Alternative Market Briefing

Prop trader, trained by a former CIA operative, launches qualitative hedge fund research service

Thursday, January 10, 2013

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Rene Levesque Bailey McCann, Opalesque New York:

When institutional investors start taking a hard look at their allocations to alternative investments, they often hire consultants to get color and advice on where they should place their money. Most of these consultants offer a quantitative analysis of blue chip, high-performing hedge funds and sometimes, a few emerging managers to keep an eye on. Yet, according to one research professional, many investors are overlooking qualitative factors which can provide critical information.

Rene Levesque, founder of Montreal-based, Mountjoy Capital is a former prop trader, and compliance officer who has interviewed over 4500 hedge funds to establish a proprietary set of qualitative benchmarks. He says these benchmarks, separate real alpha generators from those who rely on leverage, assume liquidity risk, or sell volatility to generate returns. Initially, the firm operated primarily in Canada, but has now expanded its reach to include a global subscription and client base.

Rather than chasing return profiles or focusing on AUM, Mountjoy looks at the propensity of existing returns to persist, based on qualitative factors such as the motivation behind trading ideas, and how those trading ideas are implemented into portfolios. "There is no value added in recommending the top 12 hedge funds. Anyone paying attention to hedge funds knows who those funds are, and what the returns are. Of the hedge funds I’ve interviewed, less than 4% are ......................

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