0
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS

   STRICTLY CONFIDENTIAL – DO NOT REPRODUCE
D ISCLOSURE

PROSPECTIVE INVESTORS ARE CAUTIONED THAT PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS AND TH...
2009 CORPORATE REVIEW

Overview
Infrastructure
Research & Technology
Principals
Investments Information
Contact Informatio...
OVERVIEW



S TRATEGIC C APITAL M ANAGEMENT , LLC

  Operates Managed Futures investment programs for private and institut...
I NFRASTRUCTURE


D EVELOPED I NFRASTRUCTURE

  Newly formed Onshore/Offshore, Master/Feeder Fund structure
  16 year cont...
R ESEARCH & T ECHNOLOGY


R ESEARCH & T ECHNOLOGY


  Proprietary research platform - C#, C++, .NET, SQL

  Redundant offi...
P RINCIPALS



Dick A. Stoken
Dick Stoken graduated from Northwestern University with a B.S. in Law and then went on to gr...
P RINCIPALS



Joseph B. Chesney

Joseph Chesney graduated with a B.S. Management from Aurora University. Since 1997, he h...
P RINCIPALS



Patrick F. Hart III

Patrick Hart holds a B.A. in Economics from Colorado State University. His role at Str...
I NVESTMENT
                                                                                      I NFORMATION

  ACCOUNT ...
STRATEGY DESCRIPTION


Philosophy
Investment Process
Risk Management
Portfolio
Allocation Models
Markets Traded


        ...
P HILOSOPHY



S TRATEGIC I NVESTMENT P HILOSOPHY

  Focuses on the long-term trend. We believe the time frame is longer t...
I NVESTMENT P ROCESS


INVESTMENT PROCESS
  Core markets are selected as the most liquid and representative members of the...
I NVESTMENT P ROCESS


Strategic Investment Management has developed fundamental models for stocks, debt,
and commodities....
I NVESTMENT P ROCESS



  Fundamental filters are used as a mechanism that indicates how heavily to
  weigh positions and ...
R ISK M ANAGEMENT



R ISK M ANAGEMENT

  Risk Management is the most important aspect of Strategic Investment’s
  approac...
R ISK M ANAGEMENT


R ISK M ANAGEMENT ( CONT .)
  L OW L EVERAGE : Average Margin to Equity ratios fall between 5% and 8%,...
P ORTFOLIO


P ORTFOLIO C HARACTERISTICS

  Low Turnover – 700 round-turns per $1milliion

  Low Margin – average 3-6% / m...
Commodity
                                               Allocation Model


S TRATEGIC C OMMODITY




C O N F I D E N T I ...
Diversified
                                                      Allocation Models


S TRATEGIC G LOBAL B LEND
          ...
Diversified
                                                            Allocation Models


   S TRATEGIC G LOBAL B LEND
 ...
Diversified
                                                             Allocation Models


     S TRATEGIC G LOBAL B LEN...
MARKETS & EXCHANGES


                      Markets & Exchanges
Commodity          Currency          Equity         Debt  ...
C ONTACT
                                                                                    I NFORMATION

               ...
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Strategic Capital Management Presentation

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Brief description of SCM's approach to managed futures investing.

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Transcript of "Strategic Capital Management Presentation"

