Collegiate Capital seeks to generate consistent, positive, risk-adjusted returns across market cycles in both absolute and relative terms in the long-run, with lower volatility than the broader market indices whilst protecting investor capital. We invest across numerous geographies and multiple strategies falling within several traditional hedge fund disciplines, and across and within a diverse range of asset classes.
Such strategies across equities, fixed income and commodities include equity long/short and event-driven, merger arbitrage, statistical arbitrage, convertible and derivative arbitrage and capital structure arbitrage. Portfolio composition is determined by analysis and selection of what we believe to be the best market opportunities, consistent with our investment objectives and our diversification and capital preservation aims. Our ability to invest globally across asset classes and sectors and in multiple strategies affords us great flexibility and allows us to adjust allocations dynamically in response to changing market conditions, so that we can capture gains and offset, smooth and contain any losses. We seek to generate consistently positive returns regardless of the directional movement in the markets (equities, interest rates, currencies etc. markets).
Through the use of both market returns (beta) and pure outperformance (alpha), combined with our broad diversification across geographies, sectors, time horizons, asset classes and alpha strategies (in addition to making use of a balance of active and passive investment solutions), we strive to deliver stable, positive returns with downside/tail-risk protection and lower volatility.
In each of our strategies our approach involves a combination of rigorous fundamental bottom up research into the key drivers of and opportunities for possible risk and return, thorough top down macroeconomic analysis and the use of quantitative tools and technology to build upon this. Together, this helps us make investment decisions, allocate capital and choose hedging strategies. In addition to using third party platforms and the leading providers, we have developed tools which build on traditional fundamental analysis and approaches, help improve our consistency and give us an advantage. It is important to emphasise that whilst powerful, these tools are only as good as the investor who uses them. For a skilled investor, these tools allow for more insightful analysis and a better consideration of probability and possible outcomes – hence leading to better investment returns in the long-run. However, in the hands of a poor investor they might simply mask their bad inputs. Ultimately, to set us apart, we rely on the innovation, expertise and insights of our people to come up with the very best ideas and identify the best opportunities for our different investment strategies. We seek to leverage their full capabilities and experience.
Investment processes and strict risk management
The skills of our people are important but our highly disciplined risk management and overall investment processes are just as crucial in ensuring positive results. We believe that a key driver of superior returns is a strong focus on risk vs. reward and our predominant focus hinges on managing risk first, above all else, and then maximising returns within a risk managed portfolio. Prospective investment opportunities undergo comprehensive analysis and we thoroughly study operational, qualitative and quantitative factors, assessing risks from multiple perspectives. We employ multistep due diligence processes with deep pre-trade analysis before making allocations and any changes to our market positioning and exposures. The investment committee constantly reviews holdings, assessing individual positions and sizing and overall portfolio composition against the stated risk management criteria and investment objectives. We focus on hedging and responsive asset allocation and impose non-discretionary and tight stop-loss mechanisms. As part of our daily risk management practices we carefully manage our use of leverage and have a strict and well defined set of controls.
We feel that, in addition to performance and effective allocations of assets, our rigorous fundamental and quantitative research and intense focus on risk management with sound frameworks characterises us.
In our pursuit of long-term and real returns, and in order to achieve further portfolio diversification, we also invest in real estate. We consider commercial, residential and industrial opportunities across the world, both in the private and public markets, and where appropriate make equity and debt investments across a range of strategies. These can at times act as effective hedges to inflation as well as a source of appealing risk-adjusted returns. We conduct extensive due diligence and deep analysis of specific opportunities to determine the value propositions and also of data from equity and debt based real estate transactions. We combine this with thorough real estate market research and capital markets intelligence when making investment decisions.
We make direct investments covering a range of strategies from prime and core/core plus to value-add and opportunistic. We often co-invest and work with trusted local partners and networks so that we can identify and respond to opportunities quickly when they arise. We have an active management approach and seek to find undervalued, underfunded or undermanaged property assets. We aim to unlock further value through operational improvements and via sustainable revenue growth and enhanced income streams.
In addition to locations with proven fundamentals and long-term growth prospects in the most developed markets, we strive to find potential investment opportunities in emerging markets where economies are growing quickly with lower levels of debt and where the demographics prove favourable. We can show flexibility with regards to property sectors in these markets and also look at office, retail and hotel opportunities here.
Investments in publicly listed REITs and real estate securities
We seek to capitalise on opportunities where listed real estate securities have not been priced efficiently, relative to the underlying value and growth prospects. We look to uncover catalysts for price appreciation as well as negative potential for diminished returns. In addition to analysing trends we aim to invest in mispriced (often undervalued but also overvalued) listed real estate companies (engaged in or related to the industry) and REITs.