Modern Capital Management Co.
A Modern Approach for the Modern Professional
WHO WE ARE
- Markets behave as efficiently as market participants account for them, which can lead to discrepancies and opportunity
- Markets trade efficiently with regards to price but not necessarily value
- Over time inefficiencies tend to reduce which can present attractive exit points
AND THEREFORE, SEEK TO...
- Buy securities that are trading at levels that represent a discount to their historic net asset value (NAV) or multiple.
- Purchase securities that are mispriced due to short-term negative events or presence in out-of-favor sectors.
- Sell securities in sectors that have appreciated ahead of their historical means.
- Invest in closed-end funds that provide dividend payouts during the holding period.
SOURCING AND EVALUATION
A broad scope of market factors are considered, and may vary from time to time, depending upon the portfolio's current composition. The team seeks to:
- Establish a general market outlook.
- Evaluate and constantly monitor all closed-end fund market segments.
- Assess the capital markets, geo-political and macroeconomic environment.
- Identify closed-end fund classifications that display significant pricing inefficiencies.
RESEARCH & ANALYSIS
Once a thesis is established, the in-house research team evaluates targeted ideas, based on the critical characteristics, including:
- Underlying securities
- Historical performance
- Fund management
- Gap between share price and NAV
- Source of discount
- Leverage percentage
- Tax considerations
- Dividends & Dividend date
- Comparables with ETFs and open-end funds
TRADING & EXECUTION
The team trades across all sectors and market capitalizations
- Portfolio typically contains 40 to 80 total long positions in CEFs, ETFs, ADRs and Equity & debt instruments.
- Average time horizon is less than one year.
- Actively managed averaging over 300 trades per month.
- Utilize cash as a tactical allocation.
- CIO controls final decisions regarding significant position changes and/or portfolio rebalancing.
- Tactical trading ensures optimal positioning, attractive entry and exit points and takes advantage of market volatility.
The portfolio team convenes for a formal discussion to:
- Challenge research assumptions.
- Assess the thesis through the filter of the firm's daily and longer-view trading strategies.
- Optimize return profile by daily trading against core positions.
- Determine if holdings maintain risk efficiency.
The Modern Capital Tactical Opportunities Fund
Our consulting process begins with a discussion about your needs, your pain points, and strategic vision. Contact us to schedule a discovery call to get started.