RV Capital's First-Half 2024 Letter to Co-Investors

Fund Performance and Management Changes

As of June 30, 2024, the net asset value (NAV) of the Business Owner Fund stood at €979.45, reflecting a significant increase of 28.9% for the year and 887.1% since its inception in 2008. This growth represents a compound annual growth rate of 15.6%. Recent administrative changes include the planned transfer of management to Axion, a Luxembourg-based investment manager, following the closure of the investment-axing Zelschaft for Langfrostige. Despite these changes, it is expected that investors will see no significant differences in fund operation, costs, or tax consequences, ensuring a smooth transition for current stakeholders.

A Personal Journey in Investment

The narrative emphasizes a personal journey that began when the speaker founded RV Capital in 2006 after being inspired by Warren Buffett at a Berkshire Hathaway shareholder meeting. Lack of experience and the challenges of starting a fund were countered by the invaluable support from Norman Rentrop, whose interventions were crucial in establishing the Business Owner Fund during the financial crisis that followed its launch. The story highlights how mentorship and lessons learned in character assessment of investment managers shaped the speaker's investment philosophy. This journey underscores the importance of trust and integrity in investment management, with Rentrop's guidance proving to be instrumental throughout.

Investment in the Oil and Gas Sector

A recent investment in International Petroleum Company (IPCO) marked a departure into the oil and gas sector, a move driven by its favorable valuations and solid management. IPCO, producing approximately 46,000 barrels of oil equivalent per day, has shown impressive growth since its inception, significantly increasing both its reserves and share price. The company's strategic acquisitions during periods of market downturns catalyzed its development, positioning it well for future growth. This investment reflects a broader strategy focused on companies with strong management cultures and operational expertise, despite common hesitations regarding the cyclical nature of the oil industry.

Perspectives on ESG Investing

Concerns regarding climate change prompted a discussion on Environmental, Social, and Governance (ESG) investing, where a distinction is made between ESG principles in theory versus practice. The critique focuses on the limitations of current ESG frameworks and emphasizes the importance of understanding trade-offs in investment decisions, particularly in sectors like oil and gas. It acknowledges the ethical implications of energy production and stresses that transitioning to sustainable choices will require continued investment in traditional sectors. Ultimately, the speaker advocates for a more nuanced approach to ESG that recognizes the complexities and interdependencies of modern economic systems while fostering genuine innovation.

The Rob Vinall Podcast

RV Capital's First-Half 2024 Letter to Co-Investors

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Quick takeaways

Deep dives

Fund Performance and Management Changes

A Personal Journey in Investment

Investment in the Oil and Gas Sector

Perspectives on ESG Investing

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