What Defines the PrideRock Investment Process?

The PrideRock edge lies in its investment process which, at its heart, uses systematic means to identify core market trend and trades the identified trend – or counter-trend – on both algorithmic and discretionary bases.

All PrideRock hardware is off-the-shelf and fungible. Competitive advantage is driven by our software – our programming -- and the signals it provides.

PrideRock begins its investment process with a “strategy scan” that identifies, in a discretionary manner, a stock pool of some 200 equities. The pool is China-focused but not necessarily exclusively Chinese. The PrideRock principals believe strongly that unique, uncorrelated market out-performance can be captured by assessing how the world maps to the China beat – whether it be on a top-down fundamental basis, a sector-specific basis, or a granular microeconomic basis that secures return via pronounced trend (or trend disruption) in the likes of supply chains.

The first stage of the PrideRock competitive advantage is secured from this pool of equities, which are evaluated against a mix of metrics – “strategies” – to find the best “histories” to trade. Once evaluated, some 20 to 40 stocks (and it can vary) are chosen and bucketed into three groups by the PrideRock principals: a single stock bucket; a market layer bucket; and a pair layer bucket that essentially captures long-short positioning.

In a typical portfolio, the single stock bucket is made up of 20 companies; the pair layer can contain another 20 some stocks, usually unique to the portfolio from the single stock bucket, but not uniformly so. The market layer bucket generally constitutes index-focused beta exposures and hedges.

The buckets are all established and traded automatically via PrideRock’s proprietary algorithms – algorithms themselves which are designed to discern and signal key directional market trends and gamma events.

To no small extent, the signals are the PrideRock edge and assist the principals in divining whether market action is trend-following or, conversely, constitutes trend-reversal.

Once evaluated, the principals will implement -- on a discretionary basis -- macro strategies to capture that market trend. The principals will also deploy CTA strategies designed, if need be and the circumstances permit, to capture intra-day volatility.

The net delta of the notional portfolio generally runs at 50%, plus or minus depending on core market trends.

Gross delta runs maximum 200% -- but depends on the number of signals the algorithms relay.

Equity portfolio turnover, including futures, runs around 15-25x per year, though the pairs turnover – which sits longer generally in the portfolio than the single stock bucket – is lower in number.

CTA portfolio turnover can run as high as 50-100x turnover per year.

Weighting in the portfolio amongst the three core buckets varies, but inclines toward 50% equity exposure; 30% macro exposure; and 20% CTA exposure.

At any one time, the China-centric nature of the portfolio with contain 50-70% China A-shares, H-shares or ADRs. The balance of the portfolio will be aimed at capturing how global markets are resonating to China and can come from a bevy of asset classes – equities, currencies, fixed income or commodities.