An Investment Process Focused on Risk
The Chickasaw Capital Management investment team starts with an energy point of view which influences our outlook on the relative attraction of various sectors of the MLP market. The current MLP investment universe is thoroughly analyzed in order to evaluate potential investment candidates.
Through our rigorous research efforts, Chickasaw Capital Management develops a clear profile of the risk and return characteristics of a given MLP. We seek to identify those factors that most strongly influence the MLP’s distributable cash flow, which is more important to us than earnings estimates. We then call upon those factors and our understanding of the particular MLP's management strategy and project portfolio to forecast future distributable cash flow estimates and anticipated growth rates. Business prospects, then valuation, are thoroughly assessed before our process ultimately yields viable candidates for closer consideration.
While many in the investment community may use statistical measures — such as standard deviation* — as proxies for risk, we define risk as the potential for any investment loss. Ultimately, we are interested in identifying possible influences and circumstances that could lead to loss. We seek to control risk by developing a diversified portfolio comprised of MLPs that collectively maintain a history of stable and growing cash flow, with exposure that is spread across geographic, business, capital structure and company management factors.
Chickasaw Capital Management's research and investment processes have evolved from our depth of experience and expertise. These qualities combine with our close, longstanding relationships with MLP management teams to help differentiate Chickasaw Capital Management as we strive to deliver competitive returns to our clients.
*A statistical measure of the historical volatility of a mutual fund or portfolio, usually computed using 36 monthly returns.
Diversification does not assure a profit nor protect against loss in a declining market.