Optimization

Fund

Fund Investment Objectives

The objective of the Optimization Fund is to preserve capital and provide superior long-term returns on a risk-adjusted basis. The first step of the strategy is to develop an investment thesis through earnings screens and news flow. The process involves the analysis of a large sample of data points over time to distill down to a generalized investment idea. Then we research the major players in the relevant space to structure a position of long and short stocks to have the best risk/reward ratios under various historic and hypothetical scenarios. The earnings screens and news flow are not only important sources of investment ideas, but also part of our risk management input, through which our existing investment thesis is being tested constantly. One of our greatest strengths, we believe, is our ability to manage risk. We have strict limits on sector and individual stock exposures. We have developed detailed risk control parameters, such as net exposure, position sizing and leverage for different market conditions. The methodology was derived from experience and supported by our back testing. We have the experience of effectively managing assets through turbulent market conditions since 1998. Our total net return of over 19% for 2007 and 2008 combined is the best testament of that. Also our strategy was successfully implemented at Perry Capital.