CastleArk Management, L.L.C. was founded in 1999 and is an independent, employee-owned
investment manager for institutions, investment companies, pooled investment vehicles, other
advisers and high net worth individual clients, with an emphasis on equity growth strategies.
CastleArk Alternatives, LLC which has been in existence since 2005, sponsors and manages
unregistered private (alternative investment) funds. Jerome Castellini, co-founder of CastleArk
Management, owns controlling interests in both advisory firms.
CastleArk Management and CastleArk Alternatives are separate and distinct companies that may
have differing investment goals, capabilities and functions. The companies generally have the
same policies and procedures and share senior management teams. Unless otherwise noted or
the context otherwise requires, this brochure describes common policies and procedures of the
companies. Throughout this brochure, unless the context otherwise implies, the use of the term
“CastleArk” alone is generally in reference to practices of both companies.
CastleArk offers investment management services in a several investment strategies for which we
have portfolio managers with an established investment style. Our clients include private and
government investment funds and institutions, a large proportion of which are retirement plans.
Our clients are generally sophisticated investors and often have internal and external consultants
and advisers to assist them with determinations of their individual needs, such as allocations among
types of investments, and generally do not seek those determinations from us.
For most of our clients, we manage a specific equity investment strategy (i.e. Large Cap Growth,
Mid Cap Growth, Small and SMID Cap Growth, International Small Cap Growth) to complement a
client’s existing investment portfolio lineup. We also provide a more diversified All Cap portfolio to
meet a client’s broader investment objectives. The scope and type of the investment management
service, including any corresponding investment restrictions or unique circumstances, are set forth
in writing and made a part of the investment management agreement with our client.
CastleArk Investment strategies overview
CastleArk provides investment advisory services to institutional separately managed accounts,
registered funds and collective trusts by implementing strategies that are designed to generate
superior returns over time. The goal of all our investment strategies is to out-perform market
benchmark returns over time.
We manage portfolios and offer investment advisory services to institutional investors, for U.S. and
non-U.S. equity strategies. CastleArk manages diversified growth investment styles and energy
sector and energy sub-sector strategies. Diversified growth equity strategies include U.S. Large
Cap, Mid Cap, SMID Cap and Small Cap growth and International Small Cap growth, plus a U.S.
all cap growth strategy that employs all of our U.S. growth strategies. CastleArk also manages
specialized energy sector strategies. Finally, we manage fixed income portfolios with a core bond
strategy, plus a balanced strategy, which combines U.S. growth equity and core bond strategies.
All CastleArk investment strategies are based upon time-tested processes for constructing
portfolios. Our portfolio management teams use criteria which have been developed in-house,
along with fundamental research, including research provided by third parties, to build and maintain
the investment strategies we provide.
Within each investment strategy, all client accounts are managed in accordance with CastleArk’s
model portfolio for the strategy. We do, however, adhere to restrictions a client may impose on the
holding of certain securities, which can result in minor differences from time to time among client
accounts in the same strategy. See below.
Specialized energy strategies
CastleArk manages strategies that invest primarily in the energy sector. The energy strategies
invest in US and non-US energy stocks, and one specializes in limited partnerships. Our Energy
MLP strategy seeks to provide a high level of total return with an emphasis on cash distributions.
It seeks to achieve its objective by investing primarily in Master Limited Partnerships (MLPs) in the
energy sector. These investments predominantly derive their revenues from the businesses of
exploring, developing, producing, gathering, transporting, processing, storing, refining, distributing,
mining or marketing of natural gas, natural gas liquids, crude oil, refined petroleum products or
coal.
Asset allocation
CastleArk may provide asset allocation services. For selected clients, CastleArk may advise as to
the appropriate allocation of their assets among equity securities strategies or other asset classes.
From time to time CastleArk may recommend to a separately managed account client that it invest
in a private fund sponsored by CastleArk Alternatives. Any such recommendation could carry the
risk of a conflict of interests. See below at Items 6 and 11 for our approach to monitor and mitigate
such conflicts.
Alternative investment strategies
CastleArk Alternatives provides investment advisory services to alternative investment funds that
are exempted from registration as investment companies under section 3(c)(7) of the Investment
Company Act of 1940, as amended. Fund strategies include an energy strategy and a volatility
strategy.
