My Worst Investment Ever: Tobias Carlisle

Tobias Carlisle

An original by Dr. Andrew Stotz, My Worst Investment Ever features investors and financial titans from around the world to share their heartbreaking tales of investment misfortune.

Listen and discover the best practices for risk management that will keep you in the game.

Tobias Carlisle is the founder of The Acquirer’s Multiple, as well as the founder of the Acquirers Funds.

Best known as the author of the The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, he has also authored other several Amazon best-sellers including Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors, and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors.

In This Episode

Tobias holds extensive experience in investment management, business valuation of public companies, corporate governance, and corporate law. Before founding the forerunner to acquirers fund in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer.

As a lawyer specializing in mergers and acquisitions, he has advised on transactions across a variety of industries in the United States, the UK, China, Australia, Singapore, Bermuda, Papa New Guinea, New Zealand, and Guam. He is a graduate of the University of Queensland in Australia with degrees in Law and Business.

In this episode, Tobias Carlisle shares the story of his worst investment ever; and the promise of never seeing again “an opportunity like that.”

My Worst Investment Ever

Started Out Investing in Asset-Heavy Business
When the BP oil spill happened in 2010, many oil and gas companies got into a lot of trouble. One of which was the Seahawk Drilling. As soon as the drilling stops, they didn’t get a lot of cash flow but they were very asset-heavy.

So, when they were trading at around $0.10, Tobias took the offer to invest in those jack up rigs as he was promised that there has never been an opportunity like that. To capitalize and become one of the big drillers in the area through these undervalued assets was exactly what Tobias was looking for.

Good Thesis Is Good, But Careful With Cash Flow
Tobias learned that when companies are losing money, that’s the time to buy. Meanwhile, when they are making a lot of money, it’s the best opportunity to sell.

However, he missed the important factor and that was cash flow.T he issue with Seahawk drilling was they ran out of cash, so they kept on selling these undervalued jack up rigs. They ended up in bankruptcy because they were taken advantage of instead of the other way around. The result? Tobias was down 80% or 90% on his investment.

Lessons Learned

Look At The Company In Its Totality
When you are buying, you think like an acquirer, but you also need to think like a buyout firm and an activist. When you do that, you are not only buying the equity, the market capitalization, but also the debt and other debt-like security.

Valuation Will Help You Beat The Market
One of the hardest decisions is deciding whether to exit or add to a position when a stock goes down. A big part of becoming comfortable with the position is doing the valuation.

For more, listen to the full podcast below:

Written by

Cheryl Toh

Last updated on

March 4th 2020, 1:41 pm

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