Hedged equity strategy seeking long term capital appreciation, downside protection, and lower volatility by primarily investing in long and short positions in equity securities of U.S. companies.
Latest Meeting Note
Meeting Note 06 Nov 2019
The research team met with Dan Chung, portfolio manager of the Alger Dynamic Opportunities Fund. The fund is a growth-focused hedged equity strategy composed of Alger’s best ideas (long and short). The portfolio is fed by a two-sided inv... Read more
The research team met with Dan Chung, portfolio manager of the Alger Dynamic Opportunities Fund. The fund is a growth-focused hedged equity strategy composed of Alger’s best ideas (long and short). The portfolio is fed by a two-sided investment team structure: Fred Alger Management and Weatherbie Capital (small cap specialist founded in 1995 and acquired by Alger in March 2017). At the manager level, each team runs its own discrete best ideas portfolio following a growth-oriented, fundamental, bottom-up research process within their area of expertise. These two strategies are then combined into a single diversified US focused portfolio run by Dan Chung (CIO) and Gregory Adams (Risk Manager), who have the ultimate responsibility to oversee the strategy. The investment philosophy is rooted in the teams ability to identify ‘Dynamic Change’ companies that may be future winners and losers, with the latter typically deemed to be the ‘victims’ of the change (e.g. companies in growth sectors with deteriorating fundamentals, structurally challenged businesses, etc). These positions are managed more opportunistically (high turnover strategy) with a reasonably short investment horizon. The average holding period for long positions is about 12 months. These are typically companies with innovative products, high earnings growth, and enduring competitive advantage. A detailed scenario analysis model is developed to evaluate the risk/reward characteristics of each company (target prices are meant to be ‘ranges’ rather than static data points). The portfolio holds around 50-80 longs and 25-60 shorts across the equity market cap spectrum (the bulk of risk is in mid-large caps). The fund gross exposure ranges between 80% and 140%, while net exposure fluctuates between 30-60%.