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    Alt Hedge Strategies Feb 2013 - Final

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    Bill Hallman
    The Alternative Hedge Strategy seeks to invest in alternative strategies like hedge funds, private equity, and real estate. The strategy's objectives are to preserve capital, minimize volatility, and achieve an annual return of 7-9% net of fees. The pool is a core holding across all of GI's managed accounts.

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    Alt Hedge Strategies Feb 2013 - Final

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    Bill Hallman
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    The Alternative Hedge Strategy seeks to invest in alternative strategies like hedge funds, private equity, and real estate. The strategy's objectives are to preserve capital, minimize volatility, and achieve an annual return of 7-9% net of fees. The pool is a core holding across all of GI's managed accounts.

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    The Alternative Hedge Strategy seeks to invest in alternative strategies like hedge funds, private equity, and real estate. The strategy's objectives are to preserve capital, minimize volatility, and achieve an annual return of 7-9% net of fees. The pool is a core holding across all of GI's managed accounts.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    57 views2 pages

    Alt Hedge Strategies Feb 2013 - Final

    Uploaded by

    Bill Hallman
    The Alternative Hedge Strategy seeks to invest in alternative strategies like hedge funds, private equity, and real estate. The strategy's objectives are to preserve capital, minimize volatility, and achieve an annual return of 7-9% net of fees. The pool is a core holding across all of GI's managed accounts.

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    Attribution Non-Commercial (BY-NC)
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    G.I.

    ALTERNATIVE HEDGE STRATEGY FEBRUARY 2013


    GI CAPITAL

    G.I. Alternative Hedge Strategy Pool


    The Alternative Hedge Strategy is an alternative to traditional bond funds, which although carry very low credit risk, currently have minimal return; and to equity funds that exhibit high volatility. The Alternative Hedge Strategy seeks to invest in alternative strategies like hedge funds, private equity, and real estate, which offer higher returns, at a reasonable risk, while minimizing exposure to global stock and bond markets. The fund provides access to sophisticated private investment vehicles traditionally reserved for large pension plans and the ultra high net worth investors. The strategys objectives are to preserve capital, minimize volatility, have a low or zero correlation with stock and bond markets, and achieve an annual return of 7-9% net of fees. The pool is a core holding across all of GIs managed accounts.

    PORTFOLIO PERFORMANCE FOR ALTERNATIVE HEDGE STRATEGY


    Year 2011 2012 2013 0.19% 2.10% -0.29% 1.15% 0.49% 0.07% 3.16% -1.32% -0.83% 0.22% 1.55% 1.40% -0.16% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -0.20% 0.60% Total -0.20% 5.18% 3.26%

    STRATEGY
    Securitized Mortgages High Yield Bond Strategies Private Distressed Debt Hedged Fixed Income Distressed Real Estate

    COUNTRY
    US US US CAN US

    DESCRIPTION
    Long senior or mezzanine tranches of securitized bonds (RMBS, CMBS, CDOs, CLOs) through granular analysis of underlying assets in the pool. Hedged through tactically shorting the ABX (RMBS Index), etc. Publically traded bonds that have fallen below 75% of their par value. High current yields and yield to maturity. Some hedging through shorts on equities and non-distressed bonds. Private placements into charged off consumer debt at a severe discount to face value (ie 1-2% of par value). Purchased from distressed banks trying to clean up their balance sheets. High quality fixed income fund which has been hedged against a rise in interest rates. Private placements into real property with positive cash flows, purchased at significant discounts to replacement cost.

    INVESTMENT BY ASSET CLASS


    Distressed Real Estate -4.27%

    MONTH PERFORMANCE BY STRATEGY


    Global Macro

    7%

    3%4%

    21%

    Hedged Fixed Income High Yield Bond Strategies -0.35%

    3.30%

    Long/Short MLP Hedged Fixed Income

    34% 5% 7%

    19%

    Global Macro Private Distressed Debt Securitized Mortgages Long/Short MLP Cash -1.20% 0.03% 1.00% 0.00%

    8.65%

    High Yield Bond Strategies Securitized Mortgages Private Distressed Debt Distressed Real Estate Other

    FEATURE INVESTMENT
    High Yield Bond Strategies: This is a hedge fund strategy that buys distressed bonds and holds them to maturity or until they have substantially recovered. Bonds are usually issued at a par value of $100. When there is a negative company specific event, these bonds can trade down in the $50-80 range, resulting in a typical Yield-to-Maturity of 18-24%/annum. One could argue that they are priced this way because of the risk of bankruptcy, but about 80% of these stressed issues do not go bankrupt. And of the 20% that do, the average recovery rate is ~$43. A more likely cause of the distressed pricing is from a lack of liquidity. When these companies experience the negative event, the bonds often get down-graded by the rating agencies. These lower ratings often cause their institutional holders to have to sell, as they may have a mandate to hold a minimum credit quality, ie BBB and above. This can result in forced selling at very attractive prices from the buyers perspective. Another reason for mis-pricings in this space is that given its small size, there is not a lot of dollars chasing these returns. Stressed bonds in the US make up only 3% of the overall market. At the funds current average price of $65 (per average holding), they have a current cash yield of 13%. Assuming a 15% default rate and recovery to $90 on the bonds that dont default, the fund projects an 18% annualized rate of return.
    This monthly update does not constitute or purport to constitute a complete description of the G.I. Capital Corp. Alternative Hedge Strategy and is in all respects subject to the more detailed provisions found in the fund's declaration of trust. The Alternative Hedge Strategy is only available to GI clients who have engaged GI to manage their account under the alternative income/hedge mandate as outlined in their investment policy statement. The returns above are net of all fees, including management fees at a rate of 1.5% but excluding performance fees which are calculated at the managed account level. The references to the target rates of return are provided for illustrative purposes only and there can be no assurance that the fund will be able to achieve the targeted rates of return.

