Andrew Pogue @UnderlyingValue

Oil as I see it: Product tightness hides the inevitable bottleneck of crude barrels. Energy importing refiners are going to go from screaming high cracks to screaming for a barrel of crude. The price of a barrel (and crazy cracks for refiners) has been buoyed by China turning off the spigot and looking inward. If production continues to be shut-in to the extent that it currently is, eventually reality is going to hit and it will be a stark one. Re: timing of this happening, I have no clue and hope cooler heads prevail - rational incentives are set up for that to be the case. We're pretty much all Brent as it is (re: our investments). You can already see the immense tightness in the market with some of the producers we own reporting SE Asian barrels getting a $12+ premium to Brent. Insane. I'm not discounting the potential for a global recession -- we're a couple AI CapEx cuts / energy crisis away imo. Be fearful when others are greedy.

Incredible value can be found in oil and gas (still) into a set-up that is going to take a long time to unwind. Adding to a producer that will have a Q2 (calendar) that should exceed the 9M prior. On a trailing basis, they trade at a little over 2x EV/EBITDA / 5x earnings. To start Q3, they increased production by ~20% with a development coming on line. Their barrels get a significant premium to Brent (all unhedged). I believe they have the chance to earn their EV over the 12-18 months starting in April '26 - currently trading at sub $30 EV/BOEPD. Breakdown of the percent we own in each company (within the energy basket): underlyingvalue.substack.com/p/deep-value-i…

Sanara Medtech ($SMTI) taken out for $33 + a small equity stub. It looks like Ron Nixon was just as tired as all the shareholders he's had over the last 5-6 years. I got lucky with a great entry point, but would have liked to have seen this stick around for awhile longer. Fourth acquisition in less than a month, joining BlueNord, M&F and Pharos. I'll be surprised if there aren't a couple more in the book that follow.

One of my favorite insights from Capital Returns is the inverse relationship between CapEx and investment returns. Will this time be different? 

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For every $100 you put into QQQ, you're getting ~$2.4 in FCF (trailing). I'm getting an average of $16.5 value weighted across my holdings, with a 6%+ dividend yield. Small. Illiquid. International. Are the future prospects for the QQQ so high to warrant the premium? Excited for time to be our judge.

@Tangible_Bruce Go with 1873

Four recent reads: - The Greatest Minds: Fantastic look through of great minds, ideas and books compiled by one of my favorite historians. Great resource to find additional timeless readings - 1873: Fantastic, easy read on this 19th century boom and bust. I found this much better than the recently released 1929. - War is a Racket: Enlightening perspective from a 30+ year Navy veteran (becoming the most decorated of his time) who saw through to what war really was. - Capital Returns: walks through capital cycles (macro and micro) with tangible case studies that make the learnings stick better for me than hypotheticals. All four are worthy of consideration.

Our latest investment is an enduringly profitable microcap. We are following one of my favorite investors (45% pa) on to the cap table. I'll outline why his permanent capital vehicle may be a near-term purchaser. Regardless, what are we getting? - Told the market results will come in "significantly ahead" of consensus in the coming days - Trades under 5x operating profit w/ 20% ROCE - Zero loss-making years since coming public - Dividend yield 5%+ - Very inexpensive vs competitors in an increasingly consolidated market Full details: underlyingvalue.substack.com/p/deep-value-m…

An enduringly profitable business with a pristine balance sheet, trading sub 5x earnings (a large disc. to levered peers) with multiple catalysts to come. Our most recent investment will be my next sub write up. Expect it this weekend.

Revisiting past articles (this is my investment journal after all) and underlying value is a must subscribe - where else can you get my sell updates before a 200% run for SK Hynix😂 Date: 1/28/26

M&F ($MFBP) taken out for up to $53.30! I guess when the government gives you free money, you become an attractive acquisition candidate! The market is waking up what this means to a couple other ECIP recipient peers that checked the boxes necessary to redeem their treasury preferred. I'll be surprised if my number 1 pick doesn't follow a similar script.

Andrew Pogue @UnderlyingValue

2 months ago

M&F Bancorp ($MFBP) is my second favorite ECIP themed investment. I believe the market is still underpricing their already signed option to repurchase $80M ECIP preferred from Treasury at a deep discount (~20–30¢ on the dollar) after clearing 60% of the Deep Impact lending

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Aimia ($AIM.TO) tipped its hand on an acquisition candidate that wasn't on my radar. An enduringly profitable, cash-generative business trading cheaply on fundamentals, with an asset-backed margin of safety. It's trading at sub-5x an operating profit it has already signaled it will beat (actuals due in the coming weeks). Updated article here: underlyingvalue.substack.com/p/aimia-tsx-ai…

