Philosophy

PRIVATE EQUITY APPROACH

We purchase stakes in companies which we believe have the ability to compound economic value for their shareholders, independent of changes in commodity prices. We work with the management teams and boards of our portfolio companies to ensure that they are focused on generating attractive returns by allocating capital to advantaged assets. By funding and participating in the value created by portfolio companies, we strive to generate attractive through-cycle returns across a broad array of commodities in a concentrated, liquid investment strategy.

PROJECT ANALYSIS

We study projects, not stocks, and believe that our cumulative knowledge, established over years of site visits and analysis across numerous commodities, is the foundation of our ability to underwrite attractive long-term returns.

CAPITAL PRESERVATION

We define risk as the permanent loss of capital, not volatility or tracking error versus an index. Our investment process and team structure are designed to identify and minimize the risks inherent in owning a commodity producer. We establish stakes in companies that we expect to create value only when we believe that the risk of capital impairment is low.

MARKET INEFFICIENCIES

Although stocks and the underlying commodities are highly correlated over short periods of time, changes in commodity prices are difficult predict. Rather than speculate on a source of returns related to changes in commodity prices, we focus on company-specific value creation, which we believe is a far more meaningful and less correlated source of returns over longer periods. We seek to take advantage of market volatility, establishing ownership positions in targeted companies when we believe the risk of loss capital impairment is low and when the expected future value creation is not reflected in the share price. Our minimum investment horizon is 3-5 years, reflecting the durable nature of our portfolio companies' competitive advantages.

CONCENTRATED PORTFOLIO

We contend that concentration reduces risk. By definition, there are a finite number of advantaged producers that are capable of creating value in each commodity. Overlay our commitment to partnering with management teams focused on returns, and our valuation discipline and the investable universe quickly shrinks. Our portfolios are constructed on a company-by-company basis, with capital concentrated around our best investment ideas. We achieve portfolio diversification as a function of the breadth of commodities and projects in which we own interests.

COUNTER-CYCLICAL INVESTING

We believe the most attractive investment opportunities typically arise when the market is concerned about the short-term outlook for a commodity. In a highly volatile and deeply cyclical space, we adhere to the value investing tenet "the time is right when the price is right." Thus, our portfolio and our investment results will vary meaningfully from an index or the market. Our objective is to generate superior long-term returns, which we believe is best achieved by investing counter-cyclically.