Separately managed account services
CastleArk Management generally provides
its services on a fully discretionary basis to separately
managed accounts. Services are provided under the terms of an advisory agreement between
CastleArk and the client. The advisory agreement generally permits either the client or CastleArk
to terminate the arrangement at any time after written notice in advance to the other party.
CastleArk permits customization of an account’s guidelines to meet the particular needs of a client,
as long as we believe such customization will not significantly impair our ability to implement the
strategy.
Funds
In addition to the separately managed account services, CastleArk Management provides advisory
or sub-advisory services to mutual funds. Information about these funds, including a description of
the services provided and advisory fees, is generally contained in each fund’s prospectus.
CastleArk also provides advisory or sub-advisory services to other investment funds such as
collective investment trusts and other types of pooled vehicles. Additional information concerning
these funds is generally included in the relevant offering documents.
Wrap fee accounts sponsored by others
CastleArk provides some portfolio management services under a "wrap fee" arrangement offered
by an unaffiliated broker-dealer Sponsor. We invest the Wrap Program accounts using the same
base model portfolio used for non-Wrap Program accounts. Clients in the program pay a single,
all inclusive (or “wrap”) fee charged by the Sponsor based on the value of the client’s account
assets for asset management, trade execution, custody, performance monitoring and reporting
through the Sponsor. The Sponsor typically assists the client in defining the client’s investment
objectives based on information provided by the client, aids in the selection of one or more
investment advisers to manage the client’s account, and periodically contacts the client to ascertain
whether there have been any changes in the client’s financial circumstances or investment
objectives that warrant a change in the management of the client’s assets.
The sponsor recommends us as an investment adviser for the strategy, pays our management fee
on behalf of the client, and monitors and evaluates our performance. CastleArk Management’s
investment advisory fee under the arrangement is likely to be different from that offered to our other
clients. Trades are generally expected to be executed only with the broker-dealer with whom the
client has entered into the wrap fee arrangement, so we will not be free to seek best price and
execution by placing transactions with other brokers and dealers. The minimum account size under
the “wrap fee” arrangement is generally lower than the minimum size we accept for other clients.
CastleArk will not have access to complete information regarding the Wrap Program client’s
financial circumstances, investment objectives or overall investment portfolio. In addition, we
receive information about the client at a later time than the Sponsor. As a result, any determination
by CastleArk as to the appropriateness or suitability for a Wrap Program client of a particular
investment will be made without regard to any other portion of the client’s portfolio, none of which
is managed by CastleArk, and such determinations may be different than would have been the
case had we had access to more complete information about the client’s financial circumstance,
investment objectives and overall investment portfolio.
Investment restrictions
CastleArk generally provides investment management services in accordance with applicable
investment guidelines and restrictions, including restrictions on investing in certain securities, or
types of securities or other financial instruments. CastleArk uses both automated and manual
processes to manage portfolios in accordance with their stated portfolio investment guidelines and
restrictions.
CastleArk can normally accommodate reasonable requests by clients to restrict their accounts from
owning investments that the client account is not permitted to own or that they wish not to own. In
those cases, the client account usually holds the same investments as other client accounts in the
same strategy, except for any holding that is restricted for that client. For any account that is
affected by a client restriction, CastleArk cannot necessarily achieve the same performance as that
of unrestricted accounts for the same strategy. Nevertheless, we seek to maximize returns for all
client accounts, including accounts with restrictions.
Services between affiliated advisers
CastleArk Alternatives may use the services of appropriate personnel of CastleArk Management
for investment advice, portfolio execution and trading, and client servicing. Arrangements between
CastleArk Management and its affiliate may take a variety of forms, including delegation
agreements or informal servicing arrangements. This practice is designed to make CastleArk’s
capabilities available to clients of its affiliate as efficiently as possible. In these circumstances,
CastleArk Alternatives remains fully responsible for the account from a legal and contractual
perspective. No additional fees are charged for the affiliate’s services.
Assets under management
CastleArk Management and CastleArk Alternatives only manage client portfolios on a discretionary
basis.
Assets under management, as of December 31, 2022, for CastleArk Management were
approximately $2.78 billion, and for CastleArk Alternatives, were approximately $16 million.