The Contrarian Fund identifies stocks that have been out of favor for the last 6 to 12 months and are starting to recover. This system 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 30 to 60 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 that show improving 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.