At Cross Shore, our investment objectives & philosophy are to maximize long-term investment performance with volatility significantly less than that of the broad market by preserving capital in declining markets and materially participating in rising markets.
Experience tells us that a select number of hedge fund managers exist who normally place in the top tier of investment performance. Knowing this, we strive to construct a diversified, fund of funds portfolio targeting 15-25 of the industry’s premier long/short equity managers. We target this number based upon analysis that demonstrates adding additional managers does not materially reduce portfolio volatility and enhance portfolio efficiency.
At Cross Shore, we build our portfolios from the perspective that each individual manager is its own risk budget. Our process is dynamic in nature and is focused on allocating incremental capital to those managers we expect to generate superior risk-adjusted returns.
Our portfolio consists of managers who demonstrate a well-defined and transparent investment process for generating solid, repeatable risk- adjusted returns. We avoid strategies that require large amounts of leverage, rely on trend following, are macro driven, or implement “black box” or computer driven approaches that provide little to no transparency into their investment process.
In addition, we focus on managers who have created an organization built upon an investment approach that emphasizes original research, independent thinking and risk management. Our bias is towards managers who employ a fundamental research approach, have investment experience across multiple market cycles, provide high quality client service, have a well-staffed operations team and who have always utilized independent, well respected third parties for accounting, legal and fund valuations.