    G.I. ALTERNATIVE HEDGE STRATEGY FEBRUARY 2013


    GI CAPITAL

    G.I. Capital Corp. (GI)


    G.I. Capital Corp. (GI) is a wealth management firm specializing in developing customized investment solutions for its clients. We are a boutique firm focused on managing our clients portfolios, offering a high level of research and service to a limited number of clients. Our client base consists of high net worth individuals in Canada and over 20 countries worldwide.

    What GI Offers to its Clients


    At GI, our primary objective is to achieve equity style returns for our clients while reducing the risk and volatility of their portfolios. We manage our portfolios on an absolute return basis, meaning that it is our goal to make profits for our clients every year, regardless of market returns. To accomplish this, we combine traditional investments such as stocks and bonds with alternative investments such as private equity, mortgages and hedge funds. GI offers customized portfolio management services to clients with a minimum portfolio size of $250,000. Portfolios are managed on a discretionary basis which allows us to take advantage of buying opportunities or profit taking opportunities quickly. GI has a unique reporting system which consolidates all the clients holdings and provides customized monthly performance on a dollar and percentage basis.

    Small Firm Feel, Large Firm Peace of Mind


    Being a small firm allows us to give customized portfolio solutions and personalized attention to our clients. Our clients also have the peace of mind knowing that their custodian is TD Waterhouse Institutional Services, one of the largest Canadian financial institutions.

    Mark Irwin, Managing Director, CFA Mark Irwin is a Managing Director of G.I. Capital Corp. and is a Senior Portfolio Manager. Mark received a B.A. in Economics from Queens University in 1993 and is a Chartered Financial Analyst (2000). 19 years experience in investment industry. After working for several independent financial advisory firms, Mark founded Integrated Financial Consultants Inc in 1999. The firm focused on structuring absolute return portfolios through Alternative Investments. In 2004, Mark co-founded GI Capital Corp, a discretionary investment management firm, and in 2005, the clients and operations of IFC were rolled over to GI. Since 2000, Mark has been a pioneer in sourcing, researching and analyzing alternative investment strategies including private debt and equity, hedge funds, real estate, and other niche strategies in Canada and the US. Jim Goren, Managing Director, CFA, MBA, CGA Jim Goren is a Managing Director at G.I. Capital Corp. and is a Senior Portfolio Manager. 9 years of experience as a Portfolio Manager including as principal of a USD 100 million Venture Capital Fund. Over 11 years of experience performing financial analysis and research. Spent over 10 years working internationally and has developed a strong global investment outlook and international banking contacts. In addition to having investment experience, Jim has over 7 years of experience as a CFO of large technology companies. Has earned a Masters of Business Administration (MBA) degree from York University, Schulich School of Business, as well as a professional accounting designation (CGA). Jim is a Chartered Financial Analyst (CFA). Bill Hallman, CFA Bill received his Chartered Financial Analyst designation in 1994 18 years of investment industry experience Bill spent 8 years as an officer and director of a private investment management company in Toronto. He was responsible for international equity and fixed income research. He covered consumer services and the consumer nondurable sectors on a global basis. Bill has a further 10 years of experience managing individual wealth as a financial advisor and branch manager at 2 different IDA firms. He is an honors graduate of the Canadian Securities Course, completed the Commodity Traders Futures course and holds diplomas in Accounting and Securities Administration. In 2010, Bill joined GI Capital as a Senior Research Analyst and is currently an Associate Portfolio Manager.

    About the G.I. Capital Portfolio Management Team

    SERVICE PROVIDERS
    Custodian (for Fund) Fund Administrator Legal Auditor Custodian (for Managed Accounts)

    240 Duncan Mill Rd Suite 806 Toronto, Ontario M3B 3S6

    G.I. CAPITAL CORP.

    Mark Irwin, CFA 647-260-3388*223


    [email protected]

    Jim Goren, CFA

    647-260-3388*222

    [email protected]

    Bill Hallman, CFA

    647-260-3388*228

    [email protected]

    Gino Scialdone

    647-260-3388*229

    [email protected]

    G.I. Capital Corp. (GI) is a wealth management firm specializing in developing customized investment solutions for its clients. We are a boutique firm focused on managing our clients portfolios, offering a high level of research and service to a limited number of clients. Our client base consists of professionals, executives and business owners. Visit us at www.gicapital.ca

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