Here are the top five reasons our clients rely on us to help invest their money in the energy sector:
We educate our investors about what we own, and why.
The energy sector can be complicated, noisy and volatile. We take pride in helping you understand it – on our podcasts and our email list here.
We are solely concerned with getting a good price on the shares of a few great businesses.
We take a fundamental value approach to stock picking in the energy sector. We believe strongly that to deserve investors’ trust, we should be politically neutral – which in the world of energy investing means we consider investing in both renewable and fossil fuel companies. The economics of the businesses we invest in are of paramount importance. And politics is way less interesting, anyway. We are professional analysts, and ideologies have no place in our portfolios.
Outperformance in energy is driven by focus and resilience.
As a firm founded my military veterans, we’d like to think we have both. And when it comes to energy investing specifically, we have expertise in both molecules and electrons.
We are an independent, SEC-registered fiduciary.
The ability to think and act independently is critical in energy investing. We think that is best done at an independent, fee-only Registered Investment Advisor – not at a Wall Street firm. Among other advantages, we provide you with full transparency into your energy investments here – via 24/7 online access – and itemize the fees we charge you every month, too, down to the penny. And unlike a hedge fund or CTA, we are thoroughly regulated.
We have skin in the game.
We are significant investors in the same energy strategies that our clients invest in.
Value Investing in the Energy Sector
Our goal is to allocate investors’ long-term capital to the best-managed companies with the most attractive economics, lowest capital expenditures, and lowest risk-adjusted valuations.
In the energy sector, that means combining rigorous bottoms-up research with informed macro forecasts about future commodity prices and closely monitoring levels and changes in capital expenditures over time.
In addition to doing deep company-specific research and building our own valuation models, our company research process involves meetings with management teams, assessing competitive moats, calls with sell side research analysts, reading industry publications, and attending industry conferences. On the qualitative side, we focus in particular on evaluating management teams.
We also use the term ‘capital cycle’ as shorthand to describe the total capital expenditures made by companies in a given sector or sub-sector.
Our premise is that the capital expenditure cycle drives future equity returns in the energy sector. Overshooting capital expenditures above and below the level required to maintain mid-cycle commodity prices drives future profitability within each company – and, therefore, future returns.
And the differences in capital expenditure levels across the various energy subsectors makes our approach unique and differentiated. If we execute it well, it offers the possibility of systematic outperformance in the sector over the long term.