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