2CHYP remains active
As you know, 2CHYP is an actively managed portfolio which means it is adaptive to market environments. Essentially, we try to create alpha in 2 ways:
- Stock selection: Owning positive active weights in superior stocks
- Return enhancement: Opportunistic trading activity that enhances winners and mitigates losers.
Each of these components can cause positive or negative alpha, but over time we believe we can produce positive alpha through hard work and relentless dedication. This week, the market provided good examples of each side of active management.
SRC’s weak earnings report demonstrated that we were wrong in selecting that stock and hurt 2CHYP’s returns, but we made back some of the loss through opportunistic purchase on Thursday as the stock bottomed. With SRC up about 11% today, our return enhancement technique appears to have worked in mitigating some of the losses. The 500 shares that were purchased yesterday were sold for a material profit.
We see this sort of activity as the value of 2CHYP’s real time trade alerts. We can alert you when opportunities are the most fecund. Errors will be made in our approach, but passive investing cannot replicate this version of risk mitigation. It will not trim stocks that get overheated, nor will it buy those which have fallen too far.
Commentary may contain forward looking statements which are by definition uncertain. We retain no obligation to update or correct forward looking statements should the available information change. Actual results may differ materially from our forecasts or estimations.