|
|
Investment Strategy
Research Process
Portfolio Construction
Sell Discipline
Portfolio Management
Value Brochure
Our objective is to seek capital appreciation from a broad universe of publicly traded natural resource companies that have an ability to generate returns above their cost of capital.
- Cash flow returns based analysis governs our research and stock selection; and,
- We purchase companies only when our calculated warranted value exceeds the current market price by at least 50%.
Our natural resources strategy invests primarily in equity securities of companies in natural resources industries worldwide. Our universe includes approximately 200 companies involved in the discovery, development, production, or distribution of natural resources.
- Our approach is an "all-cap" style;
- Our primary "screen" is to identify companies in this area that produce attractive returns on their invested capital, or where structural change will likely bring about better returns on capital; and,
- We use fundamental, grassroots research to analyze potential investments.
Portfolio construction starts from the bottom-up, based on individual stock selection. New positions typically start at between 1%-4% weighting. We incorporate a margin of safety by purchasing a company only when its "warranted value is at least 50% greater than current market price." We try to achieve relative diversification across natural resources sectors and market-cap weightings. We seek to achieve diversification through negative covariance across portfolio industries and positions.
We consider selling a position for the following reasons:
- Stock reaches warranted value price target;
- Returns on capital deteriorate;
- Company management makes poor capital allocation decisions; and/or,
- Better opportunity exists elsewhere.
Andrew P. Pilara Jr. (RS) is a co-portfolio manager and an analyst in the RS Value Group. He has managed RS Partners Fund, RS Investors Fund, and RS Global Natural Resources Fund since their inceptions. Mr. Pilara has been responsible for the management of RS Value Fund since January 2001, and has been a member of that Fund's management team since 1999. He also co-manages related separate accounts. Prior to joining the firm in 1993, he was president of Pilara Associates, an investment management firm he established in 1974. He has been involved in the securities business for more than 30 years, with experience in portfolio management, research, trading, and sales. Mr. Pilara holds a B.A. in economics from Saint Mary's College.
MacKenzie B. Davis (RS) is a co-portfolio manager and an analyst in the RS Value Group. He has been a co-portfolio manager of RS Global Natural Resources Fund since January 2005 and a co-portfolio manager of RS Value Fund, RS Partners Fund, and RS Investors Fund since October 2006. He also co-manages related separate accounts. Prior to joining RS Investments in March 2004 as an analyst in the RS Value Group, Mr. Davis spent four years as a high-yield analyst at Fidelity Management & Research Company. Previously, he was a vice president at Fidelity Capital Markets. He was also an analyst at Goldman Sachs & Company. Mr. Davis holds an A.B. from Brown University in mathematical economics and modern American history. He is a Chartered Financial Analyst.
Kenneth L. Settles Jr. (RS) has been a co-portfolio manager of RS Global Natural Resources Fund since May 2007. Prior to joining the firm in September 2006, Mr. Settles was a senior energy analyst at Neuberger Berman, LLC for seven years where he also co-managed the Neuberger Berman Premier Energy Portfolio. Previously, Mr. Settles spent three years at Salomon Smith Barney, Inc., where he was a financial analyst. Mr. Settles holds a B.A. in economics from Williams College and is a Chartered Financial Analyst.
Value Brochure
Investing in small- and mid-size companies can involve risks such as having less publicly available information, higher volatility, and less liquidity than in the case of larger companies. Funds that concentrate investments in a certain sector may be subject to greater risk than funds that invest more broadly, as companies in that sector may share common characteristics and may react similarly to market developments or other factors affecting their values. Investments in companies in natural resources industries may involve risks including changes in commodities prices, changes in demand for various natural resources, changes in energy prices, and international political and economic developments. Foreign securities are subject to political, regulatory, economic, and exchange-rate risks not present in domestic investments. The value of a debt security is affected by changes in interest rates and is subject to any credit risk of the issuer or guarantor of the security.
|
