Opportunity Strategy 1

Opportunity Strategy 1 is a rules-based, actively managed strategy designed to take advantage of depressed restaurant, retail, department stores, clothing manufactures, hotel and travel/leisure stocks that were hit by COVID. As coronavirus vaccines roll out in 2021, these companies are projected to gradually recover, along with their stock prices.  Projected gains for this strategy (the total portfolio) is 50%+ over the next 12 months. The portfolio holds 25 stocks at maximum allocation. This strategy starts by identifying depressed stocks that have positive 2021 and 2022 earnings and earnings growth projections, along with several other positive fundamental metrics. The investment universe for this strategy comprises approx. 80 stocks that have passed the fundamental screen, initially from a list of 400 candidate stocks. Once the stock passes the fundamental screen, technicals are used to trigger entries and exits. Entry into a position is triggered when a specific chart setup and breakout are achieved, which significantly increases the probability of the trade working. This strategy follows well defined exit rules and will exit a position when certain incremental gains are achieved, or if a stock experiences a technical break below a certain support level; these strict exit rules help preserve gains and capital. For many stocks within the portfolio, this actively managed strategy will open and close the same stock multiple times as a stock gradually and unevenly recovers.  This approach of incrementally booking gains in multiple stages increases the probability of achieving the desired 50% to 100% total effective gain for each of the stocks in the portfolio.

Summary of Benefits

  • Strategy is diversified across approximately 25 stocks to reduce single stock and sector risk
  • Follows well defined exit rules to close positions as dictated by the technicals of the stock or ETF
  • This dramatically increases the probability of preserving gains and capital during periods of high volatility

Sophisticated analysis comprising technical, fundamental and factor-based quantitative analysis

  • Identify stocks that have moved into high probability technical setups, including:
    • Accumulation and distribution
    • Relative strength
    • Momentum
    • Candlesticks
    • Support & Resistance
  • Perform factor-based quantitative screen to identify ETFs that:
    • Have high probability of making a move up or down
    • Have high probability that the magnitude of the move will be significant