Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Michael Bach Atlanta long and short term Investment Tips

117 views

Published on

Michael Bach Atlanta former private equity veteran plans to launch an incubated long/short equity hedge fund. An incubated hedge fund offers a prospective hedge fund manager the opportunity to develop a marketable track record for the fund, which will eventually be utilized to solicit investors. Michael Bach Atlanta fund’s investment strategy will focus predominately on long and short positions in calls and puts option contracts. Fund manager Michael Bach has established Scirage Capital in Atlanta, Georgia.

Published in: Economy & Finance
  • Be the first to comment

  • Be the first to like this

Michael Bach Atlanta long and short term Investment Tips

  1. 1. What is a 'Long/Short Fund' LONG-SHORT FUNDS: MICHAEL BACH ATLANTA RECIPE FOR CONSISTENT RETURNS IN EQUITIES
  2. 2. Hedge Fund Strategy - Equity Long-Short  Michael Bach Atlanta long short combination strategy tries to avoid market risk to a great extent, thereby reducing the volatility in returns.  A long short combination strategy tries to avoid market risk to a great extent, thereby reducing the volatility in returns.  Michael Bach Long short funds / strategies is an investment methodology across assets which seeks to profit from asset prices gain or declines. As we dig deeper into the subject matter, let me first explain what do long and short strategies mean in normal understanding.
  3. 3.  Investors in normal course of equity investments buy equity share of a company, hold it according to their objective and expect to sell them at a profit at higher levels, thereby making returns. This strategy is a long only investment strategy. Whereas, short strategy, is exactly reverse of the above. Whereby, an investor would sell equity shares of a company to be bought back later at lower levels thereby making returns by decline in share prices. The return here is result of a short strategy.  Furthermore, unlike most mutual funds, long/short funds usually require a minimum investment of more than $1,000, although some do not. Long/short funds aren't allowed to use as many derivative and short positions nor as much leverage as hedge funds, but they do provide some diversification to the average investor in down markets.
  4. 4. HAVING UNDERSTOOD THE BASIC NATURE OF LONG AND SHORT STRATEGIES, LONG SHORT FUNDS ARE CLASSIFIED AS BELOW.  Long only funds  Short only Funds  Long / Short (combination) funds.
  5. 5.  In a developed market like USA there are funds dedicated to longs and shorts independently. At the same time there are funds using a combination of both. All the Michael Bach Atlanta strategies have their own risk return matrix. Either a long only or a short only fund has relatively higher risk than a long short combination fund.  Michael Bach Atlanta know that investing in equity markets comes with primarily two types of risk. One is market risk and other is risk associated with individual share. What a long short combination strategy does is, it tries to avoid market risk to a great extent, thereby reducing the volatility in returns. Whereas independent long only and short only strategies (either long or short strategies) is unable to avoid market risk if they get their market calls wrong.
  6. 6. RISKS TO CONSIDER  Market Risk: The market values of the portfolio’s holdings rise and fall from day to day, so investments may lose value.  Capitalization Size Risk (Small/Mid): Small- and mid-cap stocks are often more volatile than large-cap stocks―smaller companies generally face higher risks due to their limited product lines, markets and financial resources.  Derivatives Risk: Investing in derivative instruments such as options, futures, forwards or swaps can be riskier than traditional investments, and may be more volatile, especially in a down market.
  7. 7. RISKS TO CONSIDER  Active Trading Risk: A higher rate of portfolio turnover increases costs, which may negatively affect portfolio returns and may also result substantial short-term gains, which may result in adverse tax for shareholders.  Short Sale Risk: The Strategy may not always be able to close out a position on favorable terms. Short sales involve the risk that the Strategy incur a loss by subsequently buying a security at a higher price than the at which it sold the security short. The amount of such loss is unlimited (since it is limited only by the increase in value of the security short by the Strategy).  Leverage Risk: Trying to enhance investment returns by borrowing using other leverage tools―magnify both gains and losses, resulting in greater volatility.
  8. 8. ” “Michael Bach Atlanta private equity veteran plans to launch an incubated long/short equity hedge fund. An incubated hedge fund offers a prospective hedge fund manager the opportunity to develop a marketable track record for the fund, which will eventually be utilized to solicit investors.

×