Tuesday, 24 May 2016
Last updated 14 hours ago
Jan 28 2009 | 12:19pm ET
Wesley Gray, a former U.S. Marine Corps intelligence officer in Iraq and founder of Lewes, Del.-based Empirical Finance, has launched his maiden hedge fund.
Gray’s Empirical Search Strategies debuted in September with seed capital from an investor who is “testing” the strategy until Dec. 31, 2009. The investor will then decide whether to make a larger allocation, according to Gray. Since inception, the fund is down 12.56%, while the Russell 2000 Index fell more than 39% during the same period.
The former-leatherneck, who is also currently completing his Ph.D. at the University of Chicago’s Booth School of Business, said the fund is a long-biased micro-cap equity strategy. It screens stocks using a proprietary algorithm, narrowing its investment universe to some 75 names, and performs fundamental analysis on those finalists.
Currently, the fund is 90% invested long, with most of those investments in special situations opportunities such as liquidations and companies selling for less than cash value.
“We are essentially playing it safe, protecting capital, and waiting for better opportunities,” said Gray, who is hoping to follow in the footsteps of another Chicago doc, AQR Capital founder Cliff Asness.
Gray said his time in the Marines Corps has sharpened his analytical skills and thickened his skin against the adversities faced by rookie hedgies.
“The U.S. government spent a lot of money teaching me skills that allow me to analyze multiple sources of data and synthesize it into a coherent and behavioral bias-free thesis,” Gray said. “I also had the opportunity to embed with the Iraqi army and dodge AK-47 rounds for a while, so that makes it easier to deal with the adversity we face in the market or our fledging investment management business.”