar just stopped exporting it.

Subscribe now

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“The big money is not in the buying or selling, but in the waiting.”

Charlie Munger

On the night of February 28th, 2026, the United States and Israel launched the largest coordinated military strike in the Middle East since the 2003 invasion of Iraq. Supreme Leader Khamenei was killed. Iran retaliated with missiles across the Gulf. And within 72 hours, something happened that energy analysts had modeled for decades but never truly believed would occur:

The Strait of Hormuz — through which 20% of the world’s oil and 20% of its LNG flows daily — went dark.

No tankers. No AIS signals. No insurance.

They shut down the most critical energy chokepoint on Earth with a handful of drones and a radio broadcast.

What does this mean for the companies that drill for oil in the safest basins on the planet — thousands of miles from the Persian Gulf?

If you think the answer is “nothing,” close this tab. If you think the answer is “everything,” keep reading.

The Soft Closure: How Insurance Killed Hormuz

Before we get to offshore drilling, you need to understand the mechanism of what actually happened. It’s far more elegant — and terrifying — than any military blockade.

Within hours of Operation Epic Fury, Iran’s Revolutionary Guard began broadcasting VHF warnings to every ship near Hormuz: no vessel is allowed to pass. Then they hit three tankers. Just three. That was enough.

Here’s the chain reaction:

Day 1 (Feb 28): Tanker traffic drops 70%. Over 150 ships anchor outside the strait. Outgoing traffic is heavy as ships flee; incoming traffic collapses.

Day 2-3 (March 1-2): Zero tankers broadcasting AIS signals in the strait. Maersk, Hapag-Lloyd, and every major container line suspend transits. Houthis announce they’re resuming Red Sea attacks. The Suez route dies simultaneously.

Day 4-5 (March 3-4): Protection & Indemnity insurance — the kind that covers a $200 million VLCC — is formally withdrawn for the Persian Gulf. Gard, Skuld, London P&I Club: all out. War-risk premiums surge over 1,000%.

Day 5 (March 4): IRGC claims “complete control” of the strait.

Let that sink in. Iran didn’t need a single submarine. They didn’t need to close anything officially. Their foreign minister actually said they had no intention of closing the strait. But the strait is closed. Because when your insurance company says “we won’t cover you,” and the alternative is risking a $200M vessel and a crew of 25, you don’t sail.

This is the soft closure. And it’s arguably more effective than a hard one, because there’s no single military action the US can take to reverse it. You can escort tankers with destroyers. You can’t escort insurance underwriters.

The Numbers That Should Terrify (or Excite) You

Let’s talk about what 20% of global oil supply disappearing actually looks like in practice.

13 million barrels per day of crude oil passed through Hormuz in 2025. That’s not the total energy flow — add LNG, jet fuel, LPG, and diesel, and you’re looking at roughly 20 million barrels per day of total petroleum products.

For context: the 1973 Arab oil embargo removed about 5 million barrels per day from global markets. Oil quadrupled. The 1979 Iranian Revolution removed about 5.6 million barrels per day. Oil tripled. A full Hormuz closure would remove 8-10 million barrels per day, even after accounting for Saudi and Emirati bypass pipelines. Do the math.

As one energy analyst put it: this could be three times the severity of the Arab oil embargo and Iranian revolution combined.

Yet Brent crude is sitting at around $80. Not $150. Not $200. Eighty dollars.

Why? Because the market is betting this ends quickly. Traders are pricing in a 2-4 week disruption followed by normalization. They’ve seen geopolitical scares come and go. They’re looking at Chinese strategic reserves, at OPEC spare capacity, at Saudi Arabia’s East-West pipeline.

They’re wrong to be this calm. Here’s why.

Saudi Arabia’s East-West pipeline has a capacity of 7 million barrels per day, but terminal infrastructure at Jeddah limits actual throughput. UAE’s Fujairah pipeline can move some barrels. Together, these alternatives might offset 2.5-3 million barrels per day. That still leaves a 5-7 million barrel per day hole.

Meanwhile, Iraq — one of OPEC’s largest producers — is literally shutting down production because it has nowhere to export its oil. These barrels aren’t being rerouted. They’re being shut in.

OPEC+ just agreed to a production increase. It’s “an entirely moot point,” as RBC’s Helima Croft wrote, because you can’t produce oil you can’t ship. “The lion’s share of OPEC barrels in the region could essentially become stranded assets in an extended war scenario.”

