How Fees, Information Ratio and Economics Can Work for Allocators and Managers

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Fundamental long-short equity investing has been in decline with fewer new fund launches and dwindling assets, but David Stemerman, CEO, CIO and Co-founder of CenterBook Partners believes data clearly shows these investors still have significant investing skill. He argues that single manger hedge fund data collected using alpha capture can be used to construct new portfolios and strategies that will be more attractive for institutional investors. Through a combination of direct payments, data sharing, and partnering with single managers on custom strategies he believes that that alpha capture can revitalize single manager hedge funds. Not all alpha capture strategies are made equal though and one of the biggest problems he is trying to solve is convincing managers and their LPs that alpha capture can be done without harming the returns of the manager.

Read the white paper: https://www.centerbook.com/ACPaper

Become a CenterBook Partners partner fund: https://www.centerbook.com/contributors

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Timestamps

00:00 Intro

00:40 Fiscal.ai

01:34 Single Manager & Tiger Cub Origins

02:45 Fundamental Long Short Equity Under Pressure

07:21 History of Alpha Capture

09:07 Responsible Alpha Capture

16:40 Fiscal.ai

17:58 Why Don’t Managers Adapt to Allocator Demands?

26:48 CenterBook's Current Alpha Capture Strategy

33:14 How Do You Manage External Partners?

35:38 Reactions From LPs at Partner Funds

39:46 Types of Allocators Are Interested in Alpha Capture?

41:53 Types of Managers Partnering with CenterBook

43:04 Is Alpha Theory a Requirement?

46:03 Scale Limits for CenterBook

48:39 Do Most Managers Have Skill?

53:15 Active Extension: The Future of Active Management?

01:03:13 Timeline for Single Manager Active Extensions