In this episode of the special situations cast I’m interviewing Javier López-Bernardo. Javier is a portfolio manager at the Brightgate Capital Focus Fund based in Madrid, Spain. I met Javier because of my writing on a mutual investment, and when I looked at his portfolio, I was very excited. Many of these I’ve invested in or are very interesting to me based on my superficial knowledge. It’s very rare that I look at someone’s portfolio and like it so much.Brightgate Capital runs one of the portfolios I’d feel good about.

I ended up talking to Javier for a long time and I’ve split up the interview in two thematic parts. This is part I and it will primarily concern the Russian oil giant Lukoil (OTCPK:LUKOY) (OTC:LUKOF) but first, we go into Javier’s overarching investment philosophy. Stephen Penman of Columbia University is a major inspiration for Javier’s valuation model, and we also dive into oil markets more generally. In the end, we also briefly discuss other energy investments.

The key things Javier discusses on Lukoil are its valuable conventional assets, its reasonable refining capacity in a continent where it considered strong, its low valuation on an enterprise value to net operating asset basis, and that it trades at $2.4 per barrel of oil in reserves. The company achieves a 13% return on net operating assets or you could look at it as generating a 14% shareholder yield.

Company website: BrightGate Focus Fund | BrighGate Capital

If you liked this interview you should check out my interview with Jan Svenda who talks about a similar Russian energy investment that’s trading at a 19.8% yield here: Jan Svenda On Svenda’s Manual Of Stocks And Where You Can Still Find A 19.8% Dividend.

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I write the Special Situation Report. I look at special situations like spin-offs, share repurchases, rights offerings and a lot of M&A events. The point is to make money with risks under control.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.