Investment Strategy


PORTFOLIO COMPOSITION AND APPROACH


Concentrated Entrepreneurial Activist Longs
The majority of our long portfolio is concentrated (each: 10-25% max. position size at cost) in up to 5 target companies where we actively engage to generate value via board representation or acquisition of the entire company.  Target companies are deeply undervalued vs. revenue, gross profit, or assets, and also lack external risks (e.g. commodity, regulatory, heavy debt, customer concentration).  Our companies are poised to benefit from exponential technology trends.

Diversified Longs
Our remaining long book consists of approximately 40 long positions that are approximately 1% exposure each of our equity and predominantly under $1bb market cap.  We utilize our proprietary machine learning platform, Gravity, to continuously search for subtle indications of value and catalysts e.g. new management with a good track record, trading at low EV/Sales.

Diversified Shorts
Our short portfolio consists of approximately 200 positions at 0.5% exposure each, primarily companies under $1bb market cap. We utilize our proprietary machine learning platform, Gravity, to synthesize data indicating that the long term fundamental performance of our shorts will deteriorate. This includes financial data, personnel data, industry trends, and more.  Our short book is designed to generate absolute returns and provide substantial purchasing power during broad market declines.

AREAS OF EXPERTISE

Entrepreneurial Business Building
Experience improving business-operating performance to earn 2-3X unlevered returns in less than 3 years.  Successful activist strategy requires deal making savvy, operational expertise and legal skills.

Data science and software
Proprietary Gravity platform provides insights into industry and management characteristics. Machine learning systems help synthesize fundamental data more completely and consistently than unaided analysts.

Industries
Target companies across different industries, avoiding those with external risks (e.g. commodity, regulatory, debt):
•    Small public companies: $100mm -$2bb market cap
•    Deeply undervalued vs. revenue, gross profits, and/or assets
•    Strategically poised to benefit from exponential technology trends
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