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By Daniel Fisher, Forbes,

If one were to attach a slogan to the investment approach of Tampa Bay mutual fund manager David Iben, it would be: “No pain, no gain.” Iben enjoys buying into scary situations. Indeed, he’s something of an investing masochist.

One of his largest holdings is Russian natural gas giant OAO Gazprom Gazprom, which, thanks to the crisis incited by Vladimir Putin’s actions in Ukraine, has seen its production slashed and shares languish. Its market cap has fallen by $39 billion in the last three years, and its OTC-listed shares trade at a multiple of 2.4 times earnings. “And that’s earnings after stealing,” notes Iben, referring to Russia’s reputation for corruption.

Still, Iben figures that he owns Gazprom’s vast oil and gas reserves for about $1 per barrel, compared with $20 for most big oil companies. Gazprom has a 6% dividend yield and an extensive pipeline network linking it to Europe, so Iben is willing to stare down Putin’s aggressive geopolitical advances. He’s betting that the enormous earnings power of the world’s second-largest oil and gas company, whose $36 billion profit last year exceeded even Exxon Mobil’s XOM -1.64%, will ultimately shrug off the current turmoil.

Ignoring conventional wisdom is a religion at his $1 billion (assets) Kopernik Global Investors. The firm itself is named after Nicolaus Copernicus, the 16th-century Polish cleric and astronomer who defied Roman Catholic orthodoxy by declaring the Earth revolves around the sun.

Outside of institutional money management circles, few have heard of Iben, but seed money and a big endorsement from onetime Fidelity Magellan manager Jeffrey Vinik have meant large capital inflows despite the fact that his All-Cap Global mutual fund has earned 4% since its inception in November 2013.

David Iben of Kopernik Global: Buying Russia on sale. (Photo credit: Robert Croslin For Forbes)

An ugly picture if ever there was one. But naysayers are missing several crucial points, Iben says. First, the last shipment of Soviet warhead fuel was delivered in 2013. And there are more than 60 new nuclear plants under construction, mainly in China. Finally, the cost of mining and refining new supplies is at least double the current spot-market price. Thus one of Iben’s biggest holdings is Canadian uranium miner Cameco Cameco, which he estimates can make money at as little as $30 per pound.

Many value investors demand more than just a cheap price. They insist on a “catalyst,” or an identified trigger that will drive the price up. For uranium that would either be a dramatic reduction in global inventories or signs that reactor operators are signing long-term contracts at prices over $50 a pound. But Iben doesn’t obsess over catalysts, arguing that once they’re apparent it’s already too late.

“If someone tells you you’re going to triple your money and it’s going to be in maybe two years, or three years, or four years, I don’t say, ‘Which is it?’ ” he says. “ I say, ‘Sign me up!’ ”

Even Iben’s path into investing was contrarian. His father was a California physician, and Iben initially set out to follow him into medicine, but he abandoned his preveterinary studies at the University of California, Davis for a degree in economics. “
I liked science,” he says. “I just liked the stock market more.”

As Nuveen struggled with the debt from a 2007 leveraged buyout, Iben quit and moved to Tampa to work for Vinik. The two made an odd couple. Vinik is a trader, dedicated to growth-stock investing, and Iben is a deep-value, buy-and-hold guy. The pair agreed to disagree on strategy, but Vinik was impressed enough to invest $20 million in Iben’s fund after he shut down his own $6 billion management firm last year to focus on his Tampa Bay Lightning hockey team.

Kopernik’s team of ten analysts start by identifying the best companies in a given industry and then calculate a price they’d be willing to pay for them. Iben doesn’t trust accounting much, but he’s even more skeptical of finance, which, he says, “is just manipulation of accounting numbers.” So his analysts use at least half a dozen different measures of value, including replacement value of assets, book value and discounted cash flow models.

After a long hiatus from emerging market stocks Iben is now knee-deep in developing world stocks, with more than 30% of Kopernik Global’s assets there. Russia’s Sberbank is an example. It’s down 20% this year and selling for less than book value. He also likes Russian electric power giant RusHydro JSC and China’s Guangshen Railway. Sometimes cheap stocks get cheaper. He bet wrong on Apex Silver, whose stock imploded in 2007 after it revealed mismanaged hedges.

One spitting-in-the-wind sector Iben continues to love is gold mining, including stakes in Newcrest Mining, Newmont, Barrick Gold, Kinross and NovaGold. He prefers companies with big reserves, even if they don’t have big mining operations, because of the embedded option those reserves provide if gold prices ever rise again. “Nothing is more important than actually owning the gold,” he says.
While Iben’s quirky risk-rife portfolio appears to bear the indelible stamp of his own biases, he insists he’s just being objective, the same as Copernicus when he rejected the prevailing geocentric system. If the market hates a business enough to let him buy it at half price, he’ll do it.

“People look at the portfolio and say, ‘You have strong views,’ ” he says. “ And I say, ‘No, that’s reflective of the market’s strong
views.’ “