Alma Recurrent Global Natural Resources Fund
Alma Recurrent Global Natural Resources Fund invests primarily in publicly traded equity and debt securities of global natural resource-related companies, operating in a capacity related to the supply, production, distribution, refining, transportation and consumption of natural resources.
The fund’s management is delegated to Recurrent Investment Advisors LLC.
Cumulative Performance (%)
Fund Inception 29 June 2018
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The investment return and the principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
Strategy & Manager
Investment objective: the fund seeks total return by investing in global natural resource-related companies.
- Typical industries in which the fund invests: energy, basic materials, infrastructure, transportation and logistics
- The fund may invest in companies of any market size capitalization, including IPOs
- The investment process incorporates macroeconomic and commodity supply/demand factors with fundamental company analysis
Recurrent Investment Advisors is focused on understanding and profiting from commodity cycles to make differentiated natural resource investments
- Formed in April 2017. Registered as an investment adviser with the U.S. Securities and Exchange Commission (SEC)
- Primarily owned by its co-founders Mark Laskin and Bradley Olsen, who both have extensive experience in energy investing
- Based in Houston, Texas (US)
Mark Laskin, Co-founder and Managing Director
Before founding Recurrent Investment Advisors, Mark was the lead energy portfolio manager and Chief Investment Officer at BP Capital Fund Advisors (BPCFA), an energy-focused long-only investment management firm.
Under Mark’s leadership, BPCFA grew from $50mm to nearly $400mm in assets under management in less than 3 years. BPCFA’s energy strategy was the #1 performing energy open-end mutual fund, as ranked by Morningstar, from 12/31/13 to 12/31/16, and its MLP strategy was in the top decile in its Morningstar category over that same time period.
Mark has 13 years of additional portfolio manager experience at Van Kampen, Morgan Stanley and Invesco. As part of a diversified large cap value strategy, Mark managed more than $10 billion and has managed energy portfolios for more than 12 years. While at Morgan Stanley Investment Management, Mark served as the internal head of equity investment research.
Mark earned an MBA/MA in Finance from the Wharton School of Business at the University of Pennsylvania and a BA in History from Swarthmore College
Brad Olsen, Co-founder and Managing Director
Before founding Recurrent Investment Advisors LLC, Brad was the lead MLP portfolio manager for BP Capital Fund Advisors (BPCFA). Under Brad’s leadership, MLP AUM more than doubled (excluding the impact of appreciation).
From 2011 to 2015, Brad led Midstream Research for Tudor, Pickering, Holt & Co. (TPH & Co.), where he was recognized as the top all-around stock picker in the US by the Financial Times in 2013, and the top energy stock picker in the US by Starmine in 2014.
Brad also has experience as an investment analyst at Eagle Global Advisors in Houston, where he was part of a 3-person team that grew midstream/MLP AUM from $300mm to over $1bn from 2008 through 2011. He has also worked in investment roles at Millennium International and Strome Investment Management. He began his career in the UBS Investment Banking Global Energy Group in Houston.
Brad earned a BA in Philosophy, Political Science, and Slavic Studies from Rice University in Houston.
Statistics & Commentary
The performance data shown represents past performance. Past performance is not a guarantee of future results. Current performance may be lower or higher than the performance data quoted. The investment return and the principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Sector Breakdown as a % of AUM
as a % of AUM
Geographical exposure as a % of AUM
as a % of AUM
Top 10 Position Details
Investment Manager's Commentaryas of 31/01/2020
During the month of April, the Alma Recurrent Global Natural Resources fund rose by 17.99%, significantly outpacing the S&P Global Natural Resources’ 13.75% return. During the month, stock selection in Exploration and Production companies added value relative to the index, with Marathon Oil (MRO) and Diamondback Energy (FANG) all rising more than 66% in the month. Additionally, with shelter-in-place mandates being loosened, early signs of increased driving demand boosted the portfolio overweight in refining sector, which rose more than 45% in April.
