Funds

  • Darden Capital Management manages five funds. Learn more about each fund below.

  • Overview

    The Cavalier Fund is a long/short equity hedge fund that focuses primarily on domestic equities including small, mid-and large capitalization companies. Our goal will be to produce positive alpha with low volatility by purchasing great businesses at reasonable prices and shorting flawed businesses at overvalued prices. We will target an 80% net long bias. Our ability to short stocks and indices will decrease the volatility of returns and produce additional alpha through good stock selection. We aim to produce a high return relative to the S&P 500 Index.

    Investment Thesis

    Our primary focus will be to purchase great businesses at reasonable prices. We seek to purchase companies that consistently produce high returns on capital at an attractive earnings yield. Our bottom up investment strategy will lead us to own sustainable business franchises that are undervalued relative to their earnings power potential for the long term. Our secondary focus will be to implement deep value analysis to purchase companies that are being offered at discounts to their net tangible asset value.

    For short positions, our primary focus will be to short companies that have flawed business plans with overly optimistic analyst expectations. We seek to identify companies that appear to have materially overstated earnings, an unsustainable or operationally flawed business, and/or are in engaged in outright fraud.

    Our fund will hold approximately 15-25 long positions at all times. As well, the value of our short positions will not exceed 20% of our total assets. The Cavalier Fund is able to invest in all capitalizations and sectors, excluding the microcap designation.

    All long positions will be strictly reevaluated at a 15% loss. No one long position at initiation will exceed 6% of total assets, and no long position will be greater than 10% of the total portfolio at any one time. The maximum size, at initiation, of any short position will not exceed 3% of the total portfolio, and the maximum position size for short positions will be 6%. Stop loss orders will be used to limit the maximum loss of any one short position to less than 1% of the total value of the portfolio. All shorts will be strictly reevaluated at a 10% loss and are subject to a 15% stop loss provision. The maximum value of all short positions at initiation will be 20% of total assets.

    Portfolio Manager Bios

    Peter Iwanowicz — Senior Portfolio Manager

    David Mariani — Portfolio Manager

    James Reynolds — Portfolio Manager

    Chiara Singleton — Portfolio Manager

    Overview

    The goal of the Darden Fund management team is to deliver returns that exceed our benchmark while incurring a comparable level of risk. We believe that superior risk-adjusted returns will result from primary, value-added research that leverages our general management education at Darden.

    Our equity investment strategy is focused on the small-cap segment; our equity portfolio benchmark is the S&P SmallCap 600. We believe that markets are least efficient in the small-cap arena, offering us the greatest opportunity for generating positive alpha. Furthermore, while we are focused on bottom-up research, we are optimistic about a reversal of the long bear market. Small-caps have historically outperformed in the initial stages of a bear market, offering additional upside potential to the Darden Fund.

    Small companies typically carry more firm-specific risk than larger firms. As a result, the current management team will ensure adequate diversification by holding a larger number of equity positions (~40) than has been true historically (~25). In addition, careful attention will be paid to matching industry exposure to the benchmark.

    Investment Thesis

    We believe that the market is least efficient in small-cap segment offering the greatest opportunity for generating positive alpha. Small cap stocks have outperformed mid and large-cap stocks for six consecutive years, and continued this trend in 2004 outperforming the general market by 10%.

    It will be difficult for small-cap stocks to continue these outsized returns particularly in an environment of rising interest rates, which has traditionally favored large-cap stocks. However, The Darden Fund managers aim to outperform our competitive benchmarks through a process of disciplined fundamental research and analysis. By leveraging our team’s diverse experiences and educational foundations, we hope to realize superior returns while remaining conscious of the inherent risk of our investments.

    Portfolio Manager Bios

    Colin Casey – Senior Portfolio Manager

    Kyle Kehoe – Portfolio Manager

    John Sanders – Portfolio Manager

    Robert Sanders – Portfolio Manager


    Overview

    The objective of the Jefferson Fund is to maximize investment returns, while at the same time minimize systematic risk. Diversification is not only achieved at the sector/industry level, but also through asset allocation. As part of Darden Capital Management, the Fund’s other objective is to provide students with an opportunity to enhance their understanding of security valuation and portfolio valuation techniques, with the expectation of furthering their pursuit of careers in the asset management industry.

    The Jefferson Fund seeks to generate excess returns through a value-based strategy, whereby out of favor or undervalued investment opportunities are identified primarily through a bottom-up process. We believe that this style of investment, which emphasizes the importance of a company’s valuation and invests only in those companies which are believed to be trading at a discount to their intrinsic value, will lead to consistent long-term outperformance. Furthermore, by concentrating on companies with market capitalizations of $200 million to $5 billion and with little analyst coverage, which we believe to be less efficient, the Fund is positioned to capture above average investment returns. From time to time, the managers may identify and invest in undervalued companies with larger capitalizations. At any given time, the Fund will hold between 20-25 positions. Individual holdings will be limited to a maximum of 6% at time of investment.

    According to the Fund’s mandate, it will hold at all times a minimum of 20% invested in a combination of cash and fixed income instruments. The managers expect to invest the fixed income portion of the portfolio primarily in U.S. Government securities. From time to time, the Fund may invest opportunistically in corporate bonds. The managers intend to minimize the cash allocation.

