The Investment Manager offers downside market risk protection through a fully hedged (dollar-neutral) strategy that seeks to generate consistently positive returns regardless of the market environment. Analytical techniques are used by the Investment Manager to predict changes in prices of individual securities relative to the market. No attempt is made to predict the market itself.
The portfolio often is leveraged, approximately 1:1, each portfolio dollar controlling one market dollar long and one market dollar short (effectively, longs purchased 100% cash and used to secure shorts). The portfolio should not pay margin interest except when positions move adversely. Additionally, the portfolio can earn short interest.
Although the portfolio often is neutral or diversified with respect to a wide variety of standard industry metrics (examples include beta, market capitalization, price-to-earnings ratio, industry, etc.,) the long and short halves of the portfolio are not explicitly balanced for criteria other than dollar neutrality and the proprietary valuation scores of the system's models. Individual stocks are chosen on their own merit, not to balance characteristics of a counterpart; stocks are not individually matched into pairs trading.