2019 Knowledge Brokers New Guards

Nic DiLoretta

Title: Senior Vice President and Deputy Head of Investment Research
Firm: TorreyCove Capital Partners LLC
Assets under advisement: $68 billion
Number of consultants at firm: 63 professionals and specialists, with 24 investment research professionals, including 10 senior consultants
Client type: public pension plans, sovereign wealth funds, government-related institutions, endowments, foundations, and financial institutions.

TorreyCove’s Nic DiLoretta takes a holistic approach to investment strategies, evaluating as many aspects of the economy that influence each strategic decision as possible before making a move.

As senior vice president and deputy head of investment research, DiLoretta covers TorreyCove’s investment strategies in real assets, including infrastructure, oil and gas, agriculture, timber, and metals and mining. He also serves as an advisor to some of the firm’s pension fund clients.

DiLoretta is forecasting a new phase for US shale and is spending time thinking about how to participate in the growing space via private capital going forward.

“There’s a legacy historical model [on the approach to oil and gas], but given the changing dynamics of the shale plays, and the industry as a whole, we’re figuring out new ways to gain exposure to the upstream part of the market,” DiLoretta told CIO.

“It will absolutely continue to evolve. The one piece of oil and gas you need to appreciate is that it’s a cyclical market, and we’re always looking across the value chain for opportunities.

“There seems to be some fatigue in the investor community in their appetite for energy. As the shale development matures, investors should adapt their investment strategies appropriately to capture the opportunity set.”

DiLoretta says oil and gas is becoming more of a real asset-style investment, more focused on developing reserves, and generating a healthy margin of return from cash flows from that asset.


Weighing Macroeconomic Influences

DiLoretta says he is also paying considerable attention to private equity dealings and macroeconomic influences that are posing significant threats to the stability of the world economy.

“On the private equity side, strategies in general are pretty strong,” DiLoretta said. “We’ve seen an increase in the number of first-time fund offerings, and we expect this trend to continue. Often those can be interesting opportunities to look at.” Some relatively larger-scale macroeconomic events, such as the US-China trade war and other geopolitical events, are on the minds of TorreyCove’s consultants as well. “Looking at the trade war from a macro perspective—there’s definitely pain being felt. It’s anyone’s guess of when a trade agreement may get structured and this would ease up, but it’s a macro-level threat that really has impacted the opportunity set in certain industries currently and for the near future.”

“We’re also assessing other geopolitical events, whether it be Brexit or Middle East tensions, and evaluating the potential risks to current investments.”

He’s also keeping an eye on the steady movement of people out of the certain regions in US, and towards coastal cities. “People have become more concentrated in metropolitan areas, and this migration of people has such profound effects on multiple dimensions. How does this create opportunity and what are all the associated risks?” he asks.

Technological innovation and disruption are something that requires constant thought. DiLoretta explains. “How do you incorporate artificial intelligence/machine learning and how can that make us more efficient? We look at how managers incorporate technology and what they are doing to create a competitive edge compared to their peers. It’s definitely something that everyone needs to pay attention to,” he says. 

By Steffan Navedo-Perez

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