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Li Lu

Lukoil
MCX:LKOH
1993-1998
Industry: Russian Oil
Category: Political/Contrarian

Why the Company is Mispriced
1993, a couple of major oil companies were privatized and handed out to citizens
These citizens did not understand the true value of the companies
The companies were trading at a huge discount to their intrinsic value

Furthermore a few years later the Asian financial crisis occurred, and the Russian currency got devalued 90%

Alternative View
At given market prices, he found that the market valued the reserve at 10-20 cents per barrel
i.e., assuming a $20/barrel of oil, the market was trading the company at 99% of the proven reserve realizable value
This is not even considering the company's earnings

Result
Although the financial data isn't available to me currently, Li Lu claims a 10x return
I will be conservative and assume a 6 year holding period, which is about a 45% CAGR

Notably
Li Lu bought Russian oil companies using his student loans while he was studying
He also mentioned another example, where oil prices dropped to $10, and the cost per barrel for most Western companies was $10
In this situation, if you could find a company that was profitable at these oil prices, you had a good situation