March 11, 2010 11:07 PM ET

Focus

Status

Private Investor

Asset class

All US equities

Cap bias

No specific

Position type

Long and short

Approach

Market Timing

Trade frequency

10 to 30 trades per month

Holding period

Short term

Diversification

21+ holdings

Profile Feedback

Patrick Clark

Strategy Market-Neutral Growth

Category Opportunistic

Average trade replication time 2 minutes

1,931 Views

2 Subscribers

Model risk score 4

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Investment Strategy

Summary
Approach
Research
Allocation Discipline
Sell Discipline
Exceptions

Believing that we are in an inflationary environment, his primary goal is to preserve the purchasing power of the dollar. With a market-neutral portfolio, he attempts to minimize the risks of a long-only or short-only strategy. He uses systematic trading decisions in order to eliminate emotion from the equation.

He follows systematic trading rules so that trade decisions are not made based on emotion, but rather on previously developed rules designed to preserve capital. This system has proven to drastically reduce portfolio volatility and grow capital in both bull and bear markets. The portfolio’s maximum drawdown is substantially lower than that of the market as a whole.

He takes long equity positions in companies with very strong balance sheets. These companies have the resources to survive and even thrive during economic downturns and the cash reserves which allow them to gain market share while cash strapped competitors go bankrupt. He takes short equity positions in companies with very weak balance sheets. He sees profit potential in holding these short... [more +]

He creates a market-neutral account using one long-only account and one short-only account. Each short position represents 4% of the short-only portfolio. The long-only portfolio is always 100% invested. The long-only portfolio consists of 30 positions, with each position sized at 3.3% of the overall long-only portfolio value.

In the short-only portfolio, if any position grows to 5%, it is closed. The result is a reduction in short exposure during bullish times. During bearish times, he closes the short positions when they shrink to 2% of the short-only portfolio and then replaces the closed position with two new 4% short positions. In the long-only portfolio, he attempts to let the winners run and cut the losers early... [more +]

None

Investment Report

March 2010

The long term trend for commodities remains bullish. However, DBC has not been very exciting lately and has hovered north and south of its 30 week moving average. In contrast, the US dollar has convincingly pushed above its 30 week moving average and looks to have broken out of the downtrend it has been stuck in for the past nine months. I would not place any bets against the dollar in the face of current technicals which are decisively positive. Other currency action of note is the dramatic downfall of the Euro which looks like a mirror image of the US dollar over the past two months. Although the dollar and the Euro have both recently established new trend reversals, neither offers a very good entry opportunity at this point in my opinion. Both appear poised for a counter trend breather in the short term.

While the US dollar and the Euro are lock into a near inverse relationship, the Yen remains in a comfortable, steady, multi-year uptrend and appears recently to have very little correlation, either positive or negative, to these other currencies.

The VIX, which is a good gauge of relative fear and complacency in the market shows that investors are relatively complacent. Virtually all of the fear that cropped up as a result of the 2008 financial crisis is priced out of the VIX at this point. According to this measure, the market believes that we are out of the woods regarding this crisis. It is quite possible that the unprecedented stimulus spending package has averted the financial crisis that we faced in late 2008. However, we are yet to see the effect of this spending on the value of our currency and the cost of living. The jury is out as to whether the cure is preferable to the illness, so to speak. The rule of law has certainly deteriorated with the cure. It appears that there will be no consequences for the rampant irresponsible behavior throughout the financial industry over the past decade.

My view of the market remains bullish with a 41% long/short bias. This bias will continue until it changes since it is based on actual market conditions rather than a forecast.

March 2010

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Personal Background

Career Air Force Noncommissioned Officer stationed overseas for 18 years
Grew portfolio value 25% during the financial crisis in 2nd half of 2008
15 years of investment experience

Experience on Covestor.com^‡

Patrick Clark's Covestor.com Profile

Overperformed Russell 2000 for 14 of their 28 months on Covestor.com^#
Return Since Inception: 32.76% (November 2007)
Last 3 Months Return: -3.33% (Russell 2000 8.42%)
Annualized Return: 13.22%
Sharpe Ratio: 1.05 (Russell 2000 0.00)
Maximum Drawdown: -10.33% (Russell 2000 -59.89%)

Performance

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	S&P500
	Manager

Custom

YTD

Inception August 19, 2009	Model Manager	S&P 500
Return Since Inception (%)	6.02	14.97
Annualized Return (%)	11.08	28.50
Month to Date Return (%)	3.31	3.72
Calendar 3 Month Return (%)	(9.90)	(0.39)
Sharpe Ratio	0.43	1.78

Monthly Performance (%)

Month	Return	S&P500	Outperformance
Feb	(0.84)	2.85	(3.69)
Jan	(9.58)	(3.70)	(5.88)
Dec	(0.27)	1.78	(2.04)
Nov	5.92	5.74	0.18

The performance of the model manager's account has been calculated by CVIM on a daily time-weighted basis including cash and broker commissions. These returns do not reflect any CVIM suitability or risk score restrictions and are exclusive of CVIM fees. Therefore, they do not represent the performance of the CVIM model available for subscription. Benchmark returns have been calculated by CVIM using a time-weighted calculation of daily valuations and do not include cash or transaction costs. Please see the additional disclosures below.

Top Holdings

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Symbol	Security	Exchange	Allocation (%)
Cash	n/a	n/a	55.91
TNE	Tele Norte Leste Participacoes S.A.	NYSE	3.76
SNE	Sony Corporation	NYSE	3.64
GLW	Corning Incorporated	NYSE	3.49
BLX	Banco Latinoamericano de Exportaciones, S.A.	NYSE	3.42

Total Holdings 45

Data displayed is as of market close: March 10, 2010

Recent Transactions

View All

Symbol	Security	Type	Price
SQNM	Sequenom, Inc.	Buy to Cover	$8.26
SQNM	Sequenom, Inc.	Sell Short	$5.36
XNPT	XenoPort, Inc.	Buy to Cover	$6.95
BMA	Banco Macro S.A.	Buy	$24.56
DF	Dean Foods Company	Buy	$17.56

Data displayed is as of market close: March 10, 2010

* The Subscription Minimum is the minimum subscription required to follow a particular model. The minimum amount is determined by CVIM, based on the characteristics of the underlying model. It should not be considered as specific investment advice for your investment situation.

^‡ Covestor.com performance data has been calculated by Covestor on a daily time-weighted basis of the equity positions of the account and is exclusive of any commissions and cash in the portfolio. The member's performance on Covestor.com, based on a separate account, may not reflect the strategy employed to manage the model available for subscription on CVIM. Please see additional disclosures below.

^# Since the model manager's inception in Covestor.com

It should not be assumed that any information discussed herein will prove to be profitable or that decisions in the future will be profitable or provide similar results. The information set forth herein is not a substitution for personalized investment advice, and should not be construed as a recommendation to purchase or sell a particular security or to subscribe to a particular model.

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