At most times, the fund seeks to employ 80% to 100% of its available capital in long positions, and approximately 40% to 100% of its available capital in short positions, resulting in a net long position between negative 20% and positive 60%. The fund typically holds between 60 and 100 long equity positions at any given time.
Most of the fund's long positions are chosen using fundamentally-driven partially quantitative techniques. These positions are generally in small-cap and micro-cap U.S. equities. Many are short-term in nature with an investment horizon of days to weeks, although some have an expected holding period of months to years. The partially quantitative techniques employed include assessments of (1) valuation versus estimated sustainable return on capital, and (2) operational performance versus expectations of market participants.
The fund also opportunistically engages in other strategies, including, but not limited to, closed-end fund arbitrage, event-driven investing, share class arbitrage, and new issues investing, as well as, on rare occasion, investment in private placements, including private investment in public equities.
The fund also utilizes options strategies, typically in order to seek to achieve a different risk-reward profile than is available from the purchase, sale, or short sale of an underlying security.
In order to offset some of its market risk, the fund takes short positions in broad market indices, such as Russell 2000 futures. The fund may also short securities representing a specific sector in order to hedge a portion of its sector risk. To a lesser extent, the fund also shorts individual equities. In determining the overall net portfolio exposure, the General Partner considers various factors including valuation and variables which reflect the sentiment and asset allocations of other market participants.
The Partnership may also take positions in commodities, currencies, or interest rates, typically using exchange-traded futures or futures options, in an attempt to profit from a directional view or to hedge macroeconomic tail risks.