F-4 Strategy

We are not the smartest investors in the world. But we know who the smartest investors are. And we watch them closely.

Who are the best stock pickers on earth? Me? You? Your neighbor? Some dude with a website? A salaried analyst with Oppenheimer? Mad Money’s Jim Cramer?

Nope.

We can quantify who the best stock pickers are by analyzing historical 13F/D/G & Form 4 data. A select few hedge fund managers’ stock picks have consistently generated abnormally good returns in the past. Some SEC filings by “smart money” investors tend to predict unusual short and long term price changes in the related stocks. 

We have extensive historical data on these disclosure events, and have developed strategies to profit from them. F-4’s process involves waiting patiently for a “fat pitch” — a smart money disclosure that has a high expectation for profit over the short and/or long term. We hold a portfolio of stocks likely to “drift” higher, post-event, over the ensuing weeks. We manage these positions based on optimization/backtesting of historical price patterns.

Passive Bubble

In the near future, returns from passive investing are likely to be, at best, disappointing.  And at worst, downright ugly. 

The circumstances that fueled the past decade’s bull market, and inflated the “passive investing bubble,” will not persist indefinitely. The bursting of this bubble will flummox a generation of investors and managers unaccustomed to downside volatility.  Passive investors who have enjoyed persistently good returns from passive investments tightly correlated with the S&P 500 will likely experience disconcerting stretches of negative returns in the months and years ahead. 

The F-4 Fund allows qualified investors to sidestep direct investment in top wealth-creating hedge funds, and invest directly and early, in their best ideas. Essentially, we are creating what we feel is an optimized portfolio of “the best ideas of the best investors on earth.”

Team

Mark Gaffney, F-4’s Head of Trading has over two decades of experience managing strategies based on the alpha contained in smart money disclosures. Mark writes regular articles for WhaleWisdomAlpha.com based on the profit opportunities in smart money filings.

From 2005 through 2012 he managed a fund devoted exclusively to investing based on analysis of legal insider trading. The strategy utilized data contained in public SEC filings and averaged 20% annualized returns, with a maximum drawdown of 10% over this time period. In 2008, this fund returned 23.78% net to investors with a max drawdown of less than 3%. That year the S&P 500 was down 40.10%.

In late 2012 Mr. Gaffney discontinued that strategy. Backtests show that the strategy regained traction in 2013 and averaged a hypothetical 20.78% annualized return from 2013 through August of 2018. 

Mr. Gaffney resumed the trading strategy in August 2018 based on similar, but expanded event analysis. 

Interested in hearing more? Email Mark: mgaffney@gulfstreamcapital.net

Please see Disclaimers page for important information.