Hi, guys.
I've posted, separately, quick highights of the Aston River Road Long Short call. Here, for those interested, is the
ARLSX audio-file link and a bit of background on the team.
As ever,
David
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Why ought you be interested in chatting with Matt, Dan and me? Two reasons:
1. investors need to become more sophisticated in their risk-management strategies. We know that high volatility strategies are disasters for 99% of the folks who invest in them; we're simply not wired to endure sharp, sudden losses. The traditional risk-management strategy, buy a wad of Treasury bonds, is becoming increasingly problematic. Serious and thoughtful folks have made the argument that directional long-short or covered-call strategies should be considered conservative core equity strategies, not just "5% in diversifying alternatives." Wasatch made a clear, readable statement of the case in "
Using a Directional Long/Short Fund as a Core Holding" (2009).
2. the River Road guys strike me as eloquently thoughtful and ARLSX shows substantial promise. Two things caused me to notice the fund. First, it started showing up in my performance screens for top-tier new funds. Second, the words "River Road" were immediately intriguing because of their association with Eric Cinnamond and the Aston / River Road Independent Value (ARIVX) fund, which strikes me as one of the best small cap options available. Those two factors didn't justify enthusiasm for ARLSX, but they did justify further investigation.
In our conversations, Matt makes four observations about the fund that do warrant both interest and enthusiasm:
They view themselves more as “risk managers, not returns managers”. They have a robust set of individual stock risk controls and a disciplined drawdown plan to manage net market exposure risk.
By controlling risk, they're better positioned to generate substantial long-term compounding. They've generated double-digit annualized returns, while keeping volatility at less than half the benchmark and controlling draw-downs.
Their short positions have "a unique focus on challenged businesses with low momentum that has led to significant outperformance on the short side."
Matt and Dan describe themselves as "100% committed to the Strategy." It's the only strategy they work on at River Road and both have 100% of their liquid net worth in it.
There's a profile of the fund (under the "funds" tab) at the Observer.
On January 1, I'll post highlights and an .mp3 file with the whole call.
Take great care,
David
Comments
Perhaps afterward you might share some impressions of the call and how to make the next one better? I'm negotiating with Matthews about a January call and we've got Seafarer on board for February, in celebration of their one-year anniversary. If there's enough reader/listener interest to keep going after that, I think we'll spend the following three months talking with managers of really focused funds. Which is to say, I'm working hard to make it useful and interesting.
As ever,
David
I am interested in listening it as I could not make it to the conf. call.