For investors with a diversified portfolio, an investment in feeder cattle provides stock market-like returns and lower overall portfolio volatility. This can maintain yields and improve the Sharpe’s ratio. The returns on an investment in feeder cattle are influenced by weather which, in turn, drives feed costs, stress on cattle and mortality rates. None of these factors are correlated with overall economic activity or the stock market. It is this detachment, this lack of correlation, which allows an investment in feeder cattle to provide uncorrelated returns in a diversified portfolio.
Feeder cattle are professionally managed, much like commercial real estate. The manager makes a difference, but the asset is not as management intensive as, say, a privately-held company owned by a private equity firm. As a result of the modest management intensity, feeder cattle are safely owned in a portfolio without having to pay the management fees of a fund manager, like a PE firm.
This is very interesting. It’s like a real estate manager company, like CBRE or Cushman & Wakefield in commercial real estate
The ranching industry is very exciting, we have opportunities everyday that give our customers a chance to make a mark in this business. I would be open to discuss any questions that you might have.
Best Regards,
Doug T