US Pipeline operators will have another profitable year. This is according to Michael Gregory, Highland Alternative Investors’ chief investment officer. While in any other year, industry experts would not have paid attention to such a message, the performance of his fund in 2016 has completely changed everything. The investment banker’s fund made significant gains.
Its energy stocks pushed enhanced the performance of Gregory’s fund. His fund, the Highland Small-Cap Equity Fund, had a significant portion of stock in the pipeline industry. As the performance of the sector improved, the returns from the investments in the industry almost doubled. This situation helped to protect the fund from bad performing investments. However, the financial expert believes that the health-care industry would stage a ‘tremendous rebound’ this year.
According to industry statistics, Highland’s Class A shares HSZAX, +0.67 percent had a return of 31.6 percent last year. This is almost three times the returns of the large-cap S&P 500 SPX, -0.29 percent that returned only 12 percent. The performance of the S&P 500 was also surpassed by the small-cap Russell 2000 Index RUT, -0.68 percent that returned 21.3 percent. This exemplary performance is attributed to the excellent leadership and dedicated professionals at Highland Capital Management. James Dondero helped Gregory in managing the fund.
Highland Alternative Investors is a unit of Highland Capital Management. The Dallas-based organization manages over $15.4 billion. However, the small-cap stock fund is still growing with only $55 million in assets.
Speaking during the announcement of the fund’s performance, Gregory said that Highland Capital’s credit competency is the primary factor behind its success. He notes that as investors were running away from the oil industry due to the declining prices in 2016, the firm decided to invest in the sector. He contends that the profitability of pipeline companies is not based on the price of the oil, but rather on the quantity of transported oil. Over the period, the companies have been making significant returns, especially when oil prices begin to soar. The returns from the oil sector contributed more than half of the fund’s total earnings. Despite a forecast of a healthy business environment in the pipeline industry, Highland Capital has decided to downsize its investment in the sector. It is speculated that Gregory is planning to make more investment in the healthcare sector.