  1. 1. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS STRICTLY CONFIDENTIAL – DO NOT REPRODUCE
  2. 2. D ISCLOSURE PROSPECTIVE INVESTORS ARE CAUTIONED THAT PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS AND THAT COMMODITY FUTURES TRADING IS SPECULATIVE AND SUBJECT TO THE RISK OF LOSS. THESE MATERIALS ARE NOT INTENDED AS AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO PURCHASE, ANY INVESTMENT. ANY OFFER OR SOLICITATION WITH RESPECT TO ANY INVESTMENT THAT MAY BE OFFERED BY STRATEGIC INVESTMENTS WILL BE MADE ONLY BY MEANS OF A DISCLOSURE DOCUMENT/OFFERING MEMORANDUM, WHICH WILL BE PROVIDED TO PROSPECTIVE INVESTORS AND WILL CONTAIN MATERIAL INFORMATION THAT IS NOT SET FORTH HEREIN. IN MAKING A DECISION TO INVEST, PROSPECTIVE INVESTORS SHOULD RELY ONLY ON THE DISCLOSURE DOCUMENT/OFFERING MEMORANDUM FOR SUCH INVESTMENT AND NOT ON THESE MATERIALS, WHICH CONTAIN PRELIMINARY INFORMATION THAT IS SUBJECT TO CHANGE AND THAT IS NOT INTENDED TO BE COMPLETE OR TO CONSTITUTE ALL THE INFORMATION NECESSARY TO ADEQUATELY EVALUATE THE CONSEQUENCES OF INVESTING IN SUCH SECURITIES. NOTHING IN THESE MATERIALS SHOULD BE CONSTRUED AS A RECOMMENDATION TO INVEST IN ANY SECURITIES THAT MAY BE ISSUED BY THE ISSUER OR AS LEGAL, ACCOUNTING OR TAX ADVICE. AN INVESTMENT IN SECURITIES OF THE TYPE DESCRIBED HEREIN PRESENTS CERTAIN RISKS. BEFORE MAKING A DECISION TO INVEST IN ANY SECURITIES OF THE ISSUER, A PROSPECTIVE INVESTOR SHOULD CAREFULLY REVIEW THE DISCLOSURE DOCUMENT/OFFERING MEMORANDUM (INCLUDING THE RISK FACTORS DESCRIBED THEREIN) FOR SUCH INVESTMENT AND CONSULT WITH ITS OWN LEGAL, ACCOUNTING, TAX AND OTHER ADVISORS IN ORDER TO INDEPENDENTLY ASSESS THE MERITS OF SUCH AN INVESTMENT. THESE MATERIALS CONTAIN “FORWARD-LOOKING” INFORMATION THAT IS NOT PURELY HISTORICAL IN NATURE. SUCH INFORMATION MAY INCLUDE, AMONG OTHER THINGS, PROJECTIONS, FORECASTS OR ESTIMATES OF CASHFLOWS, YIELDS OR RETURNS, SCENARIO ANALYSES AND PROPOSED OR EXPECTED PORTFOLIO COMPOSITION. THE FORWARD-LOOKING INFORMATION CONTAINED HEREIN IS BASED UPON CERTAIN ASSUMPTIONS ABOUT FUTURE EVENTS OR CONDITIONS AND IS INTENDED ONLY TO ILLUSTRATE HYPOTHETICAL RESULTS UNDER THOSE ASSUMPTIONS (NOT ALL OF WHICH WILL BE SPECIFIED HEREIN). ACTUAL EVENTS OR CONDITIONS ARE UNLIKELY TO BE CONSISTENT WITH, AND MAY DIFFER MATERIALLY FROM, THOSE ASSUMED. IN ADDITION, NOT ALL RELEVANT EVENTS OR CONDITIONS MAY HAVE BEEN CONSIDERED IN DEVELOPING SUCH ASSUMPTIONS. ACCORDINGLY, ACTUAL RESULTS WILL VARY AND THE VARIATIONS MAY BE MATERIAL. PROSPECTIVE INVESTORS SHOULD UNDERSTAND SUCH ASSUMPTIONS AND EVALUATE WHETHER THEY ARE APPROPRIATE FOR THEIR PURPOSES. DISTRIBUTION OF THIS INFORMATION TO ANY PERSON OTHER THAN THE PERSON TO WHOM THIS INFORMATION WAS ORIGINALLY DELIVERED AND TO SUCH PERSON'S ADVISORS IS UNAUTHORIZED AND ANY REPRODUCTION OF THESE MATERIALS, IN WHOLE OR IN PART, OR THE DISCLOSURE OF ANY OF THEIR CONTENTS, WITHOUT THE PRIOR CONSENT OF STRATEGIC INVESTMENTS OR ITS AFFILIATES IS PROHIBITED. THESE MATERIALS ARE NOT INTENDED FOR DISTRIBUTION TO, OR USE BY ANY PERSON OR ENTITY IN ANY JURISDICTION OR COUNTRY WHERE SUCH DISTRIBUTION OR USE WOULD BE CONTRARY TO LOCAL LAW OR REGULATION. IN PARTICULAR THESE MATERIALS ARE NOT INTENDED FOR DISTRIBUTION IN THE UNITED STATES OR TO OR FOR THE ACCOUNT OF U.S. PERSONS (AS DEFINED IN REGULATION S) UNLESS SUCH PERSON IS (I) A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) AND (II) A “QUALIFIED PURCHASER” WITHIN THE MEANING OF SECTION 3(C)(7) OF THE INVESTMENT COMPANY ACT OF 1940. C O N F I D E N T I A L I N F O R M AT I O N 2
  3. 3. 2009 CORPORATE REVIEW Overview Infrastructure Research & Technology Principals Investments Information Contact Information C O N F I D E N T I A L I N F O R M AT I O N 3
