Thursday, 31 July 2014
Last updated 16 hours ago
Mar 12 2008 | 2:00am ET
A pair of engineers from Lockheed Martin and General Motors are parlaying their technical know-how into a quantitative hedge fund that they hope will translate into big returns.
Andrew Borden and Stephen Longo, who are based in New York and Santa Monica, Calif., have launched Solytix Capital with three risk levels: conservative, moderate and aggressive. The fund combines long/short equity options and spreads positions in the Standard & Poor’s 500 Volatility Index and Russell 2000 Index, and exchange-traded funds and individual U.S. stocks with long-only positions in Dow 30 names. Its holding period ranges from one day to a few weeks.
The hedge fund rookies are banking on their strategy and prior trading experience–Longo traded his own account for years after leaving General Motors, and Borden spent 17 years in the risk management, trading and investment banking divisions at Merrill Lynch, Morgan Stanley and Goldman Sachs–to offset their lack of experience in the hedge fund space.
“We have a lot of experience in trading and risk management, so our having no experiences with hedge funds doesn’t deter us because the markets can be approached any infinite number of ways, and our intention is to not approach them the same way as others have,” said Longo.
“Our capital leverage ratio is considerably less than one, so we go in using our options, spreads and timing and we grab and get out, grab and get out. So any one time we’re sticking our dollars in the market, the worst case scenario is that it won’t kill us.”
The pair is currently marketing the fund to individuals and fund of funds via its own networks and cap intros from its prime broker, Shoreline Trading Group.
The fund charges a 3% management fee and a 20% incentive fee with a $1 million minimum investment requirement.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…