At today’s Ben Graham Centre’s 2025 Value Investing Conference in Toronto, Adam Waterous, Managing Partner and CEO of Waterous Energy Fund (WEF), delivered a talk titled “Value Investing in a Commodity Sector: Using a Margin of Safety Approach in a Historical Growth Equity Industry.” With decades of experience in oil and gas, Waterous challenged the conventional private equity playbook in the energy industry and made a compelling case for applying value investing principles—especially the margin of safety—to a sector many investors consider too volatile to touch.
The Traditional Model: Growth Equity in a High-Risk Sector
Waterous began by explaining how most investors approach the commodity sector, particularly oil and gas. The prevailing strategy—what he called “growth equity”—amounts to backing management teams with technical expertise in geology, engineering, and exploration. These investors bet on the team’s ability to find new resources. The thesis is simple: if the team strikes oil or gas, everyone gets rich.
