Item 7.
Courtland provides real asset (i.e., real estate, infrastructure, timber and agriculture)
investment services as previously described primarily to tax-exempt institutional investors,
including public, corporate, and Taft-Hartley pension plans, as well as foundations,
endowments, banks, insurance companies, private funds and sovereign wealth funds.
Methods of Analysis, Investment Strategies, and Risk of Loss
Item 8. A.
Courtland’s methods of analysis in providing advisory services apply at both the client
allocation and investment levels. At the allocation level, Courtland works with the client to
determine the investment objectives and preferences of the client. Courtland clients’
investment objectives with respect to real asset allocations include a number of different
objectives, including the following: enhancing overall portfolio diversification; preserving
capital investment; providing attractive income and cash flow returns; obtaining attractive
total returns; providing an inflation-hedge and accessing non-US investment exposures.
These investment objectives are determined through multiple client discussions. Additionally,
other client advisors are typically consulted to provide asset allocation modeling, setting forth
desired real asset exposures based on risk and return assumptions.
After establishing a client’s investment objectives, Courtland personnel determine the
appropriate risk and return objectives for the client. For example, if a client has a total return
focus, which suggests a higher risk and return orientation, then Courtland personnel will
develop a portfolio policy and model providing for total return investments (e.g., significant
exposure to value and opportunistic investments). If a client prefers a lower risk and return
orientation, for example, the client has a focus on preserving capital and obtaining a
reasonable cash flow and income return, then Courtland personnel will develop a portfolio
policy and model providing for lower risk, core investments. Other portfolio considerations
include portfolio liquidity, currency exposures, manager quality and experience, leverage,
manager concentration, sector concentration, geographic/market concentration, investment
vehicles, investment structure, valuation policies and procedures.
With respect to advising on specific client investments within a policy or strategy, Courtland
personnel will evaluate a number of factors in completing investment due diligence.
Courtland’s due diligence process is a team-based approach. Each proposed transaction is
evaluated by a team of our professionals, including at least one member of the Courtland
Investment Committee. Courtland’s due diligence process with respect to identifying,
evaluating, and selecting managers is based on a careful assessment of the plan-specific
Courtland Partners, Ltd. 2017 Form ADV Part 2A: Brochure
objectives, the strength of the particular manager and its investment philosophy, and the
strength of the manager’s strategy and performance relative to that of its peer group.
The initial focus of Courtland’s review generally is on the strength of the manager and its
investment philosophy. The assessment of a manager consists of both objective and
subjective elements. Objective criteria include: the organization, personnel (particularly
proposed team members), turnover and succession within the organization, research
capability, management fees and costs, ability to co-invest, past performance of investments,
unique capabilities and particular areas of expertise, ability to source transactions, the
investment allocation process, client list and client investment activity (e.g., how many other
clients/investors are pursuing similar investment strategies and how much capital remains to
be invested).
Subjective evaluation criteria, which are also important to the process, include: firm culture,
reputation, significant firm developments (i.e. sale, litigation, and merger), the ability to
execute a particular strategy, and client service history.
The second step in the review process focuses on the features of the particular manager.
Elements of a review typically include:
▪ Verification. Courtland verifies return and performance information provided by the
proposed manager with reliable sources independent of the proposed manager, to the
extent deemed appropriate.
▪ References. Courtland contacts a manager’s client references, as well as known
manager clients who are not listed as references. Courtland may also contact former
clients of a manager to determine whether there are any areas of dissatisfaction with
client service or manager performance.
▪ Manager Comparisons. Courtland compares managers in a number of areas, including
performance, organization, strategy (including particular areas of expertise), conflicts
of interest, and fee structures.
▪ Performance. Performance tends to be the best measure of a manager’s past success
and of its potential for success in the future. However, not all managers’ track records
are directly comparable. Therefore, our analysis accounts for differences in style,
property selection, and reporting periods to make more meaningful comparisons. In
addition, managers with different scopes of services are evaluated differently.
▪ Organization. Though secondary to performance, the strength of a manager’s
organization is of prime importance. Turnover and firm structure are particularly
critical in the organization’s investment decision-making process.
▪ Strategy. Current strategy, particularly with respect to market cycle developments and
anticipated movements, is critical. Courtland also may compare past strategies with
past performance as an indicator of the manager’s ability to effectively anticipate real
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