Meet The Top Dog of the Canadian Hedge Funds
I recently overheard a couple of colleagues chattering about investing in hedge funds and between the technical jargon and comparison gibberish, the only phrase I clearly understood was this:
"If I had 150 thousand bucks, I'd give it to Steve Palmer."
Researching the Markets
After a single quarter of trading, I seem to be at a near break-even point. Having heard horror stories of newbie traders losing 50% or more of their investment dollars in the early days of their trading, I suppose a mere 0.5% earnings profile is not such a bad place to start. Of course I could have earned more working at my regular job, but I see it as an educational sacrifice that cost far less than any university level course on the markets.
So what did I learn? Other than "keep green on your screen", a favorite Toni Turner sign-off to her twitter updates, I learned that there are good gurus, bad gurus, good funds, bad funds, and that everything is in flux always. I learned there is no sure thing and that psychology plays a major and often under-rated factor in the markets. I learned that technical indicators and Newton's laws of physics also play an often under-rated factor in the way the markets naturally move. I learned I am stupid about these matters and should listen to people with a track record while at the same time executing my own due diligence to confirm that at the very least I agree in principle with the advice.
So what does this have to do with Steve Palmer. Well, everything. Mr. Palmer fulfills the criteria of a good guru and manages a fund that fulfills the criteria for a first class investment. Of course, I would need 150 grand to walk through his Front Street office door, but hey, at least I have a goal.
So Who Is Steven Palmer?
Steven Palmer is a founding partner and Chief Investment Officer of AlphaNorth Asset Management, and runs their Partner Fund. After launching his investment career in 1997, Mr. Palmer became the Vice President of Canadian Equities at a major financial institution and subsequently managed a pooled fund of primarily small cap Canadian companies achieving a first rate ranking and returns of 35.8% over 9 years as compared to 10.0% for S&P/TSX Composite Index and 13.0% for the BMO small cap index.
He has an impressive track record for his young years and seems to make people lots of money, particularly investing in small cap Canadian companies, one of the most volatile, yet potentially most lucrative, investment fields.
Why is AlphaNorth so Attractive?
AlphaNorth Partners Fund is a "long biased hedge fund" launched in December, 2007, focussing on Canadian equity securities and offered to "accredited investors".
Returns Since Inception
(Dec1, 2007 to February 28th, 2011)
Annualized Cumulative
AlphaNorth Partners Fund 48.7% 262.9%
TSX Venture Index (4.1)% (12.6%)
TSX Total Return Index 4.0% 13.7%
Sure the fund dipped low in 2008 with nearly every other fund on the market, but it regained its lofty standing with a vengeance to earn an average annualized return of 48.7% since December, 2007. Big performance, big fund and a big ticket price of $150,000 initial investment. Not for the average Canadian, not for the faint of heart.
The Historical Accredited Investor
Bottom line, you have to have money to make money. And you need to be an "accredited investor" to buy a piece of AlphaNorth. A hedge fund is a high risk investment. And historically, the "accredited investor" class was designed to protect investors and investees against market crashes that could potentially wipe out personal or fund net worth.
Following the 1929 market crash and subsequent great depression, the US Congress intervened to set strict rules in place to in essence, "clean up" the practice of securities investing. Thus the Securities Act of 1933 and subsequent birth of the SEC, led to law that was passed which required companies to provide detailed information to investors so that they could make informed decisions. This Act also defined which investors could invest in certain securities, thereby creating the "accredited investor".
An accredited investor was defined as having "a net worth of at least one million US dollars or having made at least $200,000 each year for the last two years ($300,000 with his or her spouse if married) and have the expectation to make the same amount the following year."
Accredited investors have access to a level of investments such as hedge funds and other potentially high yield funds that the average Canadian unfortunately does not. And in all fairness, the law exists to protect that average Canadian from losing everything they own if a volatile investment such as a hedge fund crashes and burns up their life savings. It also protects the fund from having low risk tolerant investors run away at the first sign of a negative market flux.
Hedging With The Hedge Funds
From Wikipedia: "A hedge fund is a private investment fund which may invest in a diverse range of assets and may employ a variety of investment strategies to maintain a hedged portfolio intended to protect the fund's investors from downturns in the market while maximizing returns on market upswings."
Investors in hedge funds typically pay a management fee that goes toward the operational costs of the fund, and a performance fee when the fund’s annual return is higher than that of the previous year.
Check out Steven Palmer's AlphaNorth Partners Fund here.
Happy Investing
I recently overheard a couple of colleagues chattering about investing in hedge funds and between the technical jargon and comparison gibberish, the only phrase I clearly understood was this:
"If I had 150 thousand bucks, I'd give it to Steve Palmer."
Researching the Markets
After a single quarter of trading, I seem to be at a near break-even point. Having heard horror stories of newbie traders losing 50% or more of their investment dollars in the early days of their trading, I suppose a mere 0.5% earnings profile is not such a bad place to start. Of course I could have earned more working at my regular job, but I see it as an educational sacrifice that cost far less than any university level course on the markets.
