One of the brightest spots in energy in 2016 was Highland Small Cap Equity Fund. According to Marketwatch.com report published on 2nd February 2017, the fund almost tripled the returns on S&P 500 index following several well-calculated moves. The fund’s mutual class A shares made a return of over 31% compared to 12% that was recorded on the large cap S&P 500 index. The positive returns are attributed to the decisions of the Chief Investment Officer at Highland Alternative Investors, Michael Gregory. He is also pleased with the impressive credit competency of Highland, a feat that has made it a lucrative investment in the wake of falling oil prices in 2016.
Gregory in partnership with the President and Co-founder of HCM, James Dondero also did a commendable job of focusing on MLPs, the main pipeline clients for oil producers. The Energy MLPs in question, SemGroup Corp and Energy Transfer Equity made an impressive 100% return for the fund. Besides Energy MLPs, Highland Small Cap Equity Fund’s other sector allocations went to healthcare (25%), Consumer Discretionary (11%), Real Estate (9%) and Financials (10%). On the real estate sector, Gregory focused his sights on two multi-family Real Estate Investment Trusts (REITS), the Jernigan Capital Inc and NexPoint Residential Trusts, Inc. When asked to name his most preferred health care stocks, Gregory mention Collegium, which recently unveiled a new approach to pain relief.
In 2010, Highland Alternative Investors made the decision to purchase Small Cap Fund from General Electric. Gregory and Dondero took charge of the fund’s management in 2015. Highland Capital Management is one of the most respected SEC registered investment advisers in the industry. According to an excerpt on Highland Capital Management Charities website, the firm along with its affiliates has about $15.4 billion in assets under management. It is also one of the largest and most referred global alternative credit managers. Its diverse client portfolio includes endowments, public pension plans, governments, financial institutions and high net worth individuals. The firm was Co-Founded in 1993 by James Dondero and Mark Okada. It operates offices in New York, Seoul, Singapore and Sao Paolo.