And if you think the US military can simply reopen the strait — think again. Trump announced on March 3rd that the Navy would escort tankers through Hormuz. Bold statement. One problem: the US Navy itself told shipping industry leaders it doesn’t have the naval availability to provide escorts. They have nine guided-missile warships in the Arabian Sea and three Littoral Combat Ships in Bahrain. That’s it. As one Hudson Institute analyst put it, escorting tankers under current conditions would require a complementary air campaign to neutralize every missile launcher along Iran’s coast. This isn’t a weekend operation.

Meanwhile, European natural gas prices on the TTF benchmark jumped from €31.9/MWh on Friday to €54.3/MWh by Tuesday — nearly doubling in three trading days. European gas futures posted their biggest single-day gain since the 2022 energy crisis: 38%. Qatar, one of the world’s largest LNG suppliers, halted all production after Iranian drones hit its Ras Laffan and Mesaieed facilities. Daily freight rates for LNG tankers surged over 40% in a single session. If this drags on, China, Japan, South Korea, and India — the biggest consumers of Qatari LNG — will compete with Europe for American LNG cargoes, pushing prices to levels we haven’t modeled since the worst of the post-Ukraine shock.

Now Let’s Talk About Offshore Drilling

Here’s where it gets interesting for anyone who has been following the offshore drilling thesis.

The Middle East is the largest jackup rig market in the world. According to Esgian, there are currently 177 drilling jackups in the region — roughly 36% of the global supply. Of those, 138 are actively drilling.

These rigs aren’t standalone assets. They depend on supply vessels, logistics chains, crew rotations, equipment deliveries — all of which flow through ports and waterways that are now either closed, under attack, or commercially unusable.

Offshore drilling in the Middle East now sits squarely on the geopolitical fault line.

The jackup rigs drilling in Saudi waters, Kuwaiti waters, Emirati waters, and Qatari waters are operating in a region where Iranian drones have struck the Ras Tanura refinery — one of the world’s largest — and QatarEnergy has halted all LNG production. Amazon data centers in Bahrain and UAE have been hit. Insurance companies have pulled coverage for the entire Gulf. Crew evacuation routes are compromised. Supply chain reliability has collapsed.

And it’s not just the existing rigs that are affected. Saudi Aramco’s latest multi-rig jackup tender, upcoming requirements in Kuwait, UAE, and Oman — all of this enters a fog of execution risk, logistics uncertainty, and timeline delays.

This is the repricing event that deepwater bulls have been waiting for.

The Deepwater Thesis, Turbocharged

If you’re an E&P executive who just watched 20% of global oil supply evaporate overnight from the Persian Gulf, you’re asking one question: where can I drill that isn’t next to a warzone?

The answer is deepwater. Brazil’s pre-salt in the Santos and Campos basins. The US Gulf of Mexico, deepwater and ultra-deepwater. West Africa — Nigeria, Angola, Namibia, Senegal. Norway’s harsh environment, politically bulletproof. And Guyana’s Stabroek block, the fastest-growing offshore province on the planet.

These basins share one thing in common: they are nowhere near the Strait of Hormuz, the Red Sea, or any Iranian proxy’s missile range. They offer something the Persian Gulf can no longer guarantee — operational reliability.

And who dominates these basins? The company that just announced the largest offshore drilling merger in history.

Transocean-Valaris: The Right Fleet at the Right Time

On February 9th, 2026 — exactly 19 days before Operation Epic Fury — Transocean announced it would acquire Valaris in a $5.8 billion all-stock deal. The fleet composition matters enormously right now. Here’s the geographic breakdown of where these assets sit:

Deepwater (safe basins): 10 drillships in the US Gulf. 9 in Brazil. 8 in West Africa. Multiple semis in Norway. This is the crown jewel — ultra-deepwater assets positioned in the world’s most politically stable offshore basins.

Jackups (and here’s where we need to be brutally honest): Of the 31 Valaris jackups, nearly 40% are marketed in the North Sea — safe. But the Middle Eastern exposure is not trivial. Valaris leases 7 rigs to ARO Drilling, the 50:50 joint venture with Saudi Aramco. And ARO’s own contract backlog? $2.3 billion as of mid-2025. For context, Valaris’s total backlog is roughly $4.7 billion. So the ARO-linked backlog represents a massive chunk of the revenue pipeline flowing into this merger.

