BOZEMAN, Mont. — Beartooth Capital is selling feel-good investment opportunities with a sporting, environmental bent.
It doesn’t hurt that beautiful color photos of streams winding through tall grass, trout caught on a fly rod and vistas of blue mountains and green meadows are splashed across the firm’s promotional material, which looks and reads like a travel brochure.
Beartooth Capital buys ranches, improves the properties in a variety of ways. then sells them. Investors share in the profits from the sales and other ventures the company conducts while it still owns the properties.
“It’s a great way to make some money, and a fairly low-risk way to make money compared to the rest of the investment world,” said Robert Keith, 37, a co-founder of Beartooth Capital. “Most of our investors are more heavily invested in riskier investments.”
The results of the company’s work can be seen on the Madison Spring Creek Ranch, which Beartooth bought two years ago. It lies a 45-minute drive west of Bozeman, in the valley just east of the Madison River.
By standing on a bridge over the spring-fed Darlington Ditch and looking upstream, a visitor sees a wide, shallow spring creek.
That’s the adjoining landowner’s place.
Look downstream and there’s a sinuous creek with deep holes and riffles winding through cattails. That’s the same stream modified by a Beartooth Capital contractor. The small waterway contains some beefy trout, some of which use the creek for spawning.
Keith noted that his company isn’t doing anything new. Landowners have long restored habitat for wildlife, improved the sprinkler system to save water or updated the ranch house. The difference is that many of those owners probably don’t intend to flip their property for a profit.
Working with local and national conservation groups and state and federal land management agencies, the company has also created conservation easements to ensure that landscapes are protected long after the ranch is sold.
Even after Beartooth Capital sells, their former properties are still producing benefits for wildlife, many of which carry over to the public realm, said Mike Mansfield, the ranch recreation manager for Beartooth. Stream restoration, for example, provides more spawning habitat for river fish. A conservation easement that ensures that elk calving grounds are never developed means generations of elk have a place.
Beartooth Capital also provides paid access to some of its properties – for activities like fishing, hunting and camping – through some of the local companies it has chosen to work with. So anglers can fish one of Beartooth Capital’s restored streams for the same price they’d pay to cast on any other Montana private spring creek.
The Madison ranch is one of four that Beartooth Capital owns in Montana. The other three are in the Big Hole Valley, south of Whitehall and near Martinsdale, Mont. The company also owns ranches in California, Idaho, Wyoming and Colorado — 20,000 acres in total have been purchased. On its ranches, Beartooth claims to have protected 13,000 acres with conservation easements and restored 35 miles of stream.
The company has also built or refurbished housing on the ranches that investors can use while enjoying the properties. The accommodations range from camping out in wall tents to custom-built cabins, restored bunkhouses and a lodge.
“That’s what I get fired up about,” Keith said. “In the investment business, it’s always about ‘me, me, me. How can I get more money?’ We’re not only making money but we’re also helping wildlife and local communities by hiring local people.”
Beartooth Capital was created by Keith and fellow “enviropreneur” Robert Palmer in 2005. They came up with the name in honor of the Beartooth Mountains that rise just north of Keith’s parents’ ranch west of Cody. The Bozeman-based company now employs 12 people, not counting ranch managers.
Both partners were well versed in the investment and business world before setting up shop in Montana.
After graduating from Yale, Keith worked in investment firms in New York City and California before settling in Bozeman. He sees the southwest Montana town as the epicenter of conservation in the West, given the number of conservation groups that have headquarters or offices there.
“It’s also the center of recreational pursuits in the West, especially fly-fishing,” he said.
Palmer, 39, worked in real-estate investment as Keith’s boss at Greenbridges, a company he founded, and had also spent time working in the conservation and education communities in Utah and Wyoming. Palmer is a graduate of Brown University and met Keith when they were both attending the Graduate School of Business at Stanford University.
“They seem to be genuinely interested in land conservation,” said Jim Berkey of The Nature Conservancy, which worked with Beartooth Captial on a wetlands project in the Big Hole Valley. “They walk the talk when it comes to conservation.”
Clients who wander into Beartooth Capital’s airy, brick-walled headquarters overlooking Main Street may receive a three-pronged pitch on why they should invest. The investments are low risk and less subject to the roller coaster ride of the stock market. Second, the restoration work does something good for the natural world.
“Why not make money in a way that feels better?” Keith asked.
Third, the investment is tangible — people can see the results of a stream that’s been restored and repopulated by fish.
“The ranch still works perfectly for agriculture, but it has this whole other value,” Keith said.
For some people, it’s a place to fish with their grandchildren, relax in a cabin or go horseback riding.
“They can make a little money, enjoy it and the ranch becomes a part of who they are,” Keith said.
Not everyone can be an investor, though. A $1 million minimum is required, although Keith said that’s somewhat flexible.
“We’re at the point where it’s more fun and more strategic to get more people involved,” he said. “The key in our case is that they are accredited and qualified, two important SEC (Securities and Exchange Commission) hurdles.”
That means the money you investment can’t be your only or your last million.
Keith said he couldn’t comment on the average return on investments. The two funds created by the company are now valued at more than $65 million.