Sprott Energy Fund
Eric Nuttall is a Portfolio Manager with Sprott Asset Management LP. He joined the firm in February 2003, and over the years, his views on the oil and gas sector are frequently sought by the Business News Network (BNN), a regular contributor to Alberta Oil Magazine, often interviewed by The Globe and Mail, the National Post, the Calgary Herald, and has appeared in both the Wall Street Journal Asia and Barron’s.
Eric is Lead Portfolio Manager of the Sprott Energy Fund, and co-manages the Sprott 2011 and 2012 Flow-Through Limited Partnerships with Allan Jacobs. Eric is a key contributor to Sprott’s internal macro energy forecasts, and supports Sprott’s portfolio management team by identifying top performing oil and gas investment opportunities.
Eric graduated with High Honours from Carleton University with an Honors Bachelor of International Business.
Chief Executive Officer; Senior Portfolio Manager
Chief Executive Officer; Senior Portfolio Manager
Eric Sprott has more than 40 years of experience in the investment industry. After earning his designation as a chartered accountant, Eric entered the investment industry as a research analyst at Merrill Lynch. In 1981, he founded Sprott Securities (now called Cormark Securities Inc.), which today is one of Canada’s largest independently owned securities firms. In 2001, Eric established Sprott Asset Management Inc.
Eric’s investment expertise is well represented in his track record in managing the Sprott Hedge Fund L.P., Sprott Hedge Fund L.P. II, Sprott Bull/Bear RSP Fund, Sprott Offshore Funds, Sprott Canadian Equity Fund, Sprott Silver Equities Class and Sprott Managed Accounts. His extensive list of accolades include: Canadian Investment Awards’ Opportunistic Strategy Hedge Fund Award (Sprott Hedge Fund L.P., 2004); MarHedge’s Best Canada Based Annual Performance Award (Sprott Offshore Fund Ltd., 2006); HFM Week’s Best Long/Short Hedge Fund Globally (Sprott Offshore Fund Ltd., 2008); Winner of Absolute Return’s Hedge Fund of the Year (Sprott Capital LP, 2010). Over the years, Eric has personally been the recipient of numerous awards and honours, including one of Investor Digest’s Canada’s Best Investors (2004); Ernst & Young’s Entrepreneur of the Year (2006); Investment Executive’s Fund Manager of the Year (2007); Advisor.ca’s Top Financial Visionary (2011); Terrapinn's Most Influential Hedge Fund Manager (2012); and the 2012 Murray Pezim Award for Perseverance and Success in Financing Mineral Exploration (2013).
More recently, Eric has been elected Fellow of the Institute of Chartered Accountants of Ontario (FCA), a designation reserved for those who demonstrate outstanding career achievements and service to the community and profession.
Over the years, Eric has also been recognized for his considerable philanthropic endeavours and community contributions. Eric and his family established the Sprott Foundation in 1988 to address urgent human need, hunger and homelessness. He has provided generous endowments to Carleton University, the Ottawa Hospital Foundation, Daily Bread Food Bank and United Way, among others. More recently, Eric donated $1.4 million to CanFund in support of Canadian athletes for every gold medal won at the 2010 Vancouver Olympics. In April 2011, along with Sprott Inc., Eric sponsored a 24-year old Canadian driver James Hinchcliffe, getting him a seat with the prestigious Newman/Haas Racing. In June 2012, the Sprott Foundation donated $25 million in support of the Department of Surgery at the University Health Network.
|Distributions||Income and Capital Gains Distributed Annually (if any) Distributions are reinvested automatically|
SPR 006 (A)
|Nature of Securities||Mutual Fund Trust Units|
|Type of Fund||Energy Sector Fund|
|Minimum Initial Investment||$1,000 CDN|
|Minimum Subsequent Investment||$25 CDN|
|Minimum Investment Term||90 days (2% penalty)|
|Management Fee||2.5% annual - (A) 1.5% annual - (F)|
|Performance Fee||10% of excess over S&P/TSX Capped Energy Total Return Index|
|Eligible for Registered Plans||Yes|
|Investor Risk Tolerance||High|
Fund ObjectiveThe Sprott Energy Fund seeks to achieve long-term capital growth. The Fund invests primarily in equity and equity-related securities of companies that are involved directly or indirectly in the exploration, development, production and distribution of oil, gas, coal, or uranium and other related activities in the energy and resource sector.
The third quarter of 2013 saw a strong rise in the price of oil, mainly due to fundamental improvements across the globe. Demand recovered or strengthened in every major area, with US oil demand reaching a 3-4 year high and Chinese demand substantially improving from the tepid growth rates of a few quarters ago. Demand forecasts by the EIA were increased for both 2013 and 2014 owing again to this improvement in economic growth in most regions. At the same time, production growth rates around the world disappointed, with only 5 countries expected to grow their oil production this calendar year (Canada and the United States being 2 of the 5). This combination of strong demand with disappointing production growth has led to a tightening in inventories, as witnessed by OECD inventories reaching an 8 year low in the month of August. At the same time, over 1MM Bbl/d remained off-line due to pockets of political tension (Iran, Libya, Algeria, etc). Net/Net, the world oil market remains tight due to fundamental factors and is further aided by political factors. We believe a global oil price of approximately $100/Bbl is supported by fundamentals.
Natural Gas remained weak in the US, though Canadian prices strongly rebounded as a result of a tariff solution being arrived at between industry participants. We remain neutral/bearish on natural gas prices as North America remains flush with supply. For example, in only 4 years the US Marcellus gas play has grown from 2 Bcf/d to 12 Bcf/d… Canada produces roughly 13 Bcf/d. Despite a low natural gas directed rig count US production is expected to rise both this year and next due to profound technological improvements with how wells are drilled and completed. We believe the price of natural gas is likely to remain below $4/mcf for the next several years.
The Sprott Energy Fund benefitted from fund flows returning to Canada after several years of persistent selling pressure. This is due to several factors, but mainly is from a realization that the benefit of rail has greatly reduced Canadian oil differentials now and into the future. As industry ramps oil-by-rail export capacity to approximately 400,000 Bbl/d this year and to up to 1,000,000 Bbl/d exiting 2014, extremely wide differentials between Edmonton Light and WTI should be a thing of the past. Canadian oil stocks were being unfairly punished due to limited takeaway capacity and the recent rise in equity valuations partially reflects the improvement in capacity availability. We believe that the Canadian energy market is experiencing the beginning of a significant improvement in fund flows as Canadian equity valuations are attractive and have greatly lagged the rise in the price of oil. Foreign investors are only just beginning to realize the opportunity and their buying is evident in the recent rise of many stocks that have been poor performers despite improving fundamentals. In short, investors are caring again and the apathy that has so prevalent for the past year or two seems to be disappearing.
The indicated rates of return for series A/class A securities of the Funds are based on the historical annual compounded total returns including changes in unit/share value and reinvestment of all distributions or dividends and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.