So what did I learn? Other than "keep green on your screen", a favorite Toni Turner sign-off to her twitter updates, I learned that there are good gurus, bad gurus, good funds, bad funds, and that everything is in flux always. I learned there is no sure thing and that psychology plays a major and often under-rated factor in the markets. I learned that technical indicators and Newton's laws of physics also play an often under-rated factor in the way the markets naturally move. I learned I am stupid about these matters and should listen to people with a track record while at the same time executing my own due diligence to confirm that at the very least I agree in principle with the advice.
So what does this have to do with Steve Palmer. Well, everything. Mr. Palmer fulfills the criteria of a good guru and manages a fund that fulfills the criteria for a first class investment. Of course, I would need 150 grand to walk through his Front Street office door, but hey, at least I have a goal.
So Who Is Steven Palmer?
Steven Palmer is a founding partner and Chief Investment Officer of AlphaNorth Asset Management, and runs their Partner Fund. After launching his investment career in 1997, Mr. Palmer became the Vice President of Canadian Equities at a major financial institution and subsequently managed a pooled fund of primarily small cap Canadian companies achieving a first rate ranking and returns of 35.8% over 9 years as compared to 10.0% for S&P/TSX Composite Index and 13.0% for the BMO small cap index.
He has an impressive track record for his young years and seems to make people lots of money, particularly investing in small cap Canadian companies, one of the most volatile, yet potentially most lucrative, investment fields.
Why is AlphaNorth so Attractive?
AlphaNorth Partners Fund is a "long biased hedge fund" launched in December, 2007, focussing on Canadian equity securities and offered to "accredited investors".
Returns Since Inception
(Dec1, 2007 to February 28th, 2011)
Annualized Cumulative
AlphaNorth Partners Fund 48.7% 262.9%
TSX Venture Index (4.1)% (12.6%)
TSX Total Return Index 4.0% 13.7%
Sure the fund dipped low in 2008 with nearly every other fund on the market, but it regained its lofty standing with a vengeance to earn an average annualized return of 48.7% since December, 2007. Big performance, big fund and a big ticket price of $150,000 initial investment. Not for the average Canadian, not for the faint of heart.
The Historical Accredited Investor
Bottom line, you have to have money to make money. And you need to be an "accredited investor" to buy a piece of AlphaNorth. A hedge fund is a high risk investment. And historically, the "accredited investor" class was designed to protect investors and investees against market crashes that could potentially wipe out personal or fund net worth.
Following the 1929 market crash and subsequent great depression, the US Congress intervened to set strict rules in place to in essence, "clean up" the practice of securities investing. Thus the Securities Act of 1933 and subsequent birth of the SEC, led to law that was passed which required companies to provide detailed information to investors so that they could make informed decisions. This Act also defined which investors could invest in certain securities, thereby creating the "accredited investor".
An accredited investor was defined as having "a net worth of at least one million US dollars or having made at least $200,000 each year for the last two years ($300,000 with his or her spouse if married) and have the expectation to make the same amount the following year."
Accredited investors have access to a level of investments such as hedge funds and other potentially high yield funds that the average Canadian unfortunately does not. And in all fairness, the law exists to protect that average Canadian from losing everything they own if a volatile investment such as a hedge fund crashes and burns up their life savings. It also protects the fund from having low risk tolerant investors run away at the first sign of a negative market flux.
Hedging With The Hedge Funds
From Wikipedia: "A hedge fund is a private investment fund which may invest in a diverse range of assets and may employ a variety of investment strategies to maintain a hedged portfolio intended to protect the fund's investors from downturns in the market while maximizing returns on market upswings."
Investors in hedge funds typically pay a management fee that goes toward the operational costs of the fund, and a performance fee when the fund’s annual return is higher than that of the previous year.
Check out Steven Palmer's AlphaNorth Partners Fund here.
Happy Investing
Dear Investobot:
ReplyDeleteThank you for another great blog. What I'm reading between the lines is that equity investing is never risk-free, and that no matter what the best "guru" or money manager advises, there is alway a component of ambiguity and unpredictability to such investments. And though some have made huge amounts on the market, an equal (if not greater) number have lost a big chunk of their savings. One could argue it's not far different from rolling the dice. Of course, self-education and taking charge of one's investments, can, even if in some small ways, mitigate the risk, or at the least give an individual some sense of financial self-determination, and with it....more peaceful and sound sleep.
Thanks Vadim for your comments. Yes, I agree it's like rolling the dice and my broker account history would certainly attest to that. In the end, the best advice will always be that reviewed in hindsite and the safest thing is likely not to roll any die but stash your cash under the matress. However, having the opporunity to grow an investment is something that appeals to me and thus I carry on in the task of my research. The most peaceful sound sleep may not be on top of a mattress filled with bills, but secure in the knowledge that I've at very least, diversified, read the small print, and bought life insurance! Cheers!
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