CEC Preps Market Neutral Strategy, Halts Ocean Program

Oct 18 2007 | 12:50pm ET

CEC Capital has a new Goal in mind.

The Stuart, Fla.-based commodity trading advisor is gearing up to launch a market neutral strategy with the help of an industry veteran after putting the brakes on its two-and-a-half year old Ocean program.

CEC’s managing director Clark Collins has been prepping the latest offering, tentatively named the Goal program, with fellow CTA Pierre Tullier, the former president of Dunn Capital Management.

“The strategy is similar to pairs trading and we’re trading the largest of the S&P 500 stocks,” said Collins. “It’s a mathematical system looking at the nine different sectors that make up the S&P. Each sector is isolated as far as the analysis goes in measuring the stocks in terms of being under or overvalued. We use correlations and coefficients to help us with weighting different positions. I don’t think people have addressed market neutral in this fashion.” 

The new strategy, which already has attracted between $5 million and $20 million in commitments, is slated to launch in January and Collins aims to raise $100 million within the first year.

“We really think we can raise quite a bit of money from pensions and other investors looking for a market neutral product in a highly volatile environment,” he said.

Meanwhile, Collins said the firm stopped trading its Ocean program, a systematic diversified futures strategy, in April because it wanted to make the program fully automated.

“It was just overwhelming taking care of the Ocean program so we made a decision six months ago to stop trading it until we can implement fully automated strategies,” he said. “Currently, we have to place the orders verbally so we’re doing additional research on the program and we want to get to get it to a point where the computer is running it 100%.”

Collins, who anticipates trading the program again sometime within the next few months, said Ocean investors were diverted into the firm’s Tradewinds Global Fund, a multi-strategy fund of funds that invests in long/short equity, fixed income, foreign exchange, managed futures, and convertible arbitrage managers. The Ocean program managed $12 million at its peak in 2006 and returned –6.6% last year.

Before founding CEC Capital in 1999, Collins co-founded TJM Capital Partners and served as a portfolio manager for the firm’s multi-strategy fund of funds.

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