About

Every few years the market falls in love with something. Money piles in, the stories get bigger, and prices drift away from what the businesses actually earn. This site is about the other side of that: the businesses everyone has walked away from. Start with the Read first page if you are new.

The other side of the trade

When a sector falls out of favour, it rarely goes quietly. Fund managers sell because it has become awkward to hold. Lenders back away. Analysts stop covering it. Headlines turn from bad to worse, and after a while people simply stop looking.

The companies keep doing the same dull, necessary work. They dig things out of the ground, move them across oceans, burn them for power or turn them into something useful. The world still runs on them. It just doesn't want to talk about them.

That second group is where we spend most of our time.

Why unloved businesses

The idea behind it is simple, even if it takes years to play out. When investors abandon an industry, the money that would have built new capacity leaves too. New mines don't get opened. New ships don't get ordered. Old equipment gets run into the ground. If the world still needs the product, supply slowly gets tighter while demand carries on.

A setup we would have liked to catch

The clearest recent example of the pattern is oil tankers, and Frontline in particular. It wasn't owned here. It is written up because it is the kind of setup we look for, and because the numbers are easy to check.

Coming out of 2020, tankers were about as unloved as a sector gets. The pandemic had crushed oil demand. Tanker earnings fell by about 71% in 2021 on Clarksons' numbers, and nobody wanted to order ships that would still be sailing in a world supposedly moving away from oil. By mid-2022 the tanker orderbook had shrunk to about 5% of the existing fleet, the lowest since 1996. On 28 January 2021 Frontline's shares closed at $5.81.

The trigger came from outside the industry. Russia invaded Ukraine on 24 February 2022. Europe began turning away Russian oil, the barrels went to India and China instead, and Europe bought from further away. The same oil now spent longer at sea. From December 2022 the EU banned most seaborne Russian crude and the G7 set a price cap. Ships were suddenly scarce, and very few new ones were coming.

Frontline closed at $8.51 on 23 February 2022, the day before the invasion. On 28 May 2024 it closed at $29.21. With dividends reinvested, the gain over that stretch was more than 200%, and more than 400% measured from the January 2021 close.

Two honest caveats. The example was picked with hindsight, and it is a winner. Plenty of cheap, unloved stocks stay cheap, and some go to zero. Nobody could have known a war would be the catalyst. What could be seen in 2021 was the supply side: an orderbook that was low and falling, and an industry that had stopped investing. That is the part we try to find ahead of time. Past performance doesn't guarantee future results, and this isn't a view on tankers or Frontline today.

Source: Issue #1 on the Substack, where the prices and sources are set out in full.

How we think

Hated, cheap and still bringing in cash. Cheap on its own isn't enough. We want a business that makes real things, earns real cash, and has a balance sheet that can get through a few more bad years, because being early is part of the job.

The shape of the bet matters most. The realistic upside should be several times the realistic downside, and both should be possible to write down before the result is known.

Patience over comfort. The holding horizon is three to ten years or more. That gives a cycle time to turn. A falling price alone isn't a reason to change our minds. Changed facts are.

Small and steady. Ideas like these can sit still for years or fall further first. Starting small makes the quiet stretches easy to sit through, instead of being tempted to bail at the worst moment.

Write it down first. Putting the reasoning on paper before the outcome is known makes it much harder to fool ourselves later. We come back to old ideas and say how they went, including the ones that go badly.

What you get

A free weekly dispatch with what changed in our thinking and why. A longer report every second Sunday on one overlooked business, looked at properly. Shorter thoughts on X in between. Everything is free for now.

What this isn't