Summit Water Capital Advisors has been investing in water equities for more than 30 years, beginning when the firm’s founder John Dickerson volunteered as Treasurer for his local water utility district in the 1980s. As an investment manager with focus on deep value, John was amazed by the fundamentals of the water utility business and began searching for ways to deliver his clients exposure to the industry.
At the time, water was not recognized by Wall Street as a discrete investment sector so John was forced to build his own universe of “hydrocommerce” companies involved in the large-scale treatment and distribution of water, including investor-owned utilities and their diverse supply chain of technology providers, engineering firms, and heavy equipment manufacturers. As he pioneered this new investment thesis, he uncovered several attractive investment attributes unique to the industry:
In 1999, Summit Water launched the world’s first equity hedge fund focused exclusively on the hydrocommerce space, delivering a lifetime compound annual return of 7.6% net of fees with exceptionally low risk metrics and market correlation, before closing in early 2016 following John’s passing. Today, Summit Water offers bespoke water equities investments for large institutional investors in the form of separately managed accounts with customized emphases including yield-enhancing, utilities-only, long-short, and various global concentrations.
At the beginning of 2016, in conjunction with Zacks Index Services, Summit Water launched the Summit Zacks Global Water Index (NYSE - ^ZAXWTRX), which incorporates “smart” investment factors designed to identify water companies that offer the greatest potential from a yield and risk/return perspective while maintaining global diversification. As opposed to the passive water indices currently published that are constructed through various measures of market capitalization, equities are selected for inclusion in the Index by a proprietary formula of relevant company fundamentals including measures of price/earnings, intrinsic value, and return on capital. For full-year 2017, Total Net Return for the Index was 27.54%.
In August 2016, Summit Water launched an Exchange Traded Fund (ETF) as a publicly accessible investment product designed to track the performance of the Index. You can learn more about the Summit Water Infrastructure Multifactor ETF (NYSE – WTRX) here.