Our research shows average holding periods for a manager is about a year and for high conviction holdings, it can be much longer. What that means is that if the manager is disclosing quarterly, it can be meaningful. The hard part is deciding which manager/ideas to follow.
By comparing actual returns of the long/short fund with the simulated returns of the manager’s long positions, we’ve seen very few managers generate consistent and meaningful results from shorting stocks. In fact, many simply short to manage market exposure, not generate (alpha) returns.
Being quantitative actually allows us to test our ideas in the past which is a great way to build resilience into our strategies. It all starts and ends with our technology platform and our methodology. AlphaClone is a recognized leader when it comes to research and analysis of institutional investor public disclosures. Our live results over the past 5 years speak for themselves.
We solve a really hard problem with a relatively simple, technology-driven approach. Our dataset tracks the world’s most established investment managers and their disclosed holdings. Our process first scores the managers, then combines/selects their highest conviction ideas. Our proven scoring methodology, called Clone Score, is at the heart of what makes us different because it is designed to evaluate managers based on their demonstrated stock selection skill.
We believe it can be very difficult for long term investors to maintain their investments during periods where there is severe and protracted market turmoil. That’s why our core strategies employ a dynamic hedge that will vary the strategy’s market exposure from long only to market hedged based on a simple technical rule. The rule seeks to hedge market exposure during multi-month downturns in the market while still maintain long only exposure during multi-month rallies. As you can imagine, we’ve tested and written extensively about our rule. You can read more on our company blog.
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