    The Fund will be managed against a blended benchmark comprised of 80% Russell 1000 Index and 20% Lehman Brothers 7-10 Year Treasury Index.

    Investment Thesis

    The Jefferson Fund seeks out of favor or undervalued investment opportunities. At any one time, we intend to hold between 20-25 equity positions.

    The managers will have no industry bias and will invest opportunistically in any and all sectors.

    The Fund will purchase companies with a minimum market capitalization of $100 million, with no maximum capitalization. Because of the managers’ bias towards undervalued companies and out of favor industries, the managers expect to concentrate on companies with market capitalizations of $100 million to $5 billion that have lower analyst coverage. From time to time, the managers may identify and invest in undervalued companies with larger capitalization.

    Managers intend to minimize the cash allocation.

    Portfolio Manager Bios

    Jay Kraska – Senior Portfolio Manager

    Tyler Abell – Portfolio Manager

    James Hodge – Portfolio Manager

    Chris Nelson – Portfolio Manager

    Overview

    The Monticello Fund’s philosophy begins with the premise that superior returns over time can best be achieved through investment in undervalued companies with superior and sustainable growth prospects while integrating macroeconomic and local market factors into stock selection decisions. As a result, the Fund will consist of a blend of companies domiciled around the globe.  By employing a bottom-up approach with intensive research focused on company fundamentals and macroeconomic and local market factors, the Fund’s managers are able to identify undervalued, financially strong, and well-managed domestic and international companies in a global sector context.  Further, the managers each strive to continuously educate ourselves with regards to investment analysis and portfolio management theory.

    Investment Thesis

    Buy decisions are based on a rigorous research process that pays special attention to relative valuation on a local market and broad sector basis, profitability, management strength and competitive advantage while taking into consideration both global market and business risk.  As a result, the Fund will be comprised of approximately 20-40 individual equity holdings with differing market capitalizations from a variety of countries and sectors.

    Risk Mitigation

    Both buy and sell decisions will require a majority vote by the Fund’s managers.

    Stocks become candidates for sale if 1) they fail to meet milestones, 2) they reach pre-determined price targets, 3) their fundamentals deteriorate, or 4) changing fundamentals undermine the original investment premise. Price targets are set based on specific company and industry analysis, and the Fund managers will update their analysis when a price target is reached to determine whether or not to sell the stock. Appreciated long positions that exceed 10% of portfolio value will be scaled back, while short positions that exceed 6% of the total portfolio value will be scaled back.

    Long stocks that decline by 15% in value will be subject to a full re-analysis.  Any stock (long or short) that has a negative impact of greater than 1% on the total portfolio will be subject to a review by the CIO and faculty advisor.  All shorts will be strictly reevaluated at a 10% loss.  Stop loss orders will be used to limit the maximum loss of any one short position to 15% of the value of the position.  The goal of this intensive review process for underperforming investments is to promote a well-rounded, challenging discussion of all the issues in a timely and urgent manner.

    Portfolio Manager Bios

    Phillip Greendyke – Senior Portfolio Manager

    Daniel Lowenthal – Portfolio Manager

    Alexander Shashko – Portfolio Manager

    Adele Young – Portfolio Manager

    Overview

    The Rotunda Fund integrates sustainability research with fundamental analysis to select investments that are likely to outperform the market due to the improved long-term financial performance and lower risk features that accompany sustainable practices.  Sustainability research provides unique and valuable insights into management and internal operations of an organization.  Companies with sound environmental, social and governance (“ESG”) practices have competitive advantages over their peer institutions; these competitive advantages can include lower costs due to efficiency, reduced risk of litigation/environmental liabilities, and lower volatility of raw material costs.  Therefore, sustainability practices are expected to yield market-outperforming risk-adjusted returns.  The Rotunda Fund integrates sustainability research with fundamental analysis to purchase “best in class” companies at attractive valuations. 

    Investment Thesis

    The Rotunda Fund employs a two-step process to select and evaluate opportunities: a threshold step (size and information availability) and an investment evaluation step (ESG, industry, and financial evaluation). 

    The threshold step requires (i) market capitalization of $500 million and above and (ii) sufficient disclosure of relevant sustainability-related data.  It is expected that companies reporting under the Carbon Disclosure Project, or a similar industry-standard report, will fulfill this threshold of required disclosure.  Alternatively, companies that publish a corporate sustainability report and/or are required to report data to the US Environmental Protection Agency, such as the chemical and utility industries, will also meet the threshold criteria. 

    The companies that meet the requirements in the threshold step will then be analyzed in a three-part investment evaluation step.  This investment evaluation step seeks companies with:

    1. Best-in-class ESG metrics relative to peer companies and industry best practices.
    2. Industry or industries served, and position within those industries, that is conducive to long-term financial strength.
    3. Superior fundamentals, both qualitative and quantitative/valuation, which indicate the potential for favorable risk-adjusted returns.

    Portfolio Managers Bio

    Wyatt Somogyi — Senior Portfolio Manager  

    Tyler Graham — Portfolio Manager  

    Alessandra Salatti — Portfolio Manager 

    Emily White — Portfolio Manager