  4. 4. OVERVIEW S TRATEGIC C APITAL M ANAGEMENT , LLC Operates Managed Futures investment programs for private and institutional investors. Our investment strategies provide clients with systematic exposure to a diversified universe of global futures markets combined with institutional quality risk management. The firm’s trading principals have a combined 58 years of industry experience with a continuous track record dating back to 1992. In addition to sound investment strategies, our business philosophy centers on commitment to exceptional research, back office operations and client service. The principals maintain significant personal capital in our investment programs. C O N F I D E N T I A L I N F O R M AT I O N 4
  5. 5. I NFRASTRUCTURE D EVELOPED I NFRASTRUCTURE Newly formed Onshore/Offshore, Master/Feeder Fund structure 16 year continuous track record Outsourced Middle and Back office 3 principals / 3 employees Proprietary research platform System redundancy Business growth and continuity plan C O N F I D E N T I A L I N F O R M AT I O N 5
  6. 6. R ESEARCH & T ECHNOLOGY R ESEARCH & T ECHNOLOGY Proprietary research platform - C#, C++, .NET, SQL Redundant offices and backups Encrypted trader access CSI & CQG data Staff growth focused on research C O N F I D E N T I A L I N F O R M AT I O N 6
  7. 7. P RINCIPALS Dick A. Stoken Dick Stoken graduated from Northwestern University with a B.S. in Law and then went on to graduate from the University of Chicago Booth School of Business with an MBA having a finance concentration. Mr. Stoken is a member of both the CME and CBOT and was an original partner in the commodity firm Lind-Waldock. He is the author of CYCLES, (McGraw-Hill) and STRATEGIC INVESTMENT TIMING (McMillan), both named best investment book of the year by Stock Traders Almanac. More recently he authored THE GREAT GAME OF POLITICS (Forge). After years as an independent trader, Mr. Stoken founded the registered CTA Neims-Stoken in 1984. The firm was dissolved in late 1990 and shortly thereafter he formed Strategic Investments, LLC. In 2009 Strategic Investments, LLC. became Strategic Capital Management. Mr. Stoken is responsible for the initial development of all systems and financial models used by Strategic Capital Management, LLC, and is ultimately responsible for all trading decisions. C O N F I D E N T I A L I N F O R M AT I O N 7
  8. 8. P RINCIPALS Joseph B. Chesney Joseph Chesney graduated with a B.S. Management from Aurora University. Since 1997, he has been actively involved in the trading, infrastructure and sales aspects of the futures and equity markets. Prior to joining Strategic Capital Management, Mr. Chesney worked at both Merrill Lynch and Morgan Stanley as a financial consultant. While at both firms he focused on the needs of start up Hedge funds and CTA’s. He also maintained a client based with whom he emphasized portfolio construction using alternative managers such as CTA’s, Managed Futures funds, and hedge funds. Mr. Chesney became a registered principal of Strategic Investments LLC, in March of 2007. He is responsible for overseeing all operational procedures of the firm and is the main point of contact for all due diligence reviews and investor correspondence. Mr. Chesney is an active member of the NFA. C O N F I D E N T I A L I N F O R M AT I O N 8
