INVESTMENT > RISK MANAGEMENT
- Minimal use of leverage.
- Maximum single sector exposure is 20% net.
- As a rule, we will not average down, often investor's biggest mistake.
- Minimum 15 long names, with a target of 20-30 names, 2-5% initial positions per name.
- Short positions of 5-10 names representing minimum 20% of the AUM; pro-active and trading oriented.
- Once a short position is established, we will not add to it if we lose money; Review within 3 months, must either close it or double it.
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- Losses on a short position are reviewed at 5% increments and closed out in the event of a 20% loss.
- Pair trades: Monthly review and rebalancing.
- We will focus on "averaging up" successful positions.
- Many core positions will be held for several years.
- Will trade around core positions and earn interest income which will offset management fees and other operating costs.
- Manage currency risk at very low cost.
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