Saudi Aramco already suspended over 30 jackup contracts back in 2024, sending shockwaves through the jackup market and pushing global marketed utilization down to 82%. Valaris felt that directly — one ARO rig (Valaris 143) had its contract terminated and was returned to Valaris. Going into 2026, Valaris was spending roughly $260 million in capex, including upgrades for jackups VALARIS 116 and 250 specifically to continue their long-term bareboat charters with ARO. That’s capex committed to assets sitting in what is now a war zone’s supply chain.

And it gets more complicated. Valaris’s Q4 2025 revenues dropped from $556M to $502M, with the company explicitly citing “lower bareboat charter revenues from rigs leased to ARO Drilling” as a contributing factor. The ARO relationship was already under pressure before a single bomb fell on Tehran.

So let me be direct: if you’re buying the Transocean-Valaris thesis, you’re buying a portfolio where the deepwater crown jewels are worth more than ever, but the jackup backlog in the Gulf carries real and quantifiable downside. A sustained disruption to Saudi operations, or Aramco delaying its jackup program again, could shave hundreds of millions off the combined company’s near-term cash flow.

The bull case isn’t that Middle Eastern risk doesn’t exist. It’s that the repricing of deepwater assets in safe basins overwhelms the jackup risk by a wide margin. The probability-weighted math still favors the combined company — 33 ultra-deepwater drillships in Brazil, GOM, West Africa, and Norway are worth dramatically more in a world where the Persian Gulf is a war zone. And the combined company’s pricing power across all basins increases as the global rig market tightens. But anyone who tells you this is a clean, one-directional trade isn’t being honest with you.

The Repricing Has Barely Begun

RIG is currently trading around $6. Up about 25% in the past month. Up 144% in the past year. The 52-week range is $1.97 to $6.96.

Analyst consensus price target? $6.60. That target was set before Operation Epic Fury. Before Hormuz closed. Before 20% of global oil supply went offline.

Here’s what the market hasn’t fully priced in:

1. Dayrates are going up. When oil was at $66, offshore operators were squeezed. At $80+, the economics of deepwater projects improve dramatically. If Brent sustains above $90, dayrates will reprice higher as E&P companies rush to sanction projects in safe basins.

2. Supply is tightening. 177 jackups in the Middle East face operational uncertainty. Some projects will be delayed. Some rigs will be unable to relocate. This tightens the global supply of available rigs, particularly in basins outside the Gulf.

3. The merger creates a monopoly-like position in ultra-deepwater. Post-merger, Transocean will have nearly twice as many drillships as Noble Corp, the next largest competitor. In a tightening market with rising demand, this fleet concentration is pricing power.

4. The structural narrative has shifted. Before the war, the investment case for offshore drilling was “multi-year upcycle driven by underinvestment.” Now it’s “multi-year upcycle driven by underinvestment PLUS a permanent repricing of geopolitical risk that favors deepwater in safe basins.” That’s a different animal.

But What About the Risks?

I’d be lying if I told you this was a one-way trade. Here are the things that could go wrong:

The war ends quickly. If Iran’s regime collapses in weeks and Hormuz reopens, the geopolitical premium evaporates. Oil falls back to $65-70. The offshore thesis still works long-term, but the urgency dissipates.

Global recession. A sustained oil spike above $100 is stagflationary. Central banks pause rate cuts or hike. Demand destruction kicks in. E&P companies pull back on capex. Offshore drilling is cyclical — it doesn’t escape a demand collapse.

Transocean’s debt. Even with deleveraging progress, Transocean’s credit rating is CCC+ from S&P. The company reported a $2.92B net loss for 2025 (driven by rig impairments). In a scenario where oil collapses, that debt load becomes existential again.

Middle Eastern jackup exposure. This is the biggest risk specific to the merger thesis. ARO Drilling’s $2.3 billion backlog is tied to Saudi Aramco — the same Saudi Arabia whose Ras Tanura refinery was hit by Iranian drones. Aramco already suspended 30+ jackup contracts in 2024, and Valaris’s Q4 revenues dropped partly because of lower ARO charter income. If Aramco suspends or delays jackup operations again — entirely plausible given the war in its backyard — the combined company loses hundreds of millions in near-term cash flow. Valaris was spending $260M in 2026 capex partly on upgrading rigs for ARO. That’s capital deployed toward an increasingly uncertain revenue stream.

