Two focus areas.
One investment process.
Laser-focused on our two investment mandates.
Our two strategies cover distinct opportunity sets across natural resources and energy infrastructure, but both are built on the same company-level, valuation-driven discipline.
Natural Resources
A broad mandate spanning producers, service companies, processors and resource-intensive consumers. We compare opportunities across the value chain rather than anchor the portfolio to a single commodity-price view.
Midstream Energy Infrastructure
A specialist strategy focused on the systems that move, process, store and deliver North American energy. We underwrite the specific cash-flow drivers, asset lives, contracts and capital structures beneath the sector label.
Houston matters.
From our office in Houston, we have watched natural resources and midstream cycles up close. This is where capital markets, technology and raw steel meet the companies and capital decisions that shape these markets. Those observations feed directly into our research and investment process.
We invest in expectations, not forecasts.
Commodity prices matter, but forecasting them is not the center of our process. We begin with company economics and valuation, then ask what future returns the current stock price appears to imply.
Understand the business economics
We study historical and prospective returns on invested capital, capital requirements, balance-sheet strength, asset durability and the factors that determine how much cash the business can generate across a cycle.
Compare returns with valuation
We use enterprise value relative to invested capital, alongside other valuation measures, to understand what level of future returns appears embedded in the stock price. That gives us a common framework across very different businesses.
Rank the opportunity
We develop upside, base and downside cases, compare opportunities across sectors and formally review the portfolio in weekly investment meetings as valuations, fundamentals and expectations change.
A repeatable framework for cyclical markets.
The same ideas run through our investment philosophy, our security-selection process and the research we use to test those ideas in real markets.
Cycles create opportunity.
Returns, capital allocation and valuation change as industries move through cycles. We believe disciplined active management can use those changes rather than simply endure them.
Valuation creates discipline.
Company valuations contain expectations about future economics. Comparing those expectations with full-cycle returns helps us identify where the market may be too optimistic or too pessimistic.
Research tests the framework.
Our research looks beyond individual stocks to capital cycles, commodity markets, infrastructure and demand. Those observations feed directly back into portfolio decisions.
Questions we hear about the process.
A deeper look at how we think about commodity prices, valuation, cycles, portfolio ranking and sell discipline.
01 Do you forecast oil, gas, or other commodity prices?
No. Commodity prices matter, but forecasting them is not the center of our process. We start with company economics and valuation, then ask what future returns the current stock price already implies.
02 What does “we invest in expectations, not forecasts” mean?
Every stock price embeds assumptions about future returns, capital needs and cash generation. We compare those expectations with our view of full-cycle economics. The opportunity is where expectations appear too optimistic or too pessimistic, not where we believe we have a better near-term commodity forecast.
03 Why not just use P/E or EV/EBITDA?
Traditional earnings multiples can make cyclical businesses look cheapest near a peak and most expensive near a trough. We focus heavily on enterprise value relative to invested capital and the returns that capital can generate across a cycle. That helps us compare very different businesses on a common framework.
04 What does “full-cycle” mean in practice?
We study historical and prospective returns on invested capital, capital requirements, balance-sheet strength, asset durability and cash generation through both strong and weak environments. The question is whether today’s valuation offers an attractive return if the future is neither as good as the bulls expect nor as bad as the bears fear.
05 How are the two strategies different if they share one investment process?
Natural Resources invests broadly across producers, service companies, processors and resource-intensive consumers. Midstream Energy Infrastructure focuses on the systems that move, process, store and deliver North American energy. The opportunity sets differ, but the valuation discipline is the same.
06 How do you rank investment ideas?
We build upside, base and downside cases and compare opportunities across the investable universe. Those rankings are reviewed in weekly investment meetings as valuations, fundamentals and expectations change. Our research feeds directly into that process.
07 Are you trying to time the commodity cycle?
Not as a separate portfolio overlay. Cycles affect returns, capital allocation and valuation, so they are embedded in the underwriting. We try to use changes in the cycle to identify gaps between market expectations and full-cycle economics rather than simply predict the next move in commodity prices.
08 What makes you sell a holding?
A position becomes less attractive when its valuation no longer implies an adequate full-cycle return, when the underlying economics deteriorate, or when another investment offers a more compelling gap between price and expectations.