SHORT DURATION ALPHA

Weekly Insights from Sol Berkoff
Principal at Charleston Capital, Inc.

With the under-performance of most strategies in 2018, it is no wonder many investors looking for alpha have put their money into Private Equity. According to Preqin, 82% of Private Equity managers expect AUM to grow in 2019. With the rise of index funds and low cost ETFs, beta is now cheap and liquid.

And clearly — the market has accepted that alpha must be expensive and illiquid.

Liquidity is a measure of how easily one can turn an investment into cash. Investing in a complex, growing sector usually means one must make an illiquid investment.

Unless you invest in small business finance.

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Small business finance is not liquid in the traditional sense. Our sector is nascent and underserved.

But — at CCI, our underlying portfolio generally has a remaining term of 8 to 9 months. If trouble arises, we have the ability to go quickly from invested to cash.

What does that mean? It means we can reduce risk in our portfolio without having to rely on secondary markets. It means we can raise fresh cash without new outside investment.

It means we have the ability to provide our investors with short duration alpha.

Which in these markets, we think gives us a significant advantage.