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Island Investing

Riffs, rants, and the upside of investing from way off Wall Street


The Motley Fool Interviews Ken Peak

Toby Shute of The Motley Fool recently interviewed Ken Peak, the CEO of Tarpon Folio holding Contango Oil & Gas (AMEX:MCF). You can read the whole interview here. Here’s one exchange:

Toby Shute: Ken, can you outline your operating philosophy at Contango, and describe how your current operations reflect that philosophy?

Ken Peak: I got a Ph.D. in the risks of too much leverage … in my 26-year career prior to starting Contango in 1999. Three guiding principles from the lessons I’ve learned are: Only low-cost producers survive and prosper in a commodity business. Secondly, reserves and geophysical talent are log-normally distributed, but [Vilfredo] Pareto had it wrong. It’s the rule of 95/5 not 80/20. Thirdly, “incentives drive behavior” is a fundamental principle of life, and thus everyone associated with Contango must have incentives aligned with our owners.

It’s a great intro to Ken’s philosophies about a lot of things, some of which may look familiar to attendees of a certain annual meeting in the Keys.