Internet Advantage Strategy

Predicting Revenue Trends using a Company’s Internet Footprint
ZEGA – in conjunction with Alpha-DNA, a data mining firm – monitors the digital footprints of 2,200 publicly-traded companies. After four years of study, we’ve found a high correlation between the changes in demand for a company’s products and changes in the trajectory of its digital signal. We use this demand projection to identify potential revenue trends that are expected to surprise the markets.

What is it?cropped-ZEGA-FINANCIAL-LOGO-SYMBOL.png

  • An equity strategy that takes a unique research approach
  • Tracks the Digital Footprints of 2,200 publically traded companies
  • After 5 yrs of study, we’ve found a high correlation between the changes in demand for a company’s products and changes in the trajectory of its digital signal.
  • Long Short: Always long stocks – sometimes short stocks or indexes according to risk measures 

Potential Benefits:

An Innovative Equity Strategy

  • Can produce positive returns for the investor regardless of the direction of the market
  • Typically and especially when it has more short positions, it has less risk and lower volatility than the equity markets
  • Low historical correlation to the Equity or Fixed Income markets results in increased portfolio diversification

Portfolio Fit: 

Equity Long / Short

  • Excellent for many risk averse clients
  • Allocation commensurate with client risk profile
  • Best deployed in IRAs or with clients that are not tax sensitive due to regular rebalancing

Risks:

Long / Short is More About Risk Avoidance

  • The portfolio is always long positions and typically it has short positions of material size
  • Diversified portfolio of long equities and short stocks or indexes
  • Observed standard deviation of the strategy thru the end of March 2017 is less than 7%

What is it?cropped-ZEGA-FINANCIAL-LOGO-SYMBOL.png

  • An equity strategy that takes a unique research approach
  • Tracks the Digital Footprints of 2,200 publically traded companies
  • After 5 yrs of study, we’ve found a high correlation between the changes in demand for a company’s products and changes in the trajectory of its digital signal.

Potential Benefits:

An Innovative Equity Strategy

  • Is targeted to own stocks that are producing more revenue than the analyst community expects – which is more likely to produce higher performing stock holdings
  • High correlation to the Equity markets

Portfolio Fit: 

Excellent replacement for your equity allocation

  • As a diversified portfolio of stocks, it is a candidate to represent your long US Equity exposure in any asset allocation
  • Allocation commensurate with client risk profile
  • Best deployed in IRAs or with clients that are not tax sensitive due to regular rebalancing

Risks:

Long equity exposure carries market risk

  • The portfolio is long 30+ individual equities in small cap, mid-cap, and large cap holdings
  • Macro moves in the market will likely always be experienced in the performance of this account
  • Because of the growth and small cap holdings, it is typically around 25% more volatile than the S&P 500

IAS Best Equity Picks

 as of 9/30/2017MTDYTD1 YearITD
IAS Net6.2%20.8%23.7%13.0%
Benchmark2.4%13.9%18.7%


IAS Equity Long / Short

 as of 9/30/2017MTDYTD1 YearITD
IAS Net4.9%13.0%13.1%6.2%
Benchmark 1.1%8.0%10.4%

Internet Advantage Strategy –

Note: Returns are expressed in US Dollars net of fees.

ZEGA Financial is a registered investment adviser and investment manager that specializes in derivatives. ZEGA is a separate accounts manager and all returns expressed herein are solely from the separate accounts business within ZEGA.

INTERNET ADVANTAGE STRATEGY: EQUITY BEST PICKS Composite includes all institutional and retail portfolios that invest in a highly diversified portfolio with up to 40 holdings. The portfolio is made up of Large, Mid, and Small Cap U.S. equities designed to be long only. The strategy aims to outperform the market by identifying the stocks most likely to out-perform based on changing demand. The Internet Advantage Strategies is a series of strategies based on an innovative new research approach: ZEGA tracks the digital Internet footprint of publicly traded companies to find hidden demand trends in the market place. This composite includes all portfolios that were at least 70% dedicated to this strategy.   The benchmark is the Russell 3000 Index. The Russell 3000 Index is a collection of 3,000 of the publicly traded US Equity companies that span large cap, mid cap, and small cap categories.

INTERNET ADVANTAGE STRATEGY: EQUITY LONG/SHORT Composite includes all institutional and retail portfolios that invest in a diversified portfolio of over 30 total U.S. equity positions – either long and/or short. The strategy aims to reduce systematic market risk by identifying the stocks most likely to out-perform other stocks based on changing demand. Risk is further mitigated by implementation in market neutral posture when the research indicates potential for a downward market. The portfolio is designed to find picks that will out-perform the counter-parts. The Internet Advantage Strategies is a series of strategies based on an innovative new research approach; ZEGA tracks the digital Internet footprint of publicly traded companies to find hidden demand trends in the market place.. This composite includes all portfolios that were at least 70% dedicated to this strategy.   The benchmark is the HFRI Quantitative Directional Equity Hedge Fund Index. The HFRI Quantitative Directional Equity Hedge Fund Index is a subset of the HFRI Equity Hedge Fund Index that measures the aggregate performance of equity hedge funds that employ quantitative strategies that can use long and short equity positions and the portfolio can be positioned net long or net short. This HFRI benchmark will always include an estimate from HFRI for the most recent month. The returns are typically finalized within one month after the end of the reported month – but can sometimes be revised up to 90 days later by HFRI.

ZEGA Financial claims compliance with the Global Investment Performance Standards (GIPS). To receive a full list of composite descriptions of ZEGA Financial and/or a presentation that complies with the GIPS standards, contact Jay Pestrichelli at 1-800-380-9342, ext 101 or jay.pestrichelli@zegafinancial.com.

Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio.

These results should not be viewed as indicative of the advisor’s skill. The prior performance figures indicated herein represent portfolio performance for only a short time period, and may not be indicative of the returns or volatility each portfolio will generate over a long time period. The performance presented should also be viewed in the context of the broad market and general economic conditions prevailing during the periods covered by the performance information. The actual results for the comparable periods would also have varied from the presented results based upon the timing of contributions and withdrawals from individual client accounts. The performance figures contained herein should be viewed in the context of the various risk/return profiles and asset allocation methodologies utilized by the asset allocation strategists in developing their model portfolios, and should be accompanied or preceded by the model.

Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment’s volatility. Employee accounts do not pay advisory fees, so the returns illustrated for the strategy are higher than they would be if employee accounts paid similar fees.

Tear Sheet

Presentation

Media

IAS Best Equity Picks

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IAS Equity Long / Short

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