The Tribeca Global Natural Resources Ltd (ASX: TGF) share price is on watch after the company reported a 2.68% net asset value (NAV) decline for the 6 months ended 30 June 2019.
What did Tribeca announce this morning?
In its half-yearly letter to investors, Tribeca noted a 0.78% increase in NAV from credit investments but these gains were offset by a -3.46% contribution from listed equity positions.
As the company's strategy nears the 5-year mark since inception, Tribeca said that it has returned more than 200% net of fees against the MSCI ACWI Commodity Producers Index, which returned 19% over the same period.
As noted by Tribeca, this performance is even more impressive given the index always remains fully invested whereas the company's returns include average cash holdings of almost 30%.
Tribeca remains bullish on the Resources sector, saying the sector will be much higher in twenty years because the world is generally short most commodities, despite volatile from the cyclical nature of demand and misallocation of capital from producers.
Tribeca said it believes that within the context of multi-year cycles, the market structure for investing within the natural resources sector remains incredibly supportive for now.
The company continues to see various signposts that the sector remains "under-researched and under-invested" which "has created a cocktail of low liquidity, high volatility and wide spreads."
With regards to the threat of renewable energy to the oil and gas sector, Tribeca expects oil demand will continue to grow and noted that "most do not predict peak crude oil demand until post-2030 even on the most optimistic of electric vehicle demand".
The company said value remains in the east coast Australian gas market due to low exposure to international trade, and said "at this point, there is no obvious solution to reducing the higher prices being witnessed".
Foolish takeaway
The comprehensive investor letter touched on several domestic and global themes, ranging from industry-specific issues to broader macroeconomic trends that Tribeca expects to see in FY2020 and beyond.
While the Tribeca share price could fall lower in today's trade on the lower NAV result for the half, if its predictions do come to fruition, I'd expect to see Tribeca continue to perform strongly along with the Energy sector giants such as AGL Energy Ltd (ASX: AGL) and Santos Ltd (ASX: STO).
