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“From an emotional and well-being perspective, smaller vacations pack a bigger punch than longer ones,” Jonathan Alpert, a psychotherapist in New York City, told U.S. News and World Report. “A small amount of planning and time away can reap large rewards.”

Today, we'll discuss the journey of another investor: Lance Jubel of Aberrant Capital Management.

All this, and more, in just 6 minutes to read.

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Trivia

Always Learning with Investor Lance Jubel

In 2016, Lance Jubel worked a corporate sales job in the fashion industry. But after the initial sales learning curve, he felt stagnant. That’s when he started investing, buying shares of companies whose products or services he interacted with regularly. There wasn’t much of a thesis behind these investments other than familiarity, which gave him peace of mind.

Then Lance stumbled upon The Intelligent Investor, which changed his life. As he delved into Benjamin Graham’s principles, a fog lifted. Investing transformed from a task into an intellectual pursuit—a game of behavior and decision-making that captivated his mind. Investing provided him with the mental stimulation his day job lacked. 

“I spent all of my free time reading and learning as much as I could about investing,” he recalls. “By day, I continued with my regular job, and by night, I read everything I could about investing. As my investing understanding evolved, I went down adjacent paths in behavioral finance, decision-making, and psychology. This ultimately led me to pivot my career. I decided to go back to school, which eventually led me into a career in finance.”

Today, Lance is a professional investor who runs Aberrant Investment Partnership. He’s also a member of our Mastermind Community. In this interview, we discuss Lance’s journey to stock investing, lessons learned along the way, and how he compounds wealth.

To start, can you share a bit about what kind of investor you are and what investments you look for?

One might classify me as a growth investor based on the multiples of some companies in my portfolio. However, multiples are shorthand heuristics often obscuring the full truth. Upon deeper analysis and unpacking the multiples, many of these holdings would fall within the value category. This is why I don’t understand why individuals categorize themselves, or others, as value or growth – it doesn’t make sense to me. Value is a function of a business’s future growth; they are fundamentally intertwined.

As for what I look for, I don’t adhere to strict criteria. Often, I begin examining a company when capital has fled a particular industry or sector, often resulting in a significant drawdown. Perhaps it’s just how I’m wired, or a flaw, but I’ve always been drawn to companies that seem momentarily disliked. Human emotion tends to overreact from one extreme to the other. When the crowd moves in one direction, I tend to go the other way.

How has your investment philosophy evolved?

In the beginning, I focused on statistically cheap stocks—those with low price-to-book, price-to-earnings, price-to-sales ratios, and similar metrics. Over time, however, my approach evolved as I gained a deeper understanding of accounting. I began to recognize that some companies, while appearing expensive on the surface, had accounting irregularities that were obscuring their true earnings power and intrinsic value.

This shift expanded my horizon to look beyond conventional metrics and focus more on the underlying business fundamentals, identifying opportunities where the market is potentially mispricing companies.

What can you tell us about Aberrant Investment Partnership, its formation, investments, and how investors can learn more about it?

Aberrant was formed as an investment partnership for friends and family with a straightforward goal: to compound capital at high rates over the long term. The strategy itself is not groundbreaking, but it’s grounded in patience and discipline.

From the outset, my focus has never been on gathering assets or marketing the fund. There’s no website, no outreach efforts — I view these things as distractions from what truly matters: generating returns for my existing partners. I’m extremely fortunate to have a group of investors who share this long-term vision and are aligned with the partnership’s goals.

I think a recent interaction with a prospective investor illustrates the importance of this alignment. After our first meeting, he asked about Aberrant’s performance for the previous month. The following month, he inquired again about the fund’s monthly return. By the third time, I knew it wasn’t the right fit. His focus on monthly performance highlighted a mismatch in our time horizons.

When inevitable market drawdowns occur, partners who are not aligned with the long-term strategy can create unnecessary friction. If someone is fixated on short-term fluctuations, I can say with a high degree of certainty that it won’t be a good match. Regardless of how large a potential check is, I would rather turn away capital than partner with someone who would be calling me every time the NAV drops by 100 or 200 bps.

When and how did you find the Mastermind Community? What have you gotten out of it?

I’ve been listening to The Investor’s Podcast for several years, and when I first heard Clay mention the community in a December 2022 episode, I signed up immediately.

I have found the Mastermind Community is a gathering of like-minded investors who, over time, have gravitated toward Buffett’s philosophy. Through it, I’ve had the opportunity to meet incredibly smart and insightful individuals with whom I now regularly exchange ideas and learn from. I can’t speak highly enough of the community – its value far exceeds the price paid.

Is there an area or two of the market you feel is undervalued or mispriced? Why?

Chinese companies currently seem to be experiencing near-max pessimism. While this is accompanied by political and geopolitical uncertainties, there are some exceptional businesses emerging that are beginning to compete directly with some of America’s finest firms.

Additionally, market sentiment towards consumer discretionary companies seems unfavorable at the moment. Betting against these companies is, in effect, betting against the U.S. consumer. Over the next decade, there is a high probability that the U.S. consumer will become wealthier.

What are some of your favorite investing books? 

These aren't all strictly investing books, but many of them have relevant insights or principles that can be applied to investing.

