Fundamental Research

Yorkville Capital's core competency is conducting in-depth fundamental research on the companies in which we invest. We seek to continually build on and harness our in-depth knowledge of the asset class to drive superior investment results.

MLP Investment Criteria

Cash flow analysis is the primary tool used in U.S. energy infrastructure investing. We invest in partnerships whose cash flows are both predictable and growing. These two characteristics are critical as they provide income security, a hedge against inflation, and support capital appreciation.

Quality of Cash Flows

YCM will never invest in a partnership that has the slightest probability of cutting its distribution. We track distribution coverage ratios to ensure stability in our investments - the higher the distribution coverage ratio, the safer the distribution.

Distribution Growth Catalysts

We invest in partnerships whose fundamentals will be an impetus for future distribution growth. Growth in distributions is a hedge against inflation - it preserves the purchasing power of our investment over the long-term. Strong growth also often results in underlying capital appreciation.

Financial Modeling

We develop detailed financial models that allow us to forecast distributable cash flow and growth prospects.

Capital Structure

A strong balance sheet is an essential part of our investment criteria. Generally, MLPs are pass-through vehicles that rely on the capital markets to fund distribution growth. We seek to invest in partnerships or companies that maintain a conservative capital structure. This reduces the risk profile and grants the partnership greater access to the capital markets. We also analyze debt maturities in order to quantify interest rate risk which can pose a headwind to distribution growth.

Valuation

Yorkville uses a number of valuation techniques to help us arrive at a fair valuation: discounted cash flow, peer comparisons, multiple analysis and yield analysis. These tools help us to determine a company’s intrinsic value. We seek to invest in companies that are trading below their intrinsic value.