Dark Horse Traders' Hedge
The Dark Horse Traders' Hedge is long/short virtual portfolio written by Scott Brown, President of Sabrient Systems. It is a based on Sabrient highly successful and popular Investorsí (H)Edge Portfolio.
The Dark Horse Tradersí Hedge (DHTH) takes advantage of technical market trends to tilt the balance of LONG vs. SHORT in bearish, bullish or range bound markets for added alpha (the measure of return on a risk adjusted basis).
Long and short equity positions taken in the DHTH portfolio are chosen using to Sabrientís rating system, which is based primarily on fundamental criteria. Because the stock positions are generally held for intermediate to long periods, these positions are ideal for using with option strategies taught by Phil Davis, of Philís Stock World.
The DHTH newsletter follows a number of guidelines in an attempt to minimize systemic risk, or "beta." (Beta is a measure of the volatility of a portfolio in comparison to the market as a whole.) To keep beta low, the DHTH portfolio has both long and short positions. Consequently, dramatic moves in the market will always be in the direction of at least part of the portfolio.
Using Sabrientís rating system, DHTH focuses on being long high quality stocks, and short low quality stocks. Long positions should fare better than average during market selloffs. In contrast, the short positions, selected from the lowest ranking stocks, should perform well during selloffs. These stocks are also expected to underperform higher quality names in a stronger market. This strategy is designed to balance the goal of attaining alpha with the desire to keep beta relatively low.
For detailed guidelines followed by the DHTH portfolio, click here.
The newsletter is published periodically.
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