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
Market Review and Outlook
Natural Resources Market Discussion
Since the end of February, the market’s attention has focused on 2 things: the Coronavirus demand shock for all natural resources, and the oil supply shock from the breakdown in Saudi/Russia relations. While we see the Coronavirus impact as materially reducing global economic demand for a relatively short period of time, and oil demand by 3-4 million barrels/day, this estimate is dynamic and reflects an ebbing crisis in Asia offset by a growing crisis in the EU and potentially in the US.
While the demand side of the equation will remain in flux for weeks, if not months to come, it is on the oil supply side where we feel there is a more analyzable economic framework for investors.
“Inefficient, uneconomical producers will have to get out. This is tough to say, but that is a fact.” “We have not declared war on shale or on production from any given country or company, contrary to all the rumors you hear and see.” – Ali Ibrahim Al-Naimi @ CERAWeek, Feb-2016.
These quotes came in defense of Saudi/OPEC’s decision to NOT cut production in November of 2014.
OPEC policy reflects a “pure economic framework” – as it did in 2014-16
We view the Saudi announcement to increase production as economically appropriate and profit-maximizing action. In contrast to the perception of many market participants, in our view, the unexpected supply shock is not a market/price share “war” by the Saudis, but an affirmation that low-cost countries are economically incentivized to produce at maximum capacity.
In the previous iteration of this strategy, during 2014-16, oil prices fell below $50/barrel followed by shale oil production peaking and then falling by 1 mmbpd. There was an approximate 6 month lag between price declines and actual oil production declines. The result was a near-doubling of oil price intrayear in 2016. So we have seen the rapid-response capability of US shale production, especially at oil prices at current levels.
The oil market will resolve itself in months, not years, even if the near-term volatility is painful
Without the pre-2015 benefits going into this downturn, we expect reduced production to quickly re-balance the market. Given our “dispatch curve” framework, we believe the following steps will occur within months, not years:
Step 1 (happening now): Saudi & Russian production increases will force shale producers to reduce spending, causing production declines approaching 2 mmbpd from the peak, over the next 12 months. Globally, other high cost basins will see declines, although not at the rapid pace of shale.
Step 2 (within 9-12 months): oil prices will reflect improving supply/demand rising from these low levels in order to stabilize and ultimately reverse shale production declines.
Step 3 (beyond 9-12 months): Oil supply/demand is in balance in approximately 18 months, the oil price will revert to the $45-65/ barrel range to incentivize US Shale production to meet any additional global demand from that point forward.
In essence, we expect low oil prices to curtail US Shale capex in the short term, reducing US production. Low cost OPEC barrels will replace US barrels at the low end of the “dispatch curve”. Importantly, the global supply/demand rebalancing process will be relatively swift compared to previous imbalances, and from that point forward, the US shale barrel will return to being the rapid response barrel, which will require $45-65 oil prices to incentivize production.
In this environment, the market is appropriately expecting financial distress for certain areas of energy industry. That said, in a “dispatch curve” framework, which is incentivizing high-cost producers to “exit the market” for the time being, we believe companies with the ability to generate free cash flow at $30-40/bbl (of which there are many, especially in midstream and downstream subsectors) are, in our view, being unfairly discounted and perhaps reflective of holders’ liquidity instead of business fundamentals. The key element of our analysis is that production declines will rebalance the market more quickly than most expect given financial market constraints. Once the low-cost barrels are running at maximum capacity, high-cost, rapid-response shale barrels will be needed to produce to meet demand, requiring significantly higher prices. We believe this shake-out, albeit painful, will sort “wheat from chaff” across energy and ultimately return to a more investible, economically-grounded sector than has been the case during 2017 through 2019.
In the month of February 2020, the Alma Recurrent Global Natural Resources Fund fell 10.94%, outperforming the S&P North American Natural Resources Index’s -11.32% return. During the month, concerns surrounding the Coronavirus expanded from an Asian regional concern, to impact a broad array of countries globally, which impaired economic growth. Since shares of global natural resources companies are highly correlated to economic growth, Coronavirus’ impact was particularly felt in energy and steel industries. Within the portfolio, Barrick Gold and UPM-Kymmene (a Finnish paper manufacturer) each rose 3% during the month, positively contributing to performance, while stock selection in US Exploration and Production (E&P) companies detracted to performance.
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