Back in 1991, we started Orleans Capital Management on a few simple articles of faith and an old-fashioned flip chart.
What We Believe:
We believed that if given the opportunity to get in any room with that flip chart and compete it was a pretty good bet we’d walk out of that room with your business. We came to that room prepared and, just as importantly, prepared to be understood.
We believed that you have an obligation to the people who invest with you. This obligation is grounded not in risk but on return. You don’t loan money to people who aren’t going to pay it back. Because we believe that money is hard to make and it is hard to keep.
We believed you don’t tell a client, “Don’t worry. We’ll take care of this. It’s too complicated for you to understand.” We have never said it because we don’t invest in anything we don’t understand.
We believed, above all, in the Prudent Man, for whom everything we believed in would make perfect sense. Prudent men and women helped Orleans Capital become the trusted investment management firm it is today.
The trust of the Prudent Man has for a long while been sorely tested. The agents of Modern Portfolio Theory argued that the future could be foretold by the past. They scoffed at risk and promised a return that was boundless and everlasting. For a time it seemed the new theorists were right.
We said no to the subprime market in 2001 because it went against everything Orleans Capital Management stood for and we paid a price. Some of our customers went elsewhere to find managers promoting a high return, no-risk future. As a result, we lost assets under management. But we didn’t pay the price with our integrity.
The past, we have always believed, is no way to predict the future.
Did the past warn us of the government takeover of Fannie Mae and Freddie Mac and the shifting of $5 trillion of mortgage liability to the American taxpayer? Or the bankrupting of Lehman Brothers and the cannibal orgy of the world’s most powerful and respected banks? Did the high flying American economy of two years ago alert us to the bank bailouts, the auto industry bailouts and the $800 billion American economic system bailout? Could we have imagined then that today the greatest number of Americans in history would be filing for unemployment?
We at Orleans Capital Management bet the future of our company against the conventional wisdom. We were not afraid to call Modern Portfolio Theory a fraud and the definition of risk as volatility insanity.
It is the future that will determine what is best for our clients. In 2000, at the Sanderstolen Energy Conference in Norway, our founder, Louis Crane, came to understand what few people in the world at the time grasped: that at the precise moment in history when China and India, with nearly 40 percent of the world’s population, were industrializing, the world approached its peak ability to produce oil.
From this unique insight came Energy Opportunities Capital Management to take full advantage of the investment opportunities created by the new energy reality. In just a few short years Orleans Capital Management has, by keeping its focus fixed on the future, become a leader in energy investment.
Orleans Capital’s Three Core Investment Strategies:
Energy is the first. The second is the Dividend Strategy, based on another unique insight. The best companies and, thus, the best investments, tend to be those which consistently deliver dividends to shareholders or have a high rate of dividend growth.
The last of the core strategies is nothing new at all. It is our continued belief in Fixed Income investments. We discriminate against sectors that don’t produce. We resist broad diversification. We figure that if something isn’t good enough, why do we want a little bit of a bad thing? Why would we want to be in it at all?
We are betting on the future of the Prudent Man.
With the world economy bloody and battered, there are those who think now is the time to double down, that the cure for a little bit of a bad thing is more of a bad thing. More than at any time since we started our company, we trust in the ability of people to see through the gimmicks and tricks and sleight of hand.