Merger execution risk. The deal isn’t closed yet. Expected in H2 2026. Regulatory and shareholder approvals are still pending.

The Buffett Framework

Charlie Munger used to say that the big money is made not in buying and selling, but in waiting. The offshore drilling sector has been waiting — through years of oversupply, debt restructuring, scrapped rigs, and depressed dayrates — for the cycle to turn.

There’s a concept in Munger’s thinking called “lollapalooza effects” — when multiple forces converge in the same direction, the results are far more powerful than any single force alone. That’s what’s happening here: structural underinvestment in offshore since 2014 tightening supply, rising oil prices improving deepwater economics, geopolitical risk repricing driving demand toward safe basins, industry consolidation concentrating pricing power in the largest operators, and insurance market dislocation creating a permanent risk premium for Gulf operations.

Each of these is bullish for deepwater drilling. Together, they create a setup that the offshore industry hasn’t seen in a decade.

The market is pricing RIG like a company that operates in a world where Hormuz is a temporary scare. But what if it isn’t? What if the insurance market never fully reverts? What if E&P capital expenditure permanently tilts toward deepwater in the Americas and West Africa? What if the Transocean-Valaris merger closes into a market where dayrates are 30% higher than anyone modeled?

That’s not a $6 stock. That’s a $10-15 stock. Maybe more.

The Bottom Line

The Strait of Hormuz is closed because a few drones made it uninsurable. And in doing so, it exposed the single biggest vulnerability in the global energy system — dependence on a 21-mile-wide chokepoint controlled by a hostile regime.

The fix isn’t military escorts. The fix isn’t government insurance. The fix is structural diversification of energy supply toward basins that don’t require threading a needle between Iran and Oman.

That means deepwater. That means Brazil, the Gulf of Mexico, West Africa, Norway, and Guyana. And the company best positioned to capture that shift — with the largest fleet, the strongest backlog, and the most diversified geographic exposure — just merged into existence.

The question for investors isn’t whether the thesis is right. It’s whether the market gives you time to get positioned before it reprices.

The next time someone tells you Hormuz will reopen any day now, ask them one question: who’s writing the insurance?

Cheers, Sandro

Disclaimer: This is not financial advice. I hold a long position in Transocean (RIG). The offshore drilling sector is highly volatile and leveraged to commodity prices. This post reflects a bull case analysis — I’ve tried to present the risks honestly, but my positioning means I’m not a neutral observer. Do your own research.

You find a company that spent $5.5 billion buying back its own stock in under three years. It devoured 46 million shares. It still has $4 billion loaded in the chamber to keep going.

This same company sits on $3.5 billion in cash. It prints $5.8 billion in free cash flow. Every. Single. Year. It trades at half the S&P 500’s earnings multiple.

Question: Is this a hot new tech IPO?

No. It’s an oil driller from Houston that used to be owned by Enron.

And almost nobody is talking about it.

The Enron Kid Who Made It Out

Yes, you read that right. EOG Resources (NYSE: EOG) used to be called Enron Oil & Gas Company. That Enron. The one with the fraud, the congressional hearings, the Arthur Andersen shredding parties.

But here’s the thing nobody remembers: EOG split off in 1999. Two full years before the implosion. It’s like being the one kid from a catastrophically dysfunctional family who left home at 16, got a scholarship, and never looked back. While Enron was busy inventing fictional profits, EOG was building one of the best-run oil operations in America.

Today, EOG explores and produces crude oil, natural gas liquids, and natural gas across the Permian Basin, Eagle Ford Shale, Bakken, and the Utica Shale in Ohio. But what actually separates EOG from every other E&P company on earth isn’t where they drill.

It’s how.

Most oil companies outsource their brains. They hire service companies to figure out where to drill and how deep to go. EOG built an in-house technology team that operates more like a Silicon Valley R&D lab than a traditional oilfield operation. They pioneered horizontal drilling techniques that became industry standard. The result: some of the lowest well costs and highest returns on capital in the entire sector.

If oil companies had a Moneyball, EOG wrote it.

