Alceon
Liquid Strategies

INVESTMENT STRATEGY

Opportunistic and flexible investment strategy unconstrained by traditional style labels that aims to deliver strong compound returns over a multi-year horizon

High conviction approach means the Fund’s portfolio is concentrated in a relatively small number of thoroughly researched positions to optimise the pay-off from the manager’s best ideas

Seeking to maximise risk-adjusted returns while minimising the likelihood of permanent capital loss

Focus on ASX-listed securities, with ability to invest offshore and in unlisted investments

Rigorous fundamental research forms the basis of all investment decisions

Ability to enhance risk-adjusted returns via bespoke investment opportunities such as convertible notes

Investment philosophy

Exploit market inefficiency through a
value-based, opportunistic approach

Investment Philosophy
  • Market prices usually reflect fundamentals in the medium to long-term, but can deviate materially in the short-term
  • Function of human psychology and tendency of investors to swing between greed and fear
  • Significant shift to passive (index) investing has further reduced traditional price discovery
  • Myriad quant strategies / ETF structures can significantly amplify normal market moves
  • Risk-adjusted return mentality unconstrained by traditional style labels
  • Rigorous fundamental research the basis for all investment decisions
  • Independent and contrarian mindset - outsized returns are usually the product of investing against consensus
  • Market inefficiency exists but exploiting it is not easy (no free lunch), markets usually rebalance quickly
  • Opportunistic approach required to capture mispricing
  • High Conviction does not mean Buy & Hold – constantly reassess risk-adjusted return on offer and act decisively when justified
Implementation
  • Smaller companies / lower liquidity
  • Under-researched stocks / sectors
  • Secular trends / industry changes
  • Greater than average complexity
  • Event-driven / special situations
  • Concentrate the portfolio in a relatively small number of thoroughly researched positions
  • Optimise the pay-off from best ideas
  • Above average tolerance for volatility in pursuit of outsized returns (focus on minimising risk of capital loss, not short-term volatility)
  • Acknowledge outperformance is harder with larger capital pools
  • Disciplined approach to growing Fund asset base
  • Focus on staying nimble and opportunistic
  • Will run large cash balance if opportunity set limited

Investment Process

Investment Process

IDEA GENERATION

FUNDAMENTAL
  • Security specific catalysts
  • Thematic drivers
  • Event-driven
  • Industry change
OPPORTUNISTIC
  • Dislocations
  • IPO/secondary issues
  • Flows & liquidity
  • Broker relationships
PORTFOLIO MANAGEMENT
  • Macro factors
  • Valuation levels
  • Investment outlook
  • Portfolio hedging

Portfolio
MANAGEMENT

01Identification of Best Ideas

02Fundamental Analysis &
Proprietary Research

03Portfolio Construction &
Position Sizing

04Macro
Monitoring

05Exposure Rebalancing &
Exit Discipline

RISK MANAGEMENT

  • Daily reporting
  • Prudent liquidity management
  • Gross/Net exposure
  • Counterparty risk

Risk Management

Risk management is a primary focus and is constantly evaluated from multiple perspectives

  • Disciplined application of the investment process represents the primary risk management tool
  • Risk-adjusted return focus, including potential loss analysis
  • Focus on avoiding permanent capital loss, rather than short-term volatility minimisation
  • Exit discipline
  • Gross / Net exposure management
  • Prudent use of leverage and hedging strategies
  • Position sizing, concentration levels, trading liquidity
  • Daily reporting and monitoring
  • Institutional Order Management & Portfolio Management systems
  • Fund is managed with prudent cash levels and liquidity buffers
  • Only transact with reputable and financially sound counterparties and service providers
  • Highly aligned and experienced investment team and board with significant personal investments in the Fund
  • Dual portfolio manager approach
  • Investment team is supported by the substantial resources of the Alceon Group

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