Big Cap Alpha

This strategy focuses on stocks with a market cap of $10 billion and greater and also allocates a portion of the portfolio to short hedge trades. This strategy uses a proprietary 4-level scanner comprising technical, fundamental and factor-based quantitative analysis. For the bullish trades we buy the underlying stock and the trade is typically open for 60 to 180 days. For the bearish hedge trades we buy slightly in-the-money put options on fundamentally weak companies that have moved into high probability bearish technical setups. Four percent of capital is allocated to each trade.

 

Summary of Benefits

Managed by a trading-centric portfolio manager who is:

  • Nimble and fast moving
  • Follows strict exit rules and will close positions decisively as dictated by the technicals
  • Dramatically increases the probability of locking-in gains and preserving capital during periods of high volatility

Dynamic Blend of long and short trades

  • Reduces volatility of the portfolio while boosting returns
  • Offers protection during market corrections or black swan events

Sophisticated analysis comprising technical, fundamental and factor-based quantitative analysis

  • Identify stocks that have moved into high probability technical setups, including:
    • Accumulation and distribution
    • Relative strength
  • Identify stocks with strong fundamentals, including:
    • Sales growth
    • Earnings growth
    • Pre-tax profit
    • Return on equity
  • Factor-based quantitative screen to identify stocks with the following:
    • Have high probability of making a move up or down
    • Have high probability that the magnitude of the move will be significant

To view the past performance of this strategy please go here.

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