Investment Advisor

Oceanic Capital

Oceanic Capital

Education University of Vermont, BA
Qualifications 25 year professional and registered investment advisor

Global Diversified Aggressive

Exceptions
Sell Discipline
Allocation Discipline
Research
Approach
Summary

The model invests in multiple asset classes: domestic, international and emerging market equities, fixed income, commodities and energy, real estate and foreign exchange. The model uses both individual stocks and ETFs, and may employ leverage, tactical positions and inverse index positions.

OCM’s approach is to develop prudent allocation, employ assets with lower correlation to domestic equities and rebalance regularly in an effort to trim exposure during rising markets and increase during pullbacks. In the aggressive portfolio we will also occasionally use leverage as well as technical analysis to confirm timing of entry and exit points. When the technical market conditions confirm the fundamentals, we will tactically change allocation percentages to commit more to out of favor assets or pare down exposure to overpriced assets.

OCM research focuses at two key levels: allocation of assets and asset selection within the desired allocations. Asset allocation research looks primarily at correlation of investment performance over various horizons.

Once asset allocation has been determined via both algorithmic means and personal judgement, OCM looks at each sector fundamentally. We tend to favor “category killer” companies that benefit from strong competitive barriers, have high liquidity and price transparency.

In addition to using traditional Wall Street research from the major investment banks, OCM conducts its own research and also purchase outside institutional research for “hard dollars. Our sources include The Gartman Letter, Grants, Financial Times, Bloomberg, Barron’s and The Dow Theory Letter, among others.

OCM’s investment approach is founded on the goal of “diversification optimization".

To achieve that goal, our process examines the relative performance and historic correlations of different asset classes and sectors. We use non-traditional and uncorrelated assets in an effort to offset portfolio risk and volatility and to stabilize returns.

In this fund we typically will have 10-15 positions with individual weightings anywhere from 5-30%. We rebalance actively, so that all assets classes are kept within 2-5% of their original allocation percentage. Additionally , with 5-10 % of the portfolio, we will use tactical allocation strategies when market technicals align with our core strategy.

The model uses a mix of individual stocks and ETFs. Typical allocation will be 40-60% in equities as a whole, with approximately half of that allocated to domestic positions and half to international (developed and emerging).

This strategy may employ leverage as well as inverse ETFs as hedges or diversification strategies. As much as 5 -10% of assets may be invested strategically increasing or decreasing exposure in certain asset as shorter-term market movements allow.

OCM maintains a sell discipline on both the upside and downside. Upon entering into a position, we will establish near-term sell thresholds for it. This portfolio will not typically close out a position entirely unless a loss of 5-10% occurs very early in the investment horizon. Should this occur, we would first look to trim positions, if warranted, to rebalance allocations. If we see an unexpectedly fast achievement of 50% or more of a targeted gain, we may look to trim the position back to the original invested amount, simultaneously reducing the allocation.

Although OCM’s overall focus is strategic, this fund will employ tactical strategies as well. We look for opportunities to add to our returns during stressful or calm markets to buy or sell volatility as we see appropriate. These opportunities will likely be highlighted when both the fundamental and technical conditions for an asset class align, pointing to a potential opportunity by increasing or decreasing exposure to the asset class.

Approach Macro
Asset class Multi Asset Class
Geography Global
Subscribers8

Replicability

100.0%

Replicable

Top 5 Holdings View all

17.2%

7.4%

7.0%

6.3%

5.8%

Model commentary

Don't try to time this chaotic market

14 May 2012

What keeps us awake at night still is the drama that could unfold in Europe this summer.
Stick with cash-generating stocks, bonds and gold 16 April 2012
Why I'm Still Bullish on Gold for the Long Haul 2 March 2012
Gold will continue to rise and U.S. stocks remain … 19 February 2012
Trimming our bonds, redeploying to equities 17 February 2012

