BURNSVILLE, Minn. (HedgeWorld.com)–You don’t have to be a rocket scientist to build a hedge fund portfolio, but it surely doesn’t hurt–especially when your chosen investment methodology is options-based and reliant on complex quantitatively driven trading models.
That’s according to former aerospace engineer turned portfolio manager Alan Bohlig, who has been running a friends and family fund for six years but only recently formalized his hedge fund efforts with the creation of Alterity Capital Management.
Alterity Capital Management, whose name is an amalgam of the words “alternative” and “integrity” is the brainchild of Mr. Bohlig and his business partner Christopher Shaw, former broker and information technology specialist.
“It was a natural evolution. It really all started with family and personal money, but over time I realized that I had something that really worked well and presented a real business opportunity, which is how Alterity came about,” Mr. Bohlig said.
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The firm recently opened its Strategic Investment Fund LP to outside investors. And although the formalized fund structure itself is new, its options-based trading strategy traces its lineage directly to the personal portfolio that Mr. Bohlig has been trading for years. “We think the fact that it’s an options-based strategy makes it distinct. Of the 6,000 or so hedge funds out there, we estimated that there are only about 100 people running options-based hedge fund strategies,” Mr. Shaw said.
That options strategies are a relative rarity among the hedge funds might be explained by the fact that it takes a person with a strong quantitative and technical background to construct an options-based portfolio vs. one that places bets on equities in a long/short format using straight fundamental research. Mr. Bohlig’s multi-disciplinary background in engineering and investing made it possible for Alterity to create its options-trading models, according to Mr. Shaw.
Alterity’s investment style is one that Mr. Bohlig describes as “relative value using options.” The options themselves are targeted at highly liquid U.S. large caps with the derivatives being used to capture alpha on both the upside and downside.