Product Tankers: Refiners have been the hot trade / investment for good reason - a lot of supply is offline and/or hungry for barrels. While most of the companies tied to the sector have ran up, I still think there is good value in product tankers. They're the ships that makes sure these products get to their end destination and are an important and valuable component at the moment. Supply destruction is more than offset by the increase in ton miles these ships are traveling. As countries get increasingly desperate for supply the price to charter a vessel pales to the impact of the necessary demand destruction that would ensue from not getting jet fuel, diesel, gasoline, etc. I do not think it's far fetched to have regions of the world impacted (esp. EUR and Asia) by not having enough fuel for flights or to fill up trucks that serve as the backbone of industry. Therefore, I love investments like Scorpio Tankers ($STNG) - they have good spot exposure, are printing cash and have close to a billion dollars of net cash already on the balance sheet. They've been great at buying down shares and will likely have to consider increasing their dividend / increasing a special if the cash gusher continues. What's the valuation: MC close to $4B, EV close to $3B. At $50K/day ($11K is their breakeven), they generate $22.3/share in cash vs. $80 current price. Based on their Q2 update, I expect them to come in a little north of $50K/day across their 81 vessels for the quarter. Hopefully more of the cash starts going to shareholders. I'm long. DYODD.

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Wild if true re: a ransomware attack on $NOW.V. Trying to extort them with a deadline of tomorrow? Turned up in my llm update this am.

@hkuppy @GavMcCracken What do you think abt product tankers here? They should print through a cycle where everyone begs for a barrel, no?

Deep Value in Oil & Gas: Unfortunately geopolitical events have taken a turn for the worst since I wrote this article a week ago. There is a ton of value in the sector that is just beginning to get sifted through. Good production growth, large dividends and strong management teams amidst an increasingly bullish price environment. I outline the eight investments we've made here: underlyingvalue.substack.com/p/deep-value-i…

Andrew Pogue @UnderlyingValue

3 weeks ago

Oil & gas is a great risk/reward in my opinion. My approach: a basket of sector investments diversified across geography and business model rather than one concentrated bet. Take the four producers we own: Best yield: A mature producer I expect to return ~60% (!) of its market

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Exhibit B: HF Sinclair ($DINO) has ran up, but there still could be some value. ~680k bpd across the Mid-Con & Rockies with inland systems that run cheap, advantaged crude (Permian, local Rockies, Canadian heavy). Cracks are near record-wide right now, so operating at huge margins. And they hand it back: $2/yr dividend + buybacks that have retired ~6.5% of the company in a year, all on a barely-levered balance sheet with over $3B in liquidity. The kicker: you can buy these refineries in the market for a fraction of what it'd cost to build them and nobody's building new ones in the US, especially in the middle of the US. I'm lucky that my 2 year old introduced me to them by being drawn to their brontosaurus at a local station.

Andrew Pogue @UnderlyingValue

2 weeks ago

Exhibit A: BlueNord (BNOR.OL) - Danish (non-operating) oil and gas producer. Company has paid out close to 20% of their market cap in the first two quarters of the year. Looking forward, I think there is a good chance they'll pay out >30% through to the end of the year. Mature

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@Ren558668020931 I think you're looking at a melting ice cube unless the underlying commodities take off. My goal is to collect more in dividends than the share price declines.

Exhibit A: BlueNord (BNOR.OL) - Danish (non-operating) oil and gas producer. Company has paid out close to 20% of their market cap in the first two quarters of the year. Looking forward, I think there is a good chance they'll pay out >30% through to the end of the year. Mature fields with low operating expenses if they decide to let them run-off versus reinvesting to maintain production (net ~44.9K boepd end of Q2 run rate, +20% above Q2 actuals due to temp. shutdowns). Why so cheap? Plenty of reasons. A big step-up in CapEx next year (~3x this year), distribution policy will change in '27, step-up in tax rate (64% effective rate), license is set to expire in 2042, large debt (big '30 / '31 overhangs) and decommissioning liabilities makes the equity a stub. What I hope to see: Extension of license out to 2050 (+8 years) and a '27 payout policy that isn't meaningfully different from the current 50-70% of net operating cash flow. Management has been rational given their constraints, future returns hinge on this continuing. With all that said, I find shares inexpensive with good optionality after hoping to cash 50%+ of my cost basis through dividends in a little over 12 months. Note: Share price should dive tomorrow after going past the Q2 dividend date (of 66.82 NOK per share).

Andrew Pogue @UnderlyingValue

3 weeks ago

Oil & gas is a great risk/reward in my opinion. My approach: a basket of sector investments diversified across geography and business model rather than one concentrated bet. Take the four producers we own: Best yield: A mature producer I expect to return ~60% (!) of its market

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