M2 Capital Holdings Profile Picture Individual Investor

Pat McFadden

M2 Capital Holdings

  • Founded 1998

M2 Global

Opportunistic and at times highly concentrated, this model will invest in US listed stocks, ADRs and an occassional ETF.  It is fundamental and algorithmic-based.
Our approach is primarily fundamental and opportunistic. It is highly concentrated at times.  We screen a diverse set of companies with solid balance sheets and access to competitive financing and look for undervalued opportunities.  This approach can produce targets in out of favor growth stocks or distressed sectors. Large cap targets produce higher yields, while mid to small cap stocks may offer strong yield or above-average appreciation potential. Market volatility rewards patience, and we are patient to buy at our price.
We perform screening to identify undervalued targets that we believe will appreciate. For identified targets, we perform extensive qualitative and quantitative fundamental company and sector specific research. We observe macroeconomic research on a global basis. We use Bloomberg and other market and intelligence services and we spend a great amount of time reading EDGAR filings on target companies as identified by models and algorithms. We watch the Fed closely and pay attention to information produced by BIS and DTCC on monetary policy and credit derivatives. Differentials in expected real rates of return are considered along with macroeconomic and political funds flow factors.
75% of the portfolio can be invested directly in U.S.-listed stocks and ADRs. Target portfolio will include less than 30 companies, with up to 50% of total assets in dividend yielding stocks.

As this is an opportunistic model, we have no specific goal to maintain cap size diversification.  Furthermore, the model may be highly concentrated.

The target portfolio may invest up to 10% in ETFs such as commodities, as a hedge.

Expected turnover is low, but we may make short term trades if they present themselves.
Our sell discipline is governed primarily by our fundamental approach. Our models provide us with a target valuation that is typically a minimum of 35% higher than current prices. As a stock in the portfolio approaches our "fair value" target, we pay close attention to both fundamental and technical indicators. We are primarily investment-focused, however, and will not cut targets with good prospects short without a specific secular or cyclical tendency.
Our process requires patience and therefore may require many quarters to develop a fully diverse portfolio. Nevertheless, we typically purchase stocks that we would be comfortable holding in any focused portfolio. Regarding our purchase and sell discipline, we utilize a proprietary algorithm and consider moving average trends, RSI and stochastic oscillators. We consider these tactical tools with shorter term relevance.

Risk rating

5
48.5%

Best 30 days

-39.0%

Worst 30 days

Performance

  • -9.2%
    30 day
  • -47.9%
    365 days
  • -46.7%
    Since Inception
    February 17, 2011
Monthly vs S&P500
Sparkbar Graph, M2 Global Investment Model Performance versus S&P500
-53.0%

Last 12 months

  • $5,000 subscription min
  • margin account required
  • 1.5% fee

Replicability

100.0%
  • Replicable

Top 5 Holdings View all

100.0%
  • Cash

Model commentary

  1. Facebook confronts the law of big numbers

    23 May 2012

    The company simply may not be able to continue to grow at the previous pace.

  2. US energy sector can thrive with right policies … 9 April 2012
  3. We Still Believe in the Future of Mannkind 15 March 2012
  4. Why we remain bullish on Mannkind 18 January 2012
  5. Prepare for continued volatility 18 October 2011

show more


Performance detail

  • Manager
  • Dow Jones Global
  • S&P 500
30D 90D 365D SI

Performance

Inception February 17, 2011
as of May 23, 2012 Manager Dow Jones Global S&P 500 Average Subscriber
Past 30 days -9.2% -6.8% -3.5% -
Past 90 days -13.7% -9.4% -3.3% -
Past 365 days -47.9% -11.5% 0.2% -
Since Inception (Annualized) -39.3% -11.1% -1.3% -
2012 (YTD) -22.3% 0.3% 4.9% -

Risk Metrics

Last 365 Days
as of May 23, 2012 Manager Dow Jones Global S&P 500
Best 30 days 48.5% 13.6% 13.6%
Worst 30 days -39.0% -16.3% -16.7%
Volatility 61.7% 21.1% 23.2%
Sharpe Ratio -0.78 -0.55 0.00
Sortino Ratio -1.18 -0.76 0.00
Maximum Drawdown -51.8% -22.1% -18.8%
Value-at-risk (95%, 1 week) -14.3% -4.9% -5.4%
vs. Dow Jones Global vs. S&P 500
Information Ratio -0.63 -0.86
Alpha -35.7% -49.5%
Beta 1.04 1.15
R-Squared 0.13 0.19

Latest transactions view all

Average trades per month 6.0
Executed Symbol Security Replicable Type Price
05/21/12 MNKD MANNKIND CORP Yes Sell $1.69
05/18/12 ALU ALCATEL-LUCENT-SPONSORED ADR Yes Sell $1.45
05/14/12 MNKD MANNKIND CORP Yes Buy $1.84
05/14/12 MNKD MANNKIND CORP Yes Buy $1.85
05/14/12 MNKD MANNKIND CORP Yes Buy $1.85
05/11/12 MNKD MANNKIND CORP Yes Buy $1.88
05/11/12 MNKD MANNKIND CORP Yes Sell $1.91
05/11/12 MNKD MANNKIND CORP Yes Buy $1.90
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  • $5,000 subscription min
  • margin account required
  • 1.5% fee

Important Information

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


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