Monetary Matters with Jack Farley Can Alpha Capture Save Fundamental Long/Short Equity Investing? | David Stemerman CenterBook Partners
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Nov 18, 2025 David Stemerman, CEO and CIO of CenterBook Partners, dives into the world of alpha capture strategies aimed at revitalizing long-short equity investing. He discusses the importance of systematic portfolio construction and how it can unlock hidden returns for bottom-up stock pickers. Stemerman also addresses the skepticism around alpha capture, offering insights into how to engage fund managers without compromising their performance. With a bold vision for the future, he shares plans for integrating human skill with advanced data techniques to enhance investment outcomes.
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Hidden Alpha Behind Market Noise
- Bottom-up stock pickers generate significant alpha that's often masked by market beta and factor exposures.
- CenterBook isolates idiosyncratic returns via risk models to reveal that persistent stock-picking skill.
Protect Managers From Market Impact
- Measure trading impact by comparing the manager's and platform's trading volumes and reimburse any negative effect.
- Wait days to trade long-term fundamental ideas since most alpha persists beyond immediate price moves.
Calling A Zero Without Timing
- Stemerman recalled calling a South African consumer finance company a zero without knowing the timing of the decline.
- He used this to illustrate that knowing eventual outcomes differs from timing and position-sizing challenges.