The Price of Time

Mindset: The New Psychology of Success

The Logic of Failure: Recognizing and Avoiding Error in Complex Situations

More Than You Know: Finding Financial Wisdom in Unconventional Place

The Warren Buffett Way

How else do you learn and acquire information and knowledge?

I read a lot of annual reports. This provides in-depth insights into a company while listening to their earnings calls provides insight into their management team's strategy and mindset. Also, consistently engaging in discussions with other investors allows me to gain diverse perspectives, challenges my thinking, and refines my own views. I continually remind myself of the importance of being open to the possibility that I could be wrong and that it's perfectly acceptable to change my viewpoints as new information becomes available.

What’s a typical day look like for you?

I rarely have a ‘scheduled-day’ per se and what I love about this job is that each day I wake up and my education begins. 

Some days I’ll search companies trading at 52-week lows. If something piques my interest, I look at their financials. Years of looking at financials trains the eye to know what to look for and I generally know fairly quickly if I want to investigate further. From there, I spend my time learning about the business and its industry dynamics. I believe that success is rooted in repetition, practice, and training the brain to know what to look for. The majority of the time it leads to no actionable outcome; however, I am still learning.

When I’m not looking through the 52-week lows, I am either speaking with others, learning from their ideas and insights, or revisiting companies I already own/have been following.

What are some of your favorite things to do outside of investing?

I enjoy traveling and immersing myself in new places. I am extremely nomadic, and I’m rarely in the same place for an extended period of time. I believe that immersing myself in different cultures and environments has shaped me into a more well-rounded individual. It has deepened my understanding of diverse perspectives and how people around the world view their surroundings.

Do you typically hold stocks for a certain amount of time, or does it vary widely?

Unless I conclude that my initial analysis was incorrect, I generally intend to hold stocks for years. My approach is focused on long-term value, and I allow my investments the time they need to fully develop and realize their intrinsic worth.

Generally, how do you approach risk management?

I view risk as the potential for permanent loss of capital rather than short-term volatility. To mitigate risk, I place high importance on thoroughly understanding what I own and ensuring the business is fundamentally sound. While short-term market fluctuations are inevitable, the more one knows reduces the overall risk of the investment.

An often-overlooked risk management strategy is identifying exceptional operators – whether they are owner-operators or individuals with an owner’s mindset. While many investors may not see this as a risk management approach, these operators are crucial because they are likely to make rational capital allocation decisions that increase the company's intrinsic value over time. Essentially, investing involves outsourcing capital allocation to management teams, and finding those who are skilled and committed to long-term value creation is a vital part of managing risk.

What is the biggest, hardest lesson you learned early on?

As a teenager, I struggled with a personal hardship, and for a long time, I allowed it to define who I was. It wasn’t until I found serenity and acceptance that I was able to let go and move forward with my life.

What is the biggest investing mistake you have made? What did you learn?

Great question! My biggest mistake in investing was Wheels Up. I pitched the stock in November 2022 at a retreat with fund managers, it subsequently dropped around 50%. My thesis was wrong. In my initial thesis, I saw the company experienced negative working capital due to the large cash inflows from customer prepaying for flight hours. However, as consumer demand for private aviation decreased and customers pulled back on prepayments, the company began to face challenges. The combination of reduced cash inflows and decreased overall demand materially impaired the business. Fortunately, I decided to close the position in Q1 2023.

I learned that negative working capital, when coupled with slowing sales, can be detrimental. As revenue growth slowed, the company had less cash coming in, which made it difficult for them to meet their short-term obligations. With high fixed costs consuming nearly all available cash, the company was forced to issue equity, diluting shareholders.

Additionally, I had a nagging intuition about the management not prioritizing investor interests, which I brushed off. Eventually, the company’s founder was let go with an egregious severance package while the company was barely solvent. It’s not bad to listen to your gut at times.

What have been some of your biggest investing “wins”?

Some of my biggest wins have come from investing in companies that initially appeared optically expensive. This taught me the importance of looking beyond simplistic multiples, which can often misrepresent a company’s true value. Instead, I follow the cash. 

For instance, a company might show modest earnings on its pro-forma P&L but generate significant cash due to its negative working capital (like the Wheels Up example haha). This discrepancy highlights the importance of examining how cash is actually being generated and utilized. Michael Mauboussin's work in his early 2000s paper, CashFlow.com, provides exceptional insights into this approach.

What advice would you give to young professionals aspiring to build a career in investment management?

If you come from an unconventional background like myself, be prepared for situations where others will mistakenly judge you for not fitting a traditional archetype. Remind yourself, this is OK. Use their doubts as motivation to keep pushing forward and prove them wrong. 

Anything else you’d like to add?

Every great company will have periods where their stock will be cut by a quarter, a half, or even more. During these times, resist the urge to jump ship. If you genuinely believe in the company's long-term potential as a multi-year compounder, bet heavily. Such rare opportunities seldom present themselves. 

I also want to extend my gratitude to Stig, Clay, and Kyle for their work and guidance. The Investor’s Podcast Network has played a significant role in shaping me into the investor I am today, and more importantly, it has taught me, by example, the value of living with purpose and integrity.

Dive deeper

To connect with Lance, send him a note on LinkedIn. Learn more about our Mastermind Community here.

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