Risk Monitoring
Quantifying and understanding risk is a crucial pre-requisite to managing risk
Sivik has developed robust risk management systems to actively monitor exposures and incremental risks
Individual Positions
- Monitored closely for changes in fundamentals and market conditions
- Limit individual stock position to 7%; rarely above 5%
–Avoid taking filing positions
–Monitor liquidity and short interest on all positions
–If individual stock position is down 25%, formally reassess investment thesis
–Limit downside risk in binary events through use of options
- Non-US investments are usually held in local currency with a corresponding offsetting FX hedge to avoid currency translation volatility.
Market Exposure
- May take up exposure intra-month, typically reduce exposure at month end
- Biotechnology exposure limited to 25% (net) due to high beta of sector
- Track beta carefully to avoid mismatch
- Manage sub-sector exposure on a top-down basis
Actively trade around core positions to add incremental alpha