Finding the Next Dayton for Your Portfolio

As the Sweet 16 games get underway tonight, it’s the just about the time where we see who made their NCAA picks based on favorite mascot, who picked based off of favorite/disliked teams, and who tried to pick by statistics. There’s no other statistician out there that knows how to use his ability to appeal to the masses like, Five Thirty Eight’s, Nate Silver.

At the beginning of the tournament he came out with the probabilities of each team advancing to the next round (original stats here), and he would update the numbers as the tournament went on (current predications). At the beginning of the tournament, Dayton had a 24% chance of beating in state rival Ohio State rival, and if you’re familiar with Ohio sports culture, that was a very meaningful game, with the Dayton Daily News poking some deserved fun at those NFL players from Ohio St. who like to announce their school during Monday Night Football as ‘THE’ Ohio State:

The University of DaytonPhoto Courtesy: The Dayton Daily News

But Dayton’s chances got even smaller to advance to the Sweet 16, with only a 7% chance, according to Silver’s original stats. But Dayton must have been emboding the words of Dumb and Dumber’s famous quip, “So you’re saying there’s a chance.” In fact, Dayton did beat Syracuse in the 3rd round, and this is what happened.

President Dayton

Now, Dayton is slated to be the underdog for the third time in a row tonight – taking on #10 seed Stanford to see who advances to the Elite 8. Before the tournament started, Dayton’s chances at an Elite 8 run were 2.28%, and that now stands at a 50% chance! Surprising what a little success does for your odds.

So who do you usually pick for your portfolio – the Duke’s of the investment world, or the Dayton’s? Do you play it safe and go with the best record and highest seed? Or try and uncover talented teams which have flown under the radar but are ready for a big upset (we actually did a Managed Futures Bracket for those who want to find some underdogs).

Consider the following two charts of managed futures programs since their inception to December 2008:

The #1 Seed Man AHL:                                        The #11 Seed M6 Capital:

Man AHL InceptionM6 Capital

(Disclaimer: Past performance is not necessarily indicative of future results)

Who would you have picked for your investment bracket? The decade long track record, billions under management, 900%+ return, and brand name of the #1 seed? Or the three year track record, 40% return, millions under management #11 seed?  Most investors go with the ‘safe’ pick. But how have these two seeds performed in the ‘tournament’ over the past 5 years? AHL is down -15.09%, while M6 is up 28.91% {past performance is not necessarily indicative of future results}.  Only a very small fraction of investors chose the #11 seed over perennial favorite Man AHL back in 2008, but managed futures version of the march madness Cinderella didn’t listen to the hype or the investors voting with their checkbooks. They just kept practicing, kept working on their fundamentals, and got down to outperforming the orders of magnitude larger manager. David can beat Goliath every now and then.

So who’s an under the radar sleeper (investment) team right now, looking to pull off the upset over the next three to five years? We just happen to have a few good ideas on that, having studied the managed futures brackets day in and day out for the past 10 years. We think these five managers have just the right mix of seniors, ball handling, and coaching to upset the #1 seeds Winton, Transtrend, and the like…

Emil Van Essen

M6 

Covenant 

Integrated

Eco

 

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

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