Cedar Street Fund, L.P. Class B – Market Neutral

The General Partner seeks to achieve the Fund’s investment objectives of capital preservation and positive risk-adjusted returns by investing primarily in public companies with a market capitalization below $4 billion (generally characterized as small- and mid-cap stocks). The Fund holds both long and short positions based on extensive bottom-up fundamental analysis. The Fund concentrates mainly on equity investments, but will also use equity options to hedge positions and to leverage its exposure to compelling opportunities or to protect existing gains.




PORTFOLIO MANAGERS

Kenneth S. Grossman, Partner & Portfolio Manager
Ken began his career in 1970 as manager of the pension program of Illinois Bell Telephone Company. In 1972, he became Vice President of Mitchum, Jones & Templeton’s Consulting Group. He was one of the original founders of Callan Associates. From 1973 to 1978, Ken served as Vice President of A.G. Becker and established their Consulting Group. From 1978 to 1983, he was Senior Consulting Principal with A.S. Hansen, Inc. In 1983, he founded the investment advisory firm of Hahn Holland & Grossman (“HH&G”), which subsequently became HGT Advisors. In 1996, Mesirow Financial purchased HGT Advisors. Ken co-managed Mesirow Financial Asset Management, responsible for the small cap equity portfolio and fixed income portfolio management. He received his B.S. in Finance cum laude from the University of Miami and his master’s degree in Finance and Economics from the University of Chicago.

Glen Schneider, CFA, Partner & Portfolio Manager
Glen began his career in 1994 as an Investment Associate for Merrill Lynch. In 1995, he became an Equity Analyst for Coe Capital Management, which was previously a subsidiary of Paine Webber named Kent Capital. He provided long and short recommendations to the firm’s private client group, hedge fund and large institutional clients. In 2000, after five years with this group, Glen joined Mesirow Financial as Vice President, Portfolio Manager and Analyst of the long-only small capitalization product. In addition to conducting fundamental research, he was responsible for managing a research analyst and overseeing all trading activity. Glen received his B.S. in Economics from the University of Wisconsin. He holds the Chartered Financial Analyst designation.

Nicolette Rudman, CCO/ COO
Nicolette joined SG Capital Management in February 2010 as Chief Operating Officer and Chief Compliance Officer. In this capacity, Nikki is responsible for all operations and compliance issues concerning the firm’s hedge funds, separately managed accounts, employee and firm compliance. She began her career in 1994 as a Registered Investment Associate and then Group Manager with Merrill Lynch. In 2000, she joined JLB Investments, an investment firm, as their Manger of Compliance & Operations. Previously, she was the Director of Operations for Rail-Splitter Capital Management. Nikki has a B.A. from Indiana University. She holds Series 63 and 65 licenses.

INVESTMENT STRATEGY
  • We believe that due to our unique process and hedging techniques, our results should not be correlated to equity market indices or other hedge fund managers in the hedged equity space.

  • Our strategy has worked in most market environments. We have produced positive results, net of fees, in all of our funds for the negative market periods of 2007, 2008, 1st quarter of 2009 and 2011.

  • On every investment idea, we need to answer 3 questions:

    1. Do we have a fundamentally different viewpoint? (Where might profit assumptions be inaccurate?)

    2. What does the valuation and sentiment reflect? (Is it cheap or expensive, loved or hated, value or growth oriented?)

    3. When is the event and how do we hedge the risk? (Pair trades, options and stand alone?)

  • We are generalists, but we avoid sectors that are not compatible with our strategy including biotech, REITS, banks, utilities and energy exploration.

WHY INVEST WITH SG CAPITAL MANAGEMENT
  • 12 year history with an established back-office that provides clarity, transparency, and operational integrity in all aspects of our business.

  • Investment process that is specific, repeatable, and understandable.

  • 100% employee owned and investor focused.

  • Invest alongside founders Ken Grossman and Glen Schneider who have 44 years and 20 years of industry experience, respectively.

  • Belief in an emphasis on risk management and proven outperformance in down markets.

  • Historically non-correlated performance relative to equity indices worldwide.

FREQUENTLY ASKED QUESTIONS

Q: How would an investment with SG Capital fit into my overall portfolio?
A: An investment with us is meant to protect capital and outperform during down markets, while generating consistent, positive returns in up market environments.


Q: What is a “Market Neutral” Strategy?
A: We hedge out general market movements by being long and short stocks in the same sectors. For example, if the sector moves up, a gain in the long stock is offset by a loss on the short. Effectively, performance should be based solely on our stock picks, not the overall market.


Q: What is a “High Water Mark”?
A: This means that the 20% performance fee is only earned on net profits (i.e., profits after losses in previous periods have been recovered).


Q: What has the investor turnover been like at SG Capital?
A: Since inception 12 years ago, all of the original seed investors have remained with the firm.