Alma Recurrent Global Natural Resources Fund

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Overview

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.

Share Class

NAV

Cumulative Performance (%)

Fund Inception 29 June 2018

Daily Monthly Ytd 1Yr 3Yr 5Yr Incept. Incept.Date

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

Funds Strategy

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


Investment Manager

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 finance and energy

Based in Houston, Texas (US)

Key Persons

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

Performance

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 of 30/04/2019

Geographical exposure as a % of AUM

as of 30/04/2019

Portfolio Characteristics

as of 30/04/2019
Main indicators Fund Index
No. of securities 44 88
Estimated Price/Earnings (x) 13.4 13.1
Estimated Long Term Growth (%) 8.7 6.5
Price to Book Ratio (x) 1.6 1.4
Price to Sales Ratio (x) 0.7 0.8
Weighted Market Cap ($bn) 57.2 71.2
Median Market Cap ($bn) 19.4 18.3
Active Share (%) 65.4 -

Top 10 Position Details

as of 30/04/2019
Security name Sector % AUM
BHP Group LTD-SPON Adr Metals & Mining 4.97
Total SA-SPON Adr Oil, Gas & Consumable Fuels 4.46
Nutrien Ltd Chemicals 4.06
Rio Tinto Plc-Spon Adr Metals & Mining 3.93
Freeport Mcmoran Inc Metals & Mining 3.83
Energy Transfer LP Oil, Gas & Consumable Fuels 3.63
Cenovus Energy Inc Oil, Gas & Consumable Fuels 3.59
UPM-Kymmene OYJ Paper & Forest Products 3.55
Exxon Mobil Corp Oil, Gas & Consumable Fuels 3.40
Glencore Plc Metals & Mining 3.24

Investment Manager's Commentary

as of 30/04/2019

Market Review and Outlook

Last month, we saw that oil’s increasing supply elasticity (due to shale) has reduced the correlation between oil price and Chinese economic data. This month, we see that commodities with low supply elasticity (due to a lack of shale-equivalent resource in metals and mining) remain highly dependent on Chinese economic data.

In last month’s commentary, we outlined the changing relationship between key oil prices and Chinese economic data. Our analysis showed that during the period from 1998-2008, the correlation between the two was very strong. However, since 2008, the relationship has materially weakened. The data since 2014 is particularly noteworthy, since the R2 weakened to a mere 0.04, showing limited if any correlation between the two.

In that context, it is important to assess whether this is phenomenon applies to commodities broadly or is oil-specific. Broadly speaking, since 1992, correlations between Chinese economic data and commodities ex-energy show a similar trend to the relationship between Chinese economic data and crude oil.

Period 1 – Pre-1999

In the period between 1992-1998, the correlation between Chinese YoY GDP and commodity prices ex-energy was very low, with an R2 of just 0.09. The low correlation is very similar to the low correlation between Chinese GDP and crude oil during the same period.

Period 2 – 1Q 1999-1Q 2008

The decade was highlighted by multiple years of >10% Chinese GDP growth, which catapulted the Chinese economy to rank among the world’s largest. During this period, the relationship between Chinese GDP and commodity prices ex-energy strengthened materially, with an R2 of 72%. Unsurprisingly, the strong relationship mirrors the high correlation between Chinese GDP and oil prices, which rose to nearly 85%.

Period 3 – 2Q 2008-1Q 2019

Since the financial crisis, the relationship between Chinese economic data and commodities ex-energy weakened compared to the decade prior to the financial crisis, falling to an R2 =0.17. A similar phenomenon occurred in the correlation between Chinese GDP and crude oil during the same period.

However, there is one major difference which has emerged since 2014. While the correlation between Chinese GDP and commodities ex-energy was only an 0.007 R2 in the 2008-2014 period, the R2 increased to 0.29 from 2014-2019.

Interestingly, the relationship between crude oil and Chinese GDP weakened during the same period. Over the entire 2008-2019 period, the R2 was 0.26. However, since 2014, the correlation fell to an R2 =0.04.

What caused the divergent correlation between crude oil and commodities ex-energy? Since the Chinese demand didn’t change, the more likely difference resides in the changes in the supply side of the equation. While the supply elasticity for commodities ex-energy generally has not changed in the last decade, global supply elasticity for crude oil has changed significantly, most notably at the high end of the global cost curve occupied by US shale producers. As a result, the correlation between Chinese data, crude oil, and other commodity prices have changed, and is likely to remain differentiated as long as the supply elasticity of crude oil is markedly different than that of other commodities.

 

Fund

During the month of April, the Alma Recurrent Global Natural Resources Strategy rose 1.25%, outpacing the S&P Global Natural Resources’ -0.02% return. While commodity prices were mixed during the month, with supply outages causing oil and iron ore prices to rise 6% and 10%, respectively, most other commodity prices fell due to economic concerns.

From a portfolio perspective, the most influential performance driver was Chevron’s proposed acquisition of portfolio holding Anadarko, the subsequent higher bid by Occidental Petroleum, and resultant positive impact on E&P sector valuation. Anadarko shares rose more than 60% during April, and the E&P segment of the S&P 500 Index rose more than 5%, outpacing every other segment of the energy sector.


Facts & Documents

Facts

Fund Domicile: Luxembourg

Management Fee: 0.95% p.a. for I shares

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:
Luxembourg, France

Identifiers:

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

Documents

SICAV ALMA CAPITAL INVESTMENT FUNDS
  1. ACIF Prospectus
KIIDS Other sub-funds and other languages
available upon request