The cornerstone of Reindeer Trek LP is flexibility and the ability to navigate through changing market conditions. The best companies to invest in are experts at this. IBM has been able to flourish through a century of radical invention and obsolescence cycles because of its own commitment to flexibility and evolution. Stock market cycles have been no less dramatic. The global financial system has recently experienced an unprecedented seachange in competition, communication and price volatility. The ability to change and adapt to new conditions has never been so critical to performance.
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Fundamental, technical, macroeconomic and sentiment analysis provide a valuable inter-related set of screening criteria that we aggregate when making buy and sell decisions.
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Businesses can face extended periods of time where company specific news has no bearing on their stock prices; at other times, stock prices can make exaggerated moves in response to fundamental news or events.
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Stocks can move through cycles where macroeconomic trends stay benign or irrelevant to price moves, and at other times stage wild swings in response to the minutia of government released economic data.
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Changes in investor sentiment can create a market environment where good news is considered bad or bad news is considered good.
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Stock prices can occasionally respond perfectly to historical technical patterns or sometimes not at all.
None of these factors can be analyzed effectively in isolation or even in equal weight. Each new market cycle requires an adaptive response to how these elements are interacting to influence stock prices and future market trends.
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Reindeer Trek LP is managed to provide its highest level of absolute returns during periods of market stability or advance. The history of the U.S. stock market has demonstrated that over time stock prices rise approximately 9-10% per annum. The fund attempts to align itself favorably with this empirical historical trend by limiting short sales to time sensitive and catalyst-driven opportunities. The fund is managed more conservatively during periods of market duress with higher levels of cash reserves and short biased exchange-traded funds. Although Reindeer Trek LP has periodically exhibited strong outperformance through market down cycles, the main driver of the fund’s performance is the capitalization of long-side trading and investing opportunities in high quality growth companies in the sectors with the best organic growth.
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