Performance detail

Manager
Dow Jones Moderately Aggressive
S&P 500

30D 90D 365D SI

Performance

Inception February 03, 2011

as of May 23, 2012	Manager	Dow Jones Moderately Aggressive	S&P 500	Average Subscriber
Past 30 days	-2.3%	-4.3%	-3.5%	-2.4%
Past 90 days	-5.2%	-5.6%	-3.3%	-5.1%
Past 365 days	2.6%	-3.5%	0.2%	1.6%
Since Inception (Annualized)	6.9%	-1.7%	0.7%	-
2012 (YTD)	0.5%	2.8%	4.9%	-0.2%

Risk Metrics

Last 365 Days

as of May 23, 2012	Manager	Dow Jones Moderately Aggressive	S&P 500
Best 30 days	7.0%	11.4%	13.6%
Worst 30 days	-5.5%	-13.9%	-16.7%
Volatility	11.4%	17.4%	23.2%
Sharpe Ratio	0.22	-0.21	0.00
Sortino Ratio	0.32	-0.28	0.00
Maximum Drawdown	-7.0%	-17.4%	-18.8%
Value-at-risk (95%, 1 week)	-2.6%	-4.0%	-5.4%

	vs. Dow Jones Moderately Aggressive	vs. S&P 500
Information Ratio	0.63	0.16
Alpha	4.4%	2.0%
Beta	0.56	0.42
R-Squared	0.73	0.72

Latest transactions view all

Average trades per month 1.3

Executed	Symbol	Security	Replicable	Type	Price
02/21/12	FCX	Freeport-McMoRan Copper & Gold Inc		Buy	$44.10
02/21/12	GIS	General Mills Inc		Sell	$38.20
02/21/12	VNQ	Vanguard REIT ETF		Buy	$61.35
02/21/12	COP	ConocoPhillips		Buy	$73.99
02/21/12	UUP	PowerShares DB US Dollar Index Bullish Fund		Sell	$22.01
02/17/12	VWO	Vanguard Emerging Markets ETF		Buy	$44.26
02/17/12	TLT	iShares Barclays 20+ Year Treasury Bond Fund		Sell	$116.42
02/17/12	VEU	Vanguard FTSE All-World ex-US ETF		Buy	$44.39

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$10,000 subscription min
margin account required
1.1% fee

Important Information

1. Past performance is no guarantee of future results.

2. Performance of the model manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions, and broker commissions. Manager returns include trades that fail Covestor's trading rules, do not reflect any Covestor suitability or risk score restrictions and are exclusive of Covestor fees. More

3. Average subscription returns ("Avg Sub" or "Avg Client") are calculated by Covestor and are composed of the average, daily, time weighted returns of all active subscriptions to the underlying model. These daily average returns are then linked together for the timeframe requested. In addition, these returns include cash, dividends and earnings distributions, brokerage commissions, Covestor advisory fees, and reflect individual client suitability and risk score restrictions. More

4. All graph data is as of the end of day for the referenced period, unless otherwise specified. The subscription minimum is the minimum subscription required to follow a particular model. The minimum amount is determined by Covestor, based on the characteristics of the underlying model. It should not be considered as specific investment advice for your investment situation.

5. Benchmark returns have been calculated by Covestor using a time-weighted calculation of daily index valuations and do not include cash, dividends and earnings distributions, or transaction costs. More

6. Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.

7. All Model Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Model Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history is available upon request. Model classifications (Approach, Asset Class) are provided by Covestor, and are intended to serve as a general guide.

8. Top Replicable Holdings: These securities are currently held in the model manager's brokerage account. Those marked as "Replicable Holdings" currently pass Covestor's trading rules, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription holdings may vary.

9. Latest Transactions: These transactions were executed in the model manager's brokerage account. Those marked as "Replicable" () passed Covestor's trading rules and were eligible for replication at the time of execution, subject to individual client constraints. Eligibility for replication may change over time. Actual client subscription trade activity may vary.

10. S&P 500 Index is an unmanaged index compiled by Standard & Poor´s Corp. Index returns do not reflect any management fees, transaction costs or expenses. Individuals cannot invest directly in an Index. S&P 500 index data: S&P 500 Copyright © 2012.

11. Dow Jones index data: CME Group Index Services, LLC 2012

Background provided by the manager
Oceanic Capital Form ADV II

Oceanic Capital