A Conversation with Robert Bose from Charlestown Capital Advisors

This month, we caught up with Robert Bose, principal at Charlestown Capital Advisors in New York City. (Full disclosure: he is also president of Sintana Energy, Inc. who is a client of Harbor Access). Robert joined Charlestown in 2014, where he focused on providing merchant banking services to public and private companies with a focus on energy. Prior to Charlestown, he spent 17 years in the Global Investment Banking Group at the Bank of Nova Scotia most recently as Managing Director and Head of the Power & Utilities Group. There, he was specifically focused on providing M&A and capital market coverage to financial sponsors with interest in the energy and power sectors.

How is Charlestown different from other family offices?

Charlestown is differentiated versus many family offices in two particular respects. Many family offices allocate capital to other fund managers and let them manage funds, but we do 95% of our own investing. Second, we are a high return platform. We look for equity, like risk adjusted returns. So many of the kinds of lower risk stable asset classes that may appear in other general portfolios, we don't deal with it.

How to allocate and manage capital?

Charlestown is roughly 40%, healthcare and biotech, 40% energy and commodities and 20% miscellaneous. We are opportunistic platform and as such don't have any particular industry limits, protocols or concentrations, rather we’re looking at generating the kinds of returns given our risk appetite. That tends to be in healthcare and biotech, energy and commodities, and then others, like special situations, which may involve like bankruptcies, insolvencies or other one-off situations. We do a lot in industrials and technology too.

What is your typical time horizon?

Unlike private equity, we have no particular timing constraints. We can own things for a day, or we can own them for a lifetime. Our hold periods are entirely a function of what we can do to maximize value. We focus on finding good ideas and opportunities and, and surrounding them with the resources to maximize their probability of success. That can be management teams, financial capital, other resources. Certain things are more in the nature of trading opportunities and other things are more in the nature of investment opportunities. We are however, flexible in every way except for one thing, our return.

What do you see right now in terms of the market and your strategy?

It’s been a particularly volatile year, especially right now with the debt ceiling, and the markets are very nervous. I think we’ll continue to see steady market performance, and the indexes hold their ground. There was in article in the paper this morning about a lot of that being quantitative. We are very bullish on commodities, and think that there are multiple structural and secular reasons why the current commodity profile will continue. The evolution of the global energy industry will create a much longer duration opportunity for both traditional forms of energy, as well as a much bigger requirement for sort of transitional related things. For example, Sintana has exposure to both, like crude, natural gas and battery related metals. We are thinking about the full arc of the energy transition, but what is sort of changing is our sense of the timeframes associated with it. When you look at copper, it’s a very interesting place to be and we are not only very bullish, but we also very long. To give you an example, offshore wind turbine contains five tons of copper, a Tesla contains two kilometers of copper. It's actually been quite soft recently, because the post COVID emergence and the return to normal in China has been more muted, I think, than people had hoped. As a result of copper inventories have been building and while there's some softness in near term pricing, we are very bullish on copper. But that said, we're also very bullish on crude because when we look at what it takes to generate the kind of copper that's going to be required to meet both the structural as well as the secular change in the global economy, it means the runway for crude is actually much longer than I think people certainly want and certainly planned for. And, we continue to be very bullish on the US. If you actually look at how well the US economy has been holding up in light of all of the bad news, it's actually quite resilient. At some point, interest rates will flatten out, and the US economy will continue to grow and the opportunity for US equities is quite good. That said, we invest all around the world, as our global investment footprint more closely follows structural drivers. So, we're not investing in Europe because we think Europe's a great place, we’re investing in European energy equities because we think they present really good value in light of our views on the industry.

Where do you find ideas and opportunities?

Everywhere. We can't keep up with the throughput of ideas that come to us. We have a very good network of other family offices we regularly coinvest with, both in the US and internationally. There’s this prevailing idea if you see something that's interesting, and you're looking for capital, and it's a good idea, you call your friends and you put things together. That’s part of what really happens. When people know you're active, and send out a clear message that we are interested, for example, in energy and commodities, broker dealers, corporates and others who participate in the industry feed you ideas. We particularly like small cap, energy, land, so we see a lot of transactions and a new issue opportunity.

Do you ever get defensive if someone casts doubt on a company you're holding?

Yes, is the short answer. I don't tend to get angry, but I do have a tendency to take things personally. You definitely fall in love with ideas. There are certain companies that I really just think are amazing. I can get annoyed or frustrated when people logically criticize certain aspects of a business, and have to admit, they are right. But still, I get excited about my ideas and will defend them. We try to be objective because we are in the idea business. Part of that is testing your ideas.