“No. Shares look cheap, but management is incompetent.”

Sometimes it’s just that simple.

Regardless of how inexpensive shares might get, I have no desire to be a partner in that particular business. BP is less integrated than its peers, seems overexposed to Russia – at least to a layman like me – and, among other things, now carries with it huge uncertainty in terms of future cash calls related to this spill. And that’s about as much thought as I have given it. That I live in a small fishing village near the Gulf could be coloring my judgment here, but if so, that’s a bias I’m okay having.

I suppose there is probably a moat of some sort around BP’s business in terms of scale and/or reserves, but it does not seem particularly wide. And if you’re investing in a small-to-no moat business, management makes all the difference.

That, incidentally, is one of the advantages of owning a wide moat company…the business should do okay even if management does dumb things.

We do still own Contango in Tarpon, and we now own shares in another deepwater E&P company, but that’s a subject for another time.