The Numbers That Should Make You Uncomfortable

Uncomfortable because they’re too good for a stock this cheap. Let me walk you through it.

EOG trades at $122 per share. Market cap: $65 billion. At first glance, that sounds like a big company. And it is. Remember that — we’ll come back to it.

But look at what you’re actually getting for that price.

A P/E ratio of 13x. The S&P 500 trades above 28x. You’re paying almost half the price for each dollar of earnings. Forward P/E is 11x, meaning Wall Street expects earnings to stay rock-solid. EV/EBITDA of 6x. For a company with these margins, this is absurdly cheap. The kind of valuation you normally see in distressed businesses or companies with question marks around survival. EOG has neither.

A dividend yield of 3.6%, paying $4.08 per share annually. That’s your base layer. The regular dividend alone puts most savings accounts to shame. Free cash flow of $5.8 billion a year. This is the number that matters most. Revenue was $23.7 billion in 2024. Net income was $6.4 billion. Profit margin: 24.4%. Return on equity: 18.5%.

Debt-to-equity of 0.27. This company barely uses leverage. It’s running a $65 billion operation on a balance sheet that looks like it was designed by a paranoid accountant. And $3.5 billion of that balance sheet is pure cash.

Beta of 0.47. This stock moves less than half as much as the broader market. For an energy company, that’s almost unheard of. It behaves like a utility but prints cash like a toll booth on the only highway in town.

Now, one more number. The one that should make the hair on your neck stand up. At a $65 billion market cap, EOG’s free cash flow yield is approximately 9%.

That means for every $100 you invest, EOG generates nearly $9 in free cash flow per year. The S&P 500’s FCF yield hovers around 3–4%. EOG is giving you more than double. And they’re plowing a massive chunk of it back into buybacks — shrinking the share count, concentrating your ownership, making each remaining share worth more every quarter.

In a market where people cheerfully pay 30x earnings for companies that might be profitable someday, this one is already printing money and mailing you the receipts.

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"I like this buy-and-hold investing. It's a lovely way to live a life; you deal with a better class of people and it's worked pretty well for all of us."

- Charlie Munger, 2015 Meeting

Alpha is the reason this channel exists. A decade from today, I believe investors will look back at this company as a case study.

The beauty of investing in coal is that everyone hates it. Interest in these stocks is extremely low. A few traders move in and out, but for the most part, we are alone here. As a long term investor focused on the bigger picture, that gives you a real edge.

I would argue that this thesis could still work in an extraordinary way. The stock price is down? That is exactly what makes it extraordinary. Alpha is a business where a falling stock price is actually good news. Every dollar goes into buybacks. And when the stock is cheap, it accelerates the whole process.

Yes, Q4 was bad. And yes, full year 2025 was ugly on paper. But the problem is not that the business is broken. The problem is that met coal prices spent most of 2025 in the gutter. Alpha still has close to 500 million in cash, almost no debt, and management is buying back stock aggressively. That is not the profile of a company in trouble. That is the profile of a cyclical business waiting for its market to turn.

Let me walk you through exactly what happened this quarter, what it means for 2026, and what the insider activity is telling us.

Insider Activity

Insider activity around Q4 sends a very clear signal. But first, you have to separate real buying from noise.

The real signal is in open market purchases. Kenneth S. Courtis bought a total of 82,000 shares in December 2025 across multiple open market transactions, for about $14.70 million in total, at an average price of about $179.23 per share. Michael Gorzynski and his group bought 38,576 shares on December 15, 2025 for about $7.27 million, at an average price of about $188.50. That is real money, at market price, with no obligation to buy.

On the selling side, almost nothing. CEO Andy Eidson and CFO Todd Munsey reported January 2026 equity award vesting, and shares were withheld for taxes. Those filings show up on Form 4, but they are not discretionary open market selling. The only clear open market sale in this window was Daniel E. Horn, who sold 8,125 shares on December 11, 2025 for about $1.53 million, in multiple transactions at prices roughly between $186.19 and $189.82.

That is about $22 million in open market buying versus about $1.5 million in open market selling. The ratio is roughly 22 to 1.5 in favor of buying. That is all you need to know.

Met Coal Under Pressure or Setting Up for a Rebound?

Before diving into Alpha’s numbers, you need to understand what is happening in met coal right now. It is the single biggest driver of everything that follows.

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