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.
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
Ross Rosenstein – Senior Portfolio Manager
Ross is pursuing a joint JD/MBA degree at the UVA School of Law and the Darden School of Business. Ross began his career in investment banking with Wachovia in the U.S. and continued with a start-up maritime and oil & gas boutique in Dubai, UAE. In addition to typical investment banking responsibilities, Ross was responsible for building and leading the international team of analysts and worked extensively with international clients throughout the Middle East, Asia and Europe. Ross is a co-founder and co-owner of XMT Solutions, a consumer-products startup, and a co-founder of Clawson Justus LLC, a financial advisory firm. He is also a certified skydiver with over 170 solo jumps, an avid tennis and soccer player, and a fitness enthusiast. Ross received his BA from Davidson College where he studied Economics and Spanish.
Ted Casey — Portfolio Manager
Joakim Brevigh Nilsen – Portfolio Manager
Joakim graduated from the Royal Norwegian Naval Academy in 2009 with a bachelor degree in Leadership and a specialization in Navigation. Following his graduation, Joakim served as a navigator onboard the Norwegian Nansen-class frigates for two years before starting his Principal Warfare Officer education. Joakim graduated from the Principal Warfare Officer Course in 2012 and served as the Air Warfare Officer onboard HNoMS Fridtjof Nansen up until he started his MBA at Darden in August 2013.
Michael Tham – Portfolio Manager
Michael graduated from New York University in 2006 with a degree in Finance and International Business. Prior to Darden, he spent 6.5 years as a proprietary trader in New York City focusing on long/short equity investments. Michael interned at Deutsche Bank for the Summer in Investment Banking.