As Nathan Tinkler, maintenance-man-turned-coal-magnate, creates headlines again today with another audacious deal, it is time for leading companies to take a closer look at the qualities that have made the man so successful.
Tinkler’s $915 million personal fortune makes him the nation’s richest person under 40, according to BRW. He is known for his remarkable deal-making skills: pouncing on assets and buying them using a lot of debt, building their value and selling them for many, many times their original price. The deal that shot him into the annals of the super wealthy was putting a $1 million down-payment on a coal project, Middlemount, and selling it 18 months later for $441 million.
Yesterday Tinkler proposed to the board of the listed coal mining company, Whitehaven Coal, that he take the company private with overseas investment backing. This comes just months after Tinkler sold his holdings in Aston Resources and his private company, Boardwalk Resources, to Whitehaven in exchange for shares.
Whether Tinkler is serious – the proposal is “incomplete” according to the board – or fishing for other bidders, it does illustrate one character trait that makes him a leading investor. We look at what all leaders can learn from Tinkler.
1. Make things happen
Tinkler makes deals happen. Whatever his motives for yesterday’s proposal, Tinkler is not one to stand and wait for others to act. Whitehaven shares have fallen in value steadily over the past 18 months. Tinkler will either get control of the company for a good price, or flush out a buyer, sell his own stake and search for the next opportunity.
2. Confidence in your ability
Tinkler sold everything to back his first deal – the Middlemount project. That included his home and his maintenance business, which raised $1.3 million. At the time that he secured $7.5 million from local investors and then $150 million from overseas backers to pour into the project, he was as close to the financial brink as is possible to be: he had only $300,000 to his name, and his insurer, GIO, was seeking to wind up his company, Custom Mining, through which he operated the project.
3. Another roll of the dice
Tinkler turned that first deal in Middlemount from a fantastic deal into an astonishing deal by taking an all or nothing risk after his initial success. After securing enough backing to settle with GIO, and getting Custom Mining on a stable financial footing, Tinkler arranged to sell it to Macarthur Coal, making his 60% share worth $177 million, according to BRW magazine (September 30, 2010).
But while other early investors wanted their proceeds from the sale in cash, Tinkler took his in stock, and borrowed money to buy the others out. He rode the share price from $8 to $20, with coal prices at record highs, before his cashed out.
4. Know when to quit
Within months of Tinkler selling his shares in Macarthur Coal, the share price fell dramatically, and it has since been sold.
5. Know your weaknesses
Not everything that Tinkler touches turns to gold: he is reported to spend $20 million a year on racehorse breeding stud, Patinack Farm. This project has suffered some big losses, without any big wins to balance them out.
But Tinkler is determined to stay the course on this long-term investment… or is it just a huge waste of money in a sector that does not play to his strengths? Wise leaders might look at Tinkler’s cash drain and consider an honest appraisal of their weaknesses.