iag | strategy
2009-2010
Nicu Mihai Achihaei
AllStar Portfolio Manager
The All-Star team will employ a portfolio strategy focused on general macro-economic trends. Our view is that the massive imbalances accumulated in the Global Economy through tardy economic trends and through massive bail-outs need to be compensated. This year we will be following the global political view on the way world economies need to adjust to a new business climate for a “balanced and sustainable growth”.
Because macro-economic expectations have improved, the fund will have a large percentage of its capital invested to capitalize on market uptrend. Additionally, the team will strive to drive outperformance by focusing on the successive steps necessary to bring economic forces in equilibrium. We expect to make extra returns by buying into investment vehicles that represent forces that will be pivot in the ongoing economic change.
The All-Star team will also be on top of the catalytic events that can spur sudden market movements, ensuring that it will not overexpose its portfolio to systemic risk. Additionally, the team will be constantly readjusting its positions and will look for appropriate exit points in order to free capital for the next market movements.
Lastly, given the short time horizon of our investments, the team might also try to enhance returns by employing opportunistic strategies. The team might look into sound high growth opportunities, but at the same time, committing much less capital as percentage of portfolio.
Kenneth Chen
Initiative Portfolio Manager
The Initiative Portfolio's basic strategy for the coming year is simple in concept - we think the market's risen much faster than the economy as a whole has recovered. A sizable part of the surge can be attributed to investors simply feeling more confident in the market and trying to catch the gains on the way up. In the process we believe the stock market, which is never perfectly rational in the best of times is even less so at present. Many stocks have been overinflated either because they offered a "safe" place to sink money into as well as many which are trading under intrinsic value either because they were overlooked or concerns over their industry.
Since we can not short, the Initiative will seek to capitalize on the latter scenario. Our outlook starts primarily on macro-economic trends and from there we narrow our search. Essentially we identify a sector or industry that has not performed very well for a specific reason or circumstance we're predicting will change for the better. For example, one of our primary theses was transportation, and shipping in particular would benefit from looser credit. This was due to the vast majority of international shipping ports using letters of credit to exchange secure payments. With credit tough to come by, this essentially bogged down the entire shipping process for anyone with less than stellar credit. From there we look at companies in the sector with solid fundamentals to take advantage of the new developing situation.
And lastly, while we strive to emulate a value fund we do recognize that with a 6-7 month time horizon there are certain limitations to the type of investments we make. For this reason we are not entirely opposed to earnings plays or betting on catalysts to drive performance. But given the difficulty of hedging those bets without the ability to short it's something we're very cautious with.