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Benedicte Gravrand, Opalesque Geneva: When he set up RBR Capital in 2003, an asset management firm that runs long/short hedge funds and a long-only fund, Rudolf Bohli wanted to focus on local alphas, that is, alpha from the German speaking part of Europe. This worked well with investors and with returns. But after the Lehman debacle, it was time to adapt to a different landscape: so he organized the regulation of his products and company with multiple jurisdictions, and expanded his investment universe to include Western Europe ex-UK – not wanting to "compete with Chelsea in the Chelsea football stadium." This move made sense, he says, because opportunities are no longer what they were before 2007, when stocks and regions were a lot more correlated.
RBR's investment process is bottom-up stock picking: it involves meeting a lot of companies, maybe 500 a year, cross-checking all information, before shrinking the selection down to 30 positions at 2% each – from a universe of 800. Once the core portfolio is set, the managers undertake further research – following the Kelly Criterion, an investment formula.
The Kelly Criterion (aka Kelly strategy, Kelly formula, or Kelly bet) is a mathematical formula relating to the long-term growth of capital developed by John Larry Kelly Jr in 1956. The formula is currently used by gamblers and investors to determine what percentage of their bankr...................... To view our full article Click here
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