‘It’s the totality of the eight criteria, not just one,’ he...

‘It’s the totality of the eight criteria, not just one,’ he said. ‘But if you could only have one – if you bought stocks right after the people that run the company bought, then you’d do better than other people.

‘I’d rather know what the people who run the company are doing with their own money than what they say because every single executive of a company is a paid promoter of the business.’

Having a gas

It is the checklist process together with investing savvy that has led the Smeads to take such profitable contrarian positions.

As well as malls and housebuilders, Smead and his son bought into oil and gas stocks, including AAA-rated Occidental Petroleum (US:OXY), when they were extremely unloved.

Part of Smead’s thinking involves the increasingly important role in the energy transition that natural gas is playing. Natural gas, which releases less carbon to generate power than other fossil fuels, is already responsible for 40% of the electricity generated in the US. Smead reckons that percentage is only going to rise.

‘So [the natural gas] part of our oil and gas companies that has been producing no profit for the last three or four years is going to become highly profitable,’ he said. ‘And these guys are already highly profitable, trading at low multiples, gushing free cashflow, great balance sheets and making wise capital decisions – and a by-product of drilling for oil is going to make them rich.’

Convincing the more environmentally and socially conscious millennials and Gen Zs of the merits of the oil and gas sector might be a tougher sell, but for a demographic with its eye on the bottom line, the profits should speak for themselves. As should the returns from the Smeads’ fund.

Smead are smart investors with an outstanding track record.