  9. 9. P RINCIPALS Patrick F. Hart III Patrick Hart holds a B.A. in Economics from Colorado State University. His role at Strategic Investments is to oversee strategic planning and business development. He is also Chief Executive Officer and Managing Partner of Three Palms, LLC and its affiliated entities. Mr. Hart has over twenty-five years of experience in the design, implementation and management of structured hedge funds and Managed Futures products. Mr. Hart is a member of the Managed Funds Association and served for nine years on the Introducing Broker Advisory Committee of the NFA. Additionally, since 1988, he has served periodically on the NFA Arbitration and Nominating Committees. Mr. Hart has written numerous articles published in leading investment publications, and is a contributing author to the Handbook of Managed Futures—Performance, Evaluation and Analysis (McGraw-Hill 1997). Mr. Hart serves on the board of the Colorado Chapter of Hedge Fund Cares, a not for profit organization comprised of hedge fund industry professionals committed to protecting children from abuse and neglect. C O N F I D E N T I A L I N F O R M AT I O N 9
  10. 10. I NVESTMENT I NFORMATION ACCOUNT S TRUCTURE S ERVICE P ROVIDERS Minimum Investment Accounting Fund: $250,000 Reporting: Pyxis Global Financial Services, LLC Managed Account: $1,000,000 Fund Audit: Spicer, Jefferies, LLC Management Fee: 2% Legal Rothgerber, Johnson & Lyons, LLP Incentive Fee: 20% Trading High-Water Mark: Yes Clearing & Execution: New Edge, Advantage Futures Back Office: Pyxis Global Financial Services Hurdle Rate: No Data: CQG & Commodity Systems Inc. C O N F I D E N T I A L I N F O R M AT I O N 10
  11. 11. STRATEGY DESCRIPTION Philosophy Investment Process Risk Management Portfolio Allocation Models Markets Traded C O N F I D E N T I A L I N F O R M AT I O N 11
  12. 12. P HILOSOPHY S TRATEGIC I NVESTMENT P HILOSOPHY Focuses on the long-term trend. We believe the time frame is longer term than most managers within the macro or diversified trend following space. Our trend identification method is disciplined and highly systematic. Highlights of our approach include a fundamental overlay, which determines trade participation and position sizing, a relative strength model, which allows us to concentrate on the best performers in a sector, and our use of volatility-based exits, which help us reduce position sizing and take profits that most long-term, directional programs tend not to capture. C O N F I D E N T I A L I N F O R M AT I O N 12
  13. 13. I NVESTMENT P ROCESS INVESTMENT PROCESS Core markets are selected as the most liquid and representative members of the major asset sectors. Secondary markets within each sector provide an alternative to core markets when relative strength may warrant their inclusion. Technical and fundamental inputs are combined into tested models which are the chief components in our decision making process. Technical models determine entry and exit. We do not believe in contradicting trends. Volatility algorithms may cut position size and tighten stops when market conditions warrant. Fundamentals are used to determine whether a sector’s outlook is bullish, bearish or neutral. The outcomes are combined with our technical models to affect trade initiation, stop placement and position sizes. Manager discretion may be used to decrease positions during periods of extreme market conditions. C O N F I D E N T I A L I N F O R M AT I O N 13
  14. 14. I NVESTMENT P ROCESS Strategic Investment Management has developed fundamental models for stocks, debt, and commodities. The models are used as a filter to validate technical signals. No trades in opposition to the major trend will be taken based on the fundamental models alone. C O N F I D E N T I A L I N F O R M AT I O N 14
  15. 15. I NVESTMENT P ROCESS Fundamental filters are used as a mechanism that indicates how heavily to weigh positions and whether to enter or exit a trade on a minor, intermediate or major signal. Fundamental Filter Models (Example Model) Fundamental Trend Bullish Bearish Neutral Technical Trend Bullish Bearish Bullish Bearish Bullish Bearish Minor No Trade No Trade No Trade No Trade No Trade No Trade Intermediate Partial Trade No Trade No Trade Partial Trade No Trade No Trade Major Trade Partial Trade Partial Trade Trade Partial Trade Partial Trade C O N F I D E N T I A L I N F O R M AT I O N 15
