Looking for seed money but no idea on the how/what/who
Hey all,
Before diving into this I think it makes sense to at least give some context and background on me personally just so we're all on the same page. The general gist of what I am curious about from anyone with experience is the goal of getting seeded to start a small fund. The goal would be $2mm-$50mm. I'll get into why in a second.
As way of background, I am 34, C-suite exec (think VP of Corp Dev/Treasurer/CFO) at a mid-cap public company on the east coast. I have an MBA and CFA and have done pretty well for myself being outside of the 'high' comp / 'high end' NYC finance world. I started in a Fortune 50 and moved on up the corp ladder quite quickly. I am happy in what I do but not where I am company wise. We're a struggling company, PE backed and in knee deep of a turnaround situation.
Throughout that entire time I've traded my own account. Specifically, I've been trading since I was 16. I am obsessed with trading and have read every and any book on technical analysis and the market. I got serious on the topic in 2014 and started to actually hone in the strategy to the point of creating an algo and several scans.
The account was up 190% in 2017 and is currently up 30% YTD in 2018. I can get into as much detail as people need/want but for now let's say it's a L/S mid to large cap algo based on 4 technical analysis criteria that can, and are, used to find both L and S positions. I literally just flip the criteria for the TA pieces to find shorts. I trade both the underlying and 30-90 day vanilla call/puts as the primary piece of the strat. Win rate is 50%-60%. The account isn't a huge multi million dollar book. Think sub $250K. Nonetheless, I am happy with the results.
I know the strategy can be scaled up to a larger size. Without question the trades can take on additional size as both the underlying and a laddered options approach can be applied to the technical analysis. Trade allocation and risk management are just as important as the technical analysis pieces to me and the reason I haven't gone broke in the early years.
Playing devils advocate, I know 12 months is not enough of a track record. I get that completely and will keep trading this forever if I have to until I can start something. That is the end goal. I've been asked well why don't you just trade your own money and dump more money into it. Personally, I may do that soon. My wife and I are expecting our first baby soon so while I am laser focused on making this fund a reality I can't say I am in a position to dump more cash into it right now. In 6 months? Maybe. I know.....seems silly. Estate planning can do that to you I guess.
So, to the WSO Monkey brethren, what should I do? How can a nobody in the hedge fund world go out, convince anyone that I am not a jackass, that this track record is real (I obviously have the account statements and scans as backup) and raise $2mm - $50mm to start something. I legit know nothing about getting seed money, emerging manager platforms and the like. From what I've researched thus far, when seeded the back office, legal, accounting are all taken care of. So I am not worried about that part of it.
I thank any and all guidance and comments before hand.
Best,
Fellow Monkey
People aren't going to take you seriously if your alpha signals are purely technicals. Your track record isn't going to be your biggest issue. Maybe if you have good relationships or network/pitch well you could land some dumb HNW money but few prudent investors would invest in a pure technical analysis play.
-HFT firms mostly make money off the spread and by being a market maker. For the most part, they aren't exactly making speculative bets. I'm not an HFT guy though.
-Maybe I am incorrect but it sounds like your current setup is completely rules based? Doesn't sound like there is a statistical process involved. Rules based processes will pretty much always blow up in your face eventually.
-The basis of quantitative/systematic strategies is to use some method to forecast future returns/prices and then rank stocks by the forecasts to determine long and short portfolios. Forecasting methodology obviously varies strategy to strategy. These forecasting methodologies never rely purely on technical indicators as their usefulness is not robust without fitting against macroeconomics and fundamental factors.
Disclaimer: I do research for a quantitative market neutral global equity strategy so I don't know very much about options.