A FOCUS ON TOTAL RETURN
General Investment Objectives
Our main objective is to generate long term rates of return which have relatively low volatility (Beta), as well as low long-term correlation to mainstream equity markets. We invest in publicly-traded equities that we feel will produce consistent income which we believe supports capital appreciation. Currently, the asset classes most supportive of this strategy are energy infrastructure companies such as Master Limited Partnerships (“MLPs”), certain energy infrastructure corporations, and Energy-related Business Development Companies (“EBDCs”). From time to time we also invest in Real Estate Investment Trusts (REITS), and non-energy related Business Development Companies (“BDCs”).
Our Investment Process
In managing investment portfolios, our team relies on its disciplined investment process to determine security selection, entry points, and weightings. Our process incorporates a detailed analysis of the underlying businesses owned and operated by potential portfolio companies. Through this process, we seek investments with the potential for capital appreciation, but whose underlying business risks offer an attractive risk/reward balance for shareholders.
Our securities selection process includes a comparison of quantitative and qualitative value factors that are developed through proprietary analysis and valuation models. To determine whether an investment meets our criteria, we will generally look for, among other characteristics, sound business fundamentals, a strong record of cash flow growth, a solid business strategy, and a respected management team. We will sell investments if we believe that any of the above-mentioned characteristics have changed materially from our initial analysis, or that quantitative or qualitative value factors indicate that an investment is no longer earning a return commensurate with its risk.
We utilize our network of contacts, developed over many years, to help us identify what we believe to be promising investment opportunities. These contacts include buy-side investment managers, sell-side analysts, private market participants, industry contacts, and oil and gas professionals. We monitor our universe of potential investments on a regular basis, in order to find attractive entry points, as well as exit points to portfolio securities which, in our opinion, have become overvalued. We look for periods of opportunity which often occur when markets overreact to short-term news flows unrelated to our portfolios.
We use a combination of tools to determine valuation including, but not limited to, individual company fundamentals and “peer group” comparative valuation. We evaluate companies’ projects/acquisitions to determine whether opportunities for additional equity issuance may result in useful price inefficiencies. Moreover, we also review fundamental factors ie: availability and cost of capital that affect companies’ ability to fund current projects, make cash distributions, and service existing debt. Finally, as mentioned above, we seek to use years of relationships with other investment professionals, company management teams, and sell-side analysts to fine-tune our decision making.
Every investor’s situation is unique and your Evaluation should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Investments mentioned may not be suitable for all investors. Past performance may not be indicative of future results.