Excerpt from Iolite:
The Lesson from Bowen Coking Coal - Investing is About People
Sometimes complacency is our greatest adversary. The portfolio’s investment in Bowen Coking Coal – initially a seemingly obvious choice due to the rising global demand for steelmaking coal amid supply constraints – became one of the most significant missteps in iolite’s history. While the company’s potential was undeniable, complacency among its core investors transformed that potential into a series of ongoing disappointments.Despite a steady stream of optimistic updates, operational failures became so frequent they seemed routine. One of the main reasons I invested in this brownfield project was the people involved - experienced coal traders, miners, and investors. However, I eventually realized that there is a significant difference between investing in a winning team and investing in a team of former winners.When I began to lose faith in the management’s alignment and capability, I had to choose between selling out at a loss or pressing for change. Given the potential of the operation, its strategic value, and the strength of the shareholders’ register, I chose the latter. For over a year, I pushed for meaningful changes at the board level, but my efforts were stifled by the inertia of wealthier, more influential shareholders. When the situation worsened and it became clear that no one else would act, I called for an extraordinary shareholder meeting to replace the current board with my own candidates. By then, however, the company’s challenges had deepened, exacerbated by a sharp decline in coal prices driven by an unexpectedly weak Chinese market.The key lesson? When something feels off, I should act swiftly and decisively, instead of waiting for others to step in. In the future, I must ensure I have the authority, early on, to drive change myself, or exit quickly. This experience underscored a fundamental truth: at its core, investing is about people. The principle "hire slowly, fire quickly" applies just as much to investment decisions as it does to building a team.
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