Monthly Letter December 2013

We’ve been managing our Fund for close to 2 years now (23 months to be precise) bring- ing us to a point where there is enough data to demonstrate, with reasonable con – dence, the Fund’s sta s cs are beginning to emulate what we delivered within Investor AB. The Fund’s percentage of posi ve months has been c.66% (15 out of 23), very close to what was achieved during our 101 months at Investor AB. Since incep on the Fund’s vola lity of approximately 9.5% is again close to where we were at Investor AB. Gross exposure has ranged from 80% to 220% (80% during signi cant drawdowns and 220% a er a period of very good performance) which is very much in line with what we were running at Investor AB. We had a net exposure between 20% and 60% for most of the me at Madrague. Again very much in line with what we did at Investor AB.

Our value at risk has been between 0.6% and 1% for most of the me, just as at Investor AB. We have been managing risk in the same way we did at Investor AB i.e. reducing risk when not performing and gradually increasing it when back in sync with the market. A notable ex- cep on though, is that we have been producing returns that actually exceed what we did at Investor AB (last me we refer to our previous employer in this le er). However more importantly, the above points evidence us doing what we communicated we would do as Madrague while at the same me providing a response to the o en asked investor ques- on of what, if anything, do we do di erently since becoming an external hedge fund.

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