The Ultimate Alpha Fund, LP

Transcription

1 U L T I M A T E A L P H A P A R T N E R S, L L C The Ultimate Alpha Fund, LP June 2007 A Dynamic Investment For The 21st Century For Accredited Investors 62 6 Rex Corp P laza U ni onda le, NY Telephone : Fax : E ma il: i n fo@compl ete hedge.com Web address: J O I N O U R F A M I L Y O F I N V E S T O R S

2 T a b l e o f C o n t e n t s 3 T H E F U N D A D Y N A M I C I N V E S T M E N T 5 I N V E S T M E N T S T R A T E G Y Investment Summary Past Performance 2 2 A N I N T E L L I G E N T I N V E S T M E N T 3 2 E X T E R N A L C O U N C I L Overview of Strategies Section I: Description of Strategies A) Primary Strategies B) Secondary Strategies C) Integration of Strategies Section II: Portfolio Management Issues L i k e N o O t h e r F u n d W h y T o I n v e s t M a n a g e m e n t T e a m G e n e r a l I n f o r m a t i o n T e r m S h e e t A u d i t o r P r i m e B r o k e r 3 3 G E N E R A L H E D G E F U N D I N F O R M A T I O N D e f i n i t i o n o f a H e d g e F u n d A c c r e d i t e d I n v e s t o r s H e d g e F u n d v s. M u t u a l F u n d s H i s t o r i c a l H e d g e F u n d P e r f o r m a n c e

3 T h e F u n d A D Y N A M I C I N V E S T M E N T Investment Summary he Ultimate Alpha Fund is a domestic equity portfolio, utilizing multiple strategies to identify securities with high growth potential, by finding securities inappropriately priced due T to market misconceptions or short term factors. T he fund is continuously hedged between 15-20% through short strategies, and employs additional risk reduction strategies, including market hedges, risk arbitrage, and covered option writing. Portfolio Characteristics Methods employed have historically exhibited superior long-term performance. Quantitative mathematical modeling, statistical analysis, market cycles, and fundamental analysis are all employed in a highly integrated strategy. The portfolio is diversified among strategies, sectors and individual securities. Holding period averages 16 months, which lower transaction costs and maximize capital gain tax advantages. Performance is driven by individual security selection. Companies are chosen based upon fundamentals, management, and valuation, with an emphasis on finding securities inappropriately priced due to market misconceptions or short term factors. The risk management philosophy includes maintenance of a continuous hedge with net long exposures of 80-90%. Of this net long position approximately 25% is invested into relatively low risk covered option writing and risk arbitrage strategies. To maintain diversification and minimize risk, initial investments into any one security do not exceed 8% of the portfolio. Positions that, through growth, exceed 15% of the total fund assets, are reduced. The fund uses limited levels of leverage (margin). Fund Objective Exceed the return of the S&P 500 index by 10% annually. Preserve investment capital through managed exposure to risk. Produce positive returns for investors each year. 3

4 A D Y N A M I C I N V E S T M E N T Past Performance he methodology closely resembling that used in the portfolio has been put into practice in T an existing portfolio for 6 years (6/00 through 5/06), producing average annualized returns of 42%* and a total return of 815%*. Return on the portfolio since inception (5/01/06) through 6/30/07 are as follows: Ultimate Alpha Fund: % Fund outperformed all 3 indexes Dow Jones Industrials +18.0% Fund outperformed Dow Industrials by 82.2% S&P % Fund outperformed S&P500 by 85.5% NASDAQ +12.1% Fund outperformed NASDAQ by 88.1% Fund Performance vs S&P 500 T h e F u n d Percent Change /1/2006 6/30/2006 9/30/ /31/2006 3/31/2007 6/30/2007 Date Ultimate Alpha Fund S&P 500 he top 5 holding of the portfolio as of June 30, 2007 are as follows: T Stock Ticker Portfolio Percentage Purchased Current Price 6/30/07 1 Garmin Ltd GRMN 12% 9/06 $45.28 $ Schlumberger SLB 11% 11/06 $64.28 $ Lifeway Foods LWAY 9% 5/07 $ 9.25 $ Northern Tech NTI 9% 8/06 $ 8.07 $ Priceline.com PCLN 6% 6/06 $30.00 $ *Notes to the returns displayed are as follows: The Ultimate Alpha Fund, LP became operational on 5/01/06. Prior to this the methodology was utilized in a private portfolio. No management fees were incurred by the portfolio through 5/01/06; Beginning 5/01/06 fees apply. Past performance is not a guarantee of future results. The fund is not approved or regulated by the SEC. The fund is not insured against loss. 4

5 I n v e s t m e n t S t r a t e g y I N V E S T M E N T S T R A T E G Y Overview of Strategies he Ultimate Alpha Fund employs aggressive strategies focusing on the selection of both T growth and value securities. Approximately 30-45% of invested assets are in securities selected using growth strategies and 20-35% of invested assets are in securities selected using value strategies. Among growth and value selection, multiple strategies are employed. The use of such multiple investment strategies makes the fund unique and adds to the diversification of the portfolio. Although each strategy employed has its particular strength, the methods used are best summarized as intelligent investments into superior companies at the appropriate time. The methods used are best summarized as intelligent investments into superior companies at the appropriate time. I n addition to the above strategies, several secondary strategies are employed as a means of limiting risk. The secondary strategies act as a direct hedge, and buffer the higher risk growth and value strategies against severe market declines. Approximately 40% of portfolio assets are dedicated to these strategies. Such a high percentage is employed into these strategies because of the belief that no potential return is worth the risk if investment capital is not preserved as a consequence. While these strategies can not guarantee the prevention of losses, they do act to reduce the risk of such occurrence. No potential return is worth the risk if investment capital is not preserved as a consequence. Primary Strategies To Produce High Returns 55-65% Primary Strategies: - Growth - Value The Formula: Producing High Returns Using Risk Management Secondary Strategies To Manage Risk 35-45% Secondary Strategies: - Shorting - Risk Arbitrage - Option Writing - Market Timing Portfolio High Risk- Adjusted Returns 5