  16. 16. R ISK M ANAGEMENT R ISK M ANAGEMENT Risk Management is the most important aspect of Strategic Investment’s approach to the portfolio management process and is the basis for all modeling and research. The approach is multi-faceted and has an process dating back to the inception of the firm’s track record. C O N F I D E N T I A L I N F O R M AT I O N 16
  17. 17. R ISK M ANAGEMENT R ISK M ANAGEMENT ( CONT .) L OW L EVERAGE : Average Margin to Equity ratios fall between 5% and 8%, with a maximum of 10%. While exceptions do occur for certain markets, this puts the firm’s margin to equity ratios on the low end of the industry spectrum. S TRICT T REND A DHERENCE : We do not initiate or maintain positions which conflict with the long term trend as identified by our proprietary algorithms. C ORRELATION : Each program is constructed to contain multiple asset classes which were selected because they displayed sufficient negative correlation. Each portfolio is specifically designed and continuously back tested in order to perform under multiple market scenarios, including ones with a high degree of inflation or deflation. V OLATILITY C UTBACKS : Volatility models are used to determine when a specific market’s volatility has increased to the point where the risk has become unacceptable. At this time we reduce our positions and tighten our risk controls on the remaining positions. C O N F I D E N T I A L I N F O R M AT I O N 17
  18. 18. P ORTFOLIO P ORTFOLIO C HARACTERISTICS Low Turnover – 700 round-turns per $1milliion Low Margin – average 3-6% / max 10% 90% systematic / 10% discretionary 65% technical / 35% fundamental Strict trend adherence Non-correlation to traditional assets Fundamental overlay C O N F I D E N T I A L I N F O R M AT I O N 18
  19. 19. Commodity Allocation Model S TRATEGIC C OMMODITY C O N F I D E N T I A L I N F O R M AT I O N 19
  20. 20. Diversified Allocation Models S TRATEGIC G LOBAL B LEND 0% 0% 0% 0% METALS 16% EQUITIES & DEBT 38% ENERGIES 17% GRAINS, CURRENCIES MEATS, SOFTS 12% 17% NEUTRAL ENVIRONMENT C O N F I D E N T I A L I N F O R M AT I O N 20
  21. 21. Diversified Allocation Models S TRATEGIC G LOBAL B LEND 0% 0% 0% 0% Metals Equities & Debt 22% 25% Currencies 9% Energies Grains, Meats, 22% Softs 22% INFLATIONARY ENVIRONMENT C O N F I D E N T I A L I N F O R M AT I O N 21
  22. 22. Diversified Allocation Models S TRATEGIC G LOBAL B LEND 0% 0% 0% 0% Metals 12% Energies 12% Equities & Debt Grains, Meats, 55% Softs 12% Currencies 9% DEFLATIONARY ENVIRONMENT C O N F I D E N T I A L I N F O R M AT I O N 22
  23. 23. MARKETS & EXCHANGES Markets & Exchanges Commodity Currency Equity Debt Exchanges Corn Canadian Dollar S&P 500 US 10 Year Note CBOT Crude Oil Euro Currency Nikkei Japanese Govt. Bond CME Gold Japanese Yen S&P 500 Mini Euro Bund COMEX Soybeans British Pound NASDAQ US 30 Year Bond NYMEX Soybean Oil Swiss Franc Russell 2000 EUREX Soybean Meal DAX TSE Wheat SGX Lean Hogs Silver Copper Natural Gas RBOB Gasoline Cotton #2 Sugar #11 Coffee CORE markets are displayed in BOLD
  24. 24. C ONTACT I NFORMATION C ONTACT I NFORMATION Joseph B. Chesney (847) 222-0320 jchesney@strategic-inv.com S TRATEGIC C APITAL M ANAGEMENT, LLC www.strategic-inv.com B ACK O FFICE / A DMINISTRATION T RADING O FFICE 700 Seventeenth Street 209 West Jackson Suite 2400 6th Floor Denver, Colorado 80202 Chicago, Illinois 60605 C O N F I D E N T I A L I N F O R M AT I O N 24
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