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 28/08/2020
Market Review and Outlook
Within the energy industry, one of the most encouraging developments since the outset of the COVID-19 pandemic has been the capital discipline shown by the Exploration and Production (E&P) companies. Since March 1st, the WTI oil price has averaged nearly $67/barrel. Traditionally, oil prices this high would incentivize additional capital expenditures (CAPEX) from US shale producers, and any operating cash flow would generally be reinvested in drilling new wells in order to grow.
Many market observers are encouraged because this time seems different. With elevated oil prices, E&P companies are generating more cash flow than in recent years, and using the proceeds to pay down debt instead of increasing CAPEX.
However, there is one element of the capital discipline conversation worth following. In order to produce oil/natural gas, wells need to be first drilled, and then completed. In shale, there is a statistic which tracks the number of wells which have been “drilled and uncompleted”, known as DUCs. Since the beginning of COVID, the number of DUCs in the US has fallen by nearly 1/3.
While there may be alternate ways to interpret the data, at the core, the number of completed wells is exceeding the drilled wells. In doing so, the cost of turning wells into production during the COVID era is less because the full cost of drilling wells is not incurred – only the completion costs are.
How is this relevant to the capital discipline discussion for E&P companies? In contrast to earlier periods of the shale era, E&P companies are meeting production expectations while keeping CAPEX under control. The decline in DUCs (akin to clearing inventory off of the shelf) signifies a cost-effective method of producing oil and natural gas, but is not sustainable in the long term. Instead, the capital discipline E&P companies are currently being complimented for may actually be a short-term benefit which may not offer a true representation of the capital expenditures needed to produce at the desired levels.
To further quantify the CAPEX savings, we look at the number of DUCs compared to the total wells completed in the US in recent months. In 2021 approximately 35% of completed wells have been from DUC inventory, requiring less-than-full CAPEX cost. Depending on the well, drilling costs comprise up to 50% of the total cost of producing a well. With 35% of wells excluding drilling costs in 2021, CAPEX costs have been as much as 18% lower than a “normal” drilled-and-completed well.
E&P companies’ profits have significantly benefited from elevated oil and natural gas prices. Additionally, in exhausting DUC inventories, companies have further depressed per-well CAPEX and enhanced free cash flow, at least on a temporary basis. Going forward, we expect that this benefit to be short term in nature, and CAPEX will increase by as much as 18% simply to maintain the current rate of well completions, assuming no service cost inflation.
There are 2 likely outcomes from the trend above: first, shale E&Ps are unlikely to aggressively increase activity, given that they will be running 18% faster just to stay still. Second, we expect greater margin expansion in energy companies outside of shale, given shale’s higher CAPEX reinvestment requirements.
During this commodity upturn, we have strived to identify and invest in companies with long-term visibility on maintenance CAPEX requirements, such as Canadian oil sands and pipelines. These businesses enjoy the fruits of the commodity upcycle, with limited exposure to the CAPEX inflation that is likely accompany the exhaustion of shale producers’ DUC inventories.
In the month of August, the Alma Recurrent Global Natural Resources Fund fell by 1.22% net of fees, outperforming the S&P Global Natural Resources Index’s -1.49% return. Stock selection in the aluminum and paper products sectors added to performance, while stock selection in the oil storage sector detracted from 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:
Sustainability factors are integrated into the investment decision-making process. The Investment Manager incorporates several environmental, social and governance (“ESG”) metrics as a quantitative overlay on the selection of investments. He intends to exclude companies engaged in certain activities which are deemed as harmful from an environmental or social perspective. The Investment Manager will generally exclude companies from its investible universe if those metrics reveal systemic poor environmental, social or governance practices, as reflected in third-party environmental, social or governance rankings falling below the 25th percentile. No index has been designated as a reference benchmark for this sub-fund. Further information can be found in the prospectus of the sub-fund. The extent to which the above-mentioned characteristics are met will be included in the annual report of the fund, as from the first report issued after 1 January 2022.
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