The impacts of Covid-19 have impaired corporate profitability in the short-term, but how does this compare to the normalized long-term outlook? We examine where differences between short-term and long-term profitability may offer investment opportunities
Since the widespread onset of COVID-19 earlier in 2020, economic activity slowed greatly as shelter-in-place orders proliferated globally. While in some cases, demand rose for necessary items like cleaning supplies and personal hygiene, for other goods, demand fell dramatically. In many segments of the natural resources universe, demand fell in an unprecedented and synchronized way. Markets quickly became oversupplied and prices fell along with volumes.
Stock volatility during the months of March and April reached historic levels, as the portfolio fell by -37.5% in March and rose by +32.3% in April. As we have outlined in previous monthly commentaries, our investment process focuses on companies’ return-on-invested-capital (ROIC) compared to a ratio of enterprise value vs. invested capital (EV/IC). Given the recent volatility, it helps to take a snapshot of current ROICs as outlined by recent quarterly earnings reports, and compare those to historical ROICs to frame investment opportunities.
Interestingly, as can be seen in the chart above, there is a wide divergence of outcomes on a sub-industry basis. Certain industries, like metals/mining, gold and paper, have not yet proven to be broadly impacted by COVID-19. On the other hand, aluminum, steel, fertilizer and energy have seen ROICs fall to well below average levels.
Unsurprisingly, sector performance has proven to be correlated with evolutions in ROIC. Industries with ROICs well below average as a result of COVID-19 have underperformed, and those which have shown less of a negative COVID-19 impact have outperformed. Going forward, what “normalized” post-Covid profitability looks like remains to be seen. To the degree that “normal” looks like the pre-Covid economy, then the forward-looking risk/reward warrants additional capital. Conversely, for those companies already implying normalized ROICs, the risk/reward is less favorable, and is used as a source of cash.
Reviewing the status of the oil market after a historically volatile month
In our recent monthly commentaries, we outlined why we expected oil prices to fall sharply, and why we believed prices would cause US oil production to fall by a greater magnitude, and more rapidly, than many market analysts expected. This outcome was highlighted by oil prices briefly turning negative on April 20th, accelerating the pace of declines and triggering economic shut-ins across North America. Over the course of the month, oil producing companies not only reduced capital spending plans, but prominent oil producers in the Bakken Shale in North Dakota announced that they would be turning off production more or less entirely, further exacerbating production declines. While many estimates had expected natural oil production declines to reach 2 million barrels/day over the course of 2020, April’s sharp fall in oil prices accelerated these production cuts, both from a size and timing perspective. Currently we expect oil production to fall approximately 1 million barrels/day within May alone, largely as a result of price, greatly reducing concerns that oil inventories would overwhelm storage capabilities.
At the same time, as oil supply is rapidly falling, early signs of US demand improvement have emerged. As numerous regions have relaxed shelter-in-place regulations, mobility and driving have notably increased, a large component of lost US oil demand. The chart below highlights the increased mobility in US metropolitan areas – as a brief note, Recurrent is based in Harris County, and increased traffic patterns are easily observable.
To the degree that this trend continues, oil demand will increase to the point that the oil market will function “normally”. Already, by mid-May, WTI (US) oil prices have rebounded to roughly $25/bbl, and will remain at similar levels to disincentivize new wells to be drilled, until such time that US oil demand reverts closer to normalized levels. At that point, refined product and oil inventories will be drawn, and the oil price will continue to firm, until OPEC spare capacity returns to the market. While oil prices will soften at that time, the “normalizing” of the market will ultimately be a further sign of long term health.
Facts & Documents
Fund Domicile: Luxembourg
Fund Type: UCITS SICAV
Fund Launch: 29 June 2018
Base Currency: USD
Depositary, Administrator, Transfert Agent: BNP Paribas Securities Services (LU)
Dealing: Each day with a 1-day notice
Cut-off time: 12 pm CET
Management Company: Alma Capital Investment Management (LU)
Investment Manager: Recurrent Investment Management (LU)
Fund Managers: Mark Laskin & Bradley Olsen
Countries where the fund is registered:
Institutional USD Capitalisation share class
ISIN: LU1823602369 Ticker: ARGNIUC LX Launch: 29 Jun 2018
Institutional EUR Capitalisation share class
ISIN: LU1845388146 Ticker: ARGNIEC LX Launch: 29 Jun 2018
available upon request