Risk Management

Risk management is integrated into the Firm’s investment process, resulting in variable frameworks to manage the portfolio across various environments.  The Firm believes risk management is a skill and can be observed by a fund’s ability to consistently generate excess returns (alpha) during normal environments and protect capital during periods of higher volatility.

 

Hedging is executed at two levels for the Heard Opportunity Fund:

 

  • Portfolio-Level: The Firm constantly assesses risks that the portfolio is exposed to, including industry-specific risks, factors and events. The Firm seeks to construct efficient, portfolio-level hedges to provide protection during periods when such risks may be elevated.

 

  • Position-Level: The Firm evaluates the potential for short-duration events to create volatility in existing positions, such as earnings and analyst days.  It seeks to establish short-term, position-specific hedges to protect the position from volatility while the long-term thesis remains intact.

 

Note: The Heard High Conviction Long Only Fund does not utilize hedges; it may use a limited amount of cash